2006 (3) TMI 701 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the unit qualifies as a "new unit" under section 4A of the U.P. Trade Tax Act, 1948.
2. The validity of the machinery and equipment being classified as new and not previously used.
3. The procedural propriety of repeated remands by the Tribunal to the Divisional Level Committee (DLC).

Issue-wise Detailed Analysis:

1. Qualification as a "New Unit":
The applicant sought exemption under section 4A of the U.P. Trade Tax Act, 1948, claiming the unit was a "new unit" as defined under the Act. The DLC initially rejected the application on the grounds that the unit used old machinery and equipment. However, the Tribunal, upon multiple appeals and remands, found the DLC's reasons insufficient and unjustified. The Tribunal concluded that the applicant had provided substantial evidence, including invoices, bank loans, and verification reports from authorities, proving that the machinery was new. Consequently, the Tribunal directed the DLC to treat the unit as a new unit and issue the eligibility certificate.

2. Validity of Machinery and Equipment Classification:
The DLC rejected the applicant's exemption application multiple times, citing reasons such as the machinery being old, purchased from a non-manufacturer, and the seller not disclosing the sale in tax returns. The Tribunal examined these objections and found them baseless. It was noted that the applicant had provided corroborative evidence, including:
- Invoices from M/s. Universal Traders, Delhi.
- Loan sanction letter from Oriental Bank of Commerce certifying the machinery as new.
- Reports from the District Industries Centre and the Assistant Commissioner (Assessment) confirming the machinery was new.
The Tribunal concluded that the evidence provided by the applicant was sufficient to establish that the machinery was new and had not been used in any other unit.

3. Procedural Propriety of Repeated Remands:
The Tribunal had remanded the case back to the DLC multiple times for further enquiry, which the applicant contested as unnecessary. The High Court found the repeated remands by the Tribunal to be patently illegal and erroneous. The Court emphasized that once the Tribunal had concluded that the evidence supported the applicant's claim, there was no justification for further enquiry. The Court directed the DLC to issue the eligibility certificate within a month, highlighting the need for priority in deciding exemption matters under section 4A due to their serious consequences.

Conclusion:
The High Court allowed the revision, set aside the Tribunal's order, and directed the DLC to treat the unit as a new unit and issue the eligibility certificate under section 4A of the Act within one month. The Court also awarded costs of Rs. 5,000 to the applicant, criticizing the repeated remands and delays in finalizing the exemption issue.