TMI Blog2005 (5) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of 125 per cent of the fixed capital investment, invested by the applicant in the expansion on the turnover of the goods manufactured in excess of the base production in an assessment year. The base production was fixed at 172.8 M.T., thus, the applicant was entitled for the benefit of exemption under section 4-A of the Act in an assessment year on the production exceeding the base production 172.8 M.T. During the assessment year 1992-93 total sales made by the applicant from April 1, 1992 to March 31, 1993 was 382.125 M.T. both within the State of the U.P. as well as outside the State of U.P. including the Central sales. Thus, according to the applicant, it was entitled for the benefit of exemption under section 4-A of the Act on the turnover of the production of 209.325 M.T. Applicant claimed that during the assessment year in dispute, applicant filed the return disclosing the total sales made by it and had claimed exemption from payment of tax both under the U.P. Trade Tax Act and the Central Sales Tax Act only to the extent of sales made by it to the extent of 140.75 M.T. during the whole year. Assistant Commissioner, Trade Tax, Ghaziabad vide his assessment order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, Notification No. S.T.-21093/XI-7(42)-68-U.P. Act XV-48-Order-90, dated July 27, 1991, rule 41 and section 7(1-A) of the Act. "Section 4-A. Exemption from trade tax in certain cases. (1) Notwithstanding anything contained in this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any districts or parts of districts in particular, it may on application or otherwise, in any particular case or generally by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding twelve years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modernisation, or wherein goods of a nature different from those manufactured earlier are manufactured after diversification; (d) wherein an additional fixed capital investment of at least twenty-five per cent of such original fixed capital investment (without providing for depreciation) is made. Notification No. S.T.-2-1093/XI-7(42)-68-U.P. Act XV-48-Order-90, dated 27th July, 1991. Whereas the State Government is of the opinion that for promoting the development of certain industries in the State, it is necessary to grant exemption from or reduction in rate of tax to new units and also to units which have undertaken expansion, diversification or modernisation: Now, therefore, in exercise of the powers under section 4-A of the Uttar Pradesh Sales Tax Act, 1948 (U.P. Act No. XV of 1948), hereinafter referred to as the "Act" the Governor is pleased to declare that: (1-A) In respect of any goods manufactured in a 'new unit' other than the units of the type mentioned in annexure II established in the areas mentioned in column 2 of annexure I, the 'date of starting production' whereof falls on or after first day of April, 1990 but not later than 31st day of March, 1995, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce relating to licensing or registration of such units; (ii) that the new unit is established on land or building or both owned or taken on lease for a period of not less than fifteen years by such unit or allotted to such unit by the State or the Central Government or any Government Company or any Corporation owned or controlled by the Central or the State Government; (iii) that the exemption from tax or, as the case may be, reduction in the rate of tax shall be admissible only in respect of such goods manufactured by the unit and such by-products and waste products as are mentioned in the eligibility certificate issued to such unit under section 4-A of the Act; (iv) that the said unit furnishes to the assessing authority concerned an eligibility certificate granted in this behalf by the General Manager, District Industries Centre, Area Development Officer (Industry) of the concerned Industrial Development Authority, Additional or Joint Director of Industries of the range or Additional or Joint Director of Industries of the concerned Industrial Development Authority, as the case may be. 3.. 'Fixed Capital Investment' may, unless otherwise established, be determined in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of purchases and sales in any assessment year exceeds rupees five lakhs, shall, before the expiry of the next succeeding month, submit to the Trade Tax Officer a monthly return of his turnover in form IV, giving annexures I and II thereof detailed information, according to code numbers notified by the State Government from time to time, in respect of each category of goods in which he carries on business: Provided that the return for the month of February shall be submitted to the Trade Tax Officer on or before the twentieth day of March: Provided further that the dealer may, instead of submitting a return as aforesaid, estimate his turnover for the years on the basis of the turnover admitted by him in his return, or disclosed in his account books, whichever is greater, for the immediately preceding year, calculate the amount of tax payable thereon and deposit a sum equal to one-twelfth thereof during each of the first two months of every quarter, and deposit the balance of tax due on the turnover admitted by him in his return for the relevant quarter, which shall be prepared and submitted in the manner laid down in this rule. (8) Upon the expiry of the assessment year, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (a) shall be entitled to the facility of exemption from or reduction in the rate of tax. 7.. The only question for consideration is whether the exemption is permissible from the date on which unit achieved the base production, on the production in excess of base production in an assessment year. Further it is open to the unit to allocate the excess production on the basis of the estimated production to twelve months of the assessment year and claim exemption in the return filed for the each month as required under rule 41. According to the applicant the date on which base production is achieved is not relevant and the total claim of exemption under section 4-A of the Act on the excess production after base production should be allowed. In other words under the notification the claim is permissible under section 4-A of the Act on the production in excess of base production in an assessment year, which can be claimed by the applicant from the very beginning itself. The submission is that if the exemption is allowed for the period after the date on which base production is achieved, the very object of granting the exemption will be frustrated. Submission is that before the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranting exemption under the expansion scheme on the production in excess to the base production the intent is to get tax on the turnover, which falls within the limit of the base production. Answer appears to be in negative because the base production which may be considered as the production relating to the old unit or may from old machines if otherwise not taxable cannot be held to be taxable. Namely, that if it is not taxable against the declaration form or the goods are despatched by way of stock transfer to own depot or to consignment agent, it cannot be taxed under any provisions of the Act. Therefore, it appears that object of granting the exemption to the unit undergone expansion is to grant exemption on the production in excess of the base production which is to be considered at the end of the year and not to be considered from the date on which base production is achieved. 9. In the case of Modipon Fibres Co. v. Commissioner of Trade Tax reported in 2000 UPTC 319 (printed at page 207 infra). This Court has held that the exemption to the unit undergone expansion on the production in excess of base production is to be considered at the end of the year and not from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the facility of exemption can be availed after base production in the assessment year under consideration is achieved or the extent of exemption be worked out only at the end of the assessment year. It is noteworthy that in both sub-clauses (a) and (b) of clause 6 of the notification the words used are 'turnover of sale of goods in any assessment year'. The expression 'assessment year' is defined under section 2(j)(i) of the Act which provides that 'assessment year' means the twelve months ending on 31st March. From bare reading of clause 6 of the notification it is amply clear that the benefit of exemption is in respect of turnover of sale of goods in any assessment year in excess of the quantity as provided under sub-clause (a) of clause 6. When assessment year means the period of twelve months, the extent of facility in any assessment year cannot be worked out unless the assessment year is completed. Therefore, it has to be held that the extent of facility of exemption which can be availed by a unit under the notification can be worked out only at the end of the year." 10.. In the case of Commissioner of Income-tax, Amristar v. Strawboard Manufacturing Co. Ltd. report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. Commissioner of Income-tax [1992] 196 ITR 188 (SC); (1992) 3 SCC 78, it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case [1992] 196 ITR 188 (SC) is applied, there is no doubt whatever that the exemption granted to the respondent from August 9, 1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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