1994 (10) TMI 291 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Refusal to issue an eligibility certificate.
2. Hiring of storage tanks from a sister concern.
3. Use of trade marks/brand names of existing industrial units.
4. Alleged inordinate delay in the disposal of the application for eligibility certificate.

Detailed Analysis:

1. Refusal to Issue an Eligibility Certificate:
The petitioner challenged the refusal of the Commercial Tax Officer to issue an eligibility certificate. The application was initially rejected by the Assistant Commissioner on July 24, 1991, and subsequently by the Additional Commissioner on April 30, 1992. The Tribunal upheld these rejections, concluding that the petitioner violated conditions prescribed in the notification, specifically regarding the hiring of storage tanks and the use of trade marks/brand names of existing industrial units.

2. Hiring of Storage Tanks from a Sister Concern:
The petitioner hired two storage tanks from M/s. Pushpa Chemical Industries, a sister concern, for storing acid slurry. The Tribunal found that this action violated clause (v) of the notification, which prohibits the establishment of a new industrial unit with plant and machinery hired, leased, or rented from another manufacturing dealer. The Tribunal noted that the storage tanks were a significant part of the plant and machinery, and their cost was substantial relative to the total investment of the unit. The Tribunal rejected the argument that storage tanks were not essential for manufacturing detergent cakes and concluded that the petitioner's use of these tanks constituted a violation of the notification.

3. Use of Trade Marks/Brand Names of Existing Industrial Units:
The petitioner used the trade marks/brand names of TOMCO and Shaw Wallace and Company Limited under contractual agreements. The Tribunal held that this violated clause (vi) of the notification, which prohibits the use of trade marks/brand names of any other existing industrial unit. The Tribunal emphasized that the objective of the tax holiday scheme is to encourage new entrepreneurs who need financial incentives, not to support units backed by established trade marks or brand names. The Tribunal referenced the case of P.C.I. Papers (Private) Ltd. to support its conclusion that the petitioner's use of trade marks/brand names of established industries disqualified it from receiving the eligibility certificate.

4. Alleged Inordinate Delay in the Disposal of the Application for Eligibility Certificate:
The petitioner argued that the delay in disposing of the application for the eligibility certificate caused them prejudice. The Tribunal found no inordinate delay, noting that the intervals between the application filing, rejection by the Assistant Commissioner, and rejection of the revision petition by the Additional Commissioner were reasonable. The Tribunal also held that delay in the rejection of the application does not entitle the petitioner to an eligibility certificate if the conditions of the notification are not fulfilled.

Conclusion:
The Tribunal dismissed the petition, concluding that the petitioner violated the conditions of the notification by hiring storage tanks from a sister concern and using trade marks/brand names of existing industrial units. The Tribunal found no inordinate delay in the disposal of the application and upheld the decisions of the Assistant Commissioner and Additional Commissioner. The operation of the judgment was stayed for eight weeks from the date of the order.