TMI Blog2010 (1) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner-company and one of its share holders (petitioner No. 2) have challenged a suo motu revisional order dated July 8, 2008 passed by the Deputy Commissioner of Commercial Taxes, Special Cell, cancelling the order dated July 19, 2002, passed by the Assistant Commissioner, Sales Tax, Special Cell by which the Assistant Commissioner granted eligibility certificate to the company for availing of the benefit of remission of tax under section 41 of the West Bengal Sales Tax Act, 1994. The petitioner-company was set up as a small-scale industrial unit for the purpose of carrying on the business of tea manufacturing in the district of Jalpaiguri. On October 28, 1999, the company filed an application before the Directorate of Cottage and Small-scale Industries for necessary registration as a small-scale industrial unit. On such application the Directorate of Cottage and Small-scale Industries issued a provisional registration on December 30, 1999. The West Bengal Incentive Scheme, 1999, was announced and notified by notification dated June 22, 1999, to remain effective for five years from April 1, 1999. According to the petitioner, they being encouraged by the incentives ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its application for registration as small-scale unit and also on December 29, 1999 when registration was granted by the Directorate of Small-scale Industries. On September 23, 2001 the petitioner-company submitted application before the Assistant Commissioner of Commercial Taxes, Special, for grant of eligibility certificate (in short E.C. ) for obtaining benefit of remission of tax under section 41 of the 1994 Act. The petitioner-company approached the District Industries Centre, Jalpaiguri for permanent registration as a small-scale unit. The petitioner has claimed that in course of consideration of the said request the petitioner-company came to learn by the end of June or early July, 2002 from the office of the District Industries Centre that permanent registration as small-scale industrial unit could not be granted as the cap on investment in plants and machineries was lowered to Rs. 1 crore by the Central Government by its order December 24, 1999. The petitioner-company was advised to get itself registered as a medium scale unit from the Directorate of Industries, West Bengal. In the meantime by notification dated February 13, 2001, the State Government introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1994 Act would be allowed to a newly set up industrial unit which was set up after January 1, 2000 and in which commercial production started after January 1, 2000. Section 43A contained a proviso saving newly set up small-scale industrial units and industrial units which were registered before January 1, 2000 either under the 1993 or the 1999 incentive schemes. The second proviso to section 43A also empowered the State to bring into force the provisions of sections 39, 40, 41 or 42 in respect of any industrial unit in public interest. Explanation to section 43A further allowed newly set up small-scale or other kind of industrial units to continue to enjoy the benefit which they were enjoying or entitled to enjoy before January 1, 2000. Provisos and Explanation to section 43A of the 1994 Act are quoted below: 43A. Cessation of application of the provisions of section 39, section 40, section 41, section 42 and section 43, and power of the State Government to reinforce such provisions. Notwithstanding anything contained elsewhere in this Act, the provisions of, (a) to (d) . . . Provided that subject to the restrictions and conditions as the State Government may, fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit after being rehabilitated or revived, which has enjoyed, or has been entitled to enjoy, before the first day of January, 2000, the benefit of tax holiday under section 39 and the rules made thereunder, the benefit of deferment of payment of tax or remission of tax under section 40, or section 41, or section 42, or section 43, and the rules made thereunder, as the case may be, shall continue to enjoy, or shall continue to be entitled to enjoy, such benefit in accordance with such provisions. The petitioner-company moved the District Industries Centre, Jalpaiguri, for obtaining permanent registration. The District Industries Centre expressed its inability to grant permanent registration as a small-scale unit in view of reduction of limit of investment in plants and machinery to Rs. 1 crore. On such denial the company submitted an application on April 17, 2002, before the Directorate of Industries, West Bengal, for registration as a medium scale industrial unit. The Directorate of Industries, Government of West Bengal, granted registration as a medium scale industrial unit on May 23, 2002 under the West Bengal Incentive Scheme, 2000 and sent the certificate of registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.C. was valid for one year, i.e., up to July 29, 2002. It was renewed annually up to July 29, 2005 and the petitioner-company enjoyed the benefit of remission up to March 31, 2005. The West Bengal Value Added Tax Act, 2003 (hereinafter referred to as, the VAT Act ) was brought into effect from April 1, 2005. Under the provisions of the VAT Act and the Rules framed thereunder the petitionercompany applied for eligibility certificate under the VAT Act for the unexpired period. By an order dated July 6, 2006, the Assistant Commissioner, Special Cell, rejected the application on the ground that the petitioner-company was ineligible to obtain the benefit of remission under the 1994 Act because of section 43A thereof. He noted the fact that the company got provisional registration before January 1, 2000, that permanent registration was not granted as small-scale unit and that the company thereafter got itself registered as medium scale unit under the 2000 Scheme. Reason for refusal was not clear but it seems that he was not inclined to treat provisional registration as valid registration for the purpose of section 43A of the 1994 Act. The Assistant Commissioner also recorded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K.P. Enterprises v. Divisional Deputy Commissioner of Sales Tax, Raipur [1996] 102 STC 483 (MP), a Division Bench of the Madhya Pradesh High Court held (page 496 in 102 STC): . . . If the authority wants to withdraw the eligibility certificate, then the effectivity of withdrawal shall be with effect from the date of order and it cannot be made retrospective. To this extent submission of learned counsel is correct that the order of withdrawal of eligibility certificate cannot be given retrospective effect and the petitioner is entitled for the relief to this extent. The aforementioned judgment was followed by the Calcutta High Court in Spantek Polymers Pvt. Ltd. v. Assistant Commissioner, Commercial Taxes, Special Cell [2001] 122 STC 222 (Cal) and held that the exemption certificate should not be cancelled or withdrawn with retrospective effect. The decision of the Madhya Pradesh High Court in K.P. Enterprises [1996] 102 STC 483 (MP) has also been approvingly quoted by the Supreme Court in Birla Jute and Industries Ltd. v. State of M.P. [2000] 119 STC 14 (SC). Another Division Bench of the Calcutta High Court in Commissioner of Commercial Taxes v. West Bengal Taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30, 1999, the petitioner became ineligible to obtain registration as small-scale unit. The petitioner and the District Industries Centre, Jalpaiguri, might not be aware of the Central Government notification lowering the maximum limit of investment in plants and machineries for qualifying as a small-scale unit but in law such reduction of limit took effect from December 24, 2009. Although an E.C. cannot be cancelled with retrospective effect but at the time of considering application for new E.C. under the VAT Act the concerned officer may take legal position into account for the purpose of granting future benefit and refuse to grant new E.C. After obtaining registration as a medium scale unit from the Directorate of Industries the petitioner itself applied before the West Bengal Industrial Development Corporation for eligibility certificate under the Incentive Scheme, 2000. The West Bengal Industrial Development Corporation allowed specified incentives, viz. State capital investment subsidy, interest subsidy, waiver of electricity duty, employment generation subsidy. Remission of sales tax was not available under 2000 Scheme and not granted by the WBIDC. In these circumstances we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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