2011 (2) TMI 1256 - HC - VAT and Sales Tax

Renewal of the eligibility certificate - Section 41 of the West Bengal Sales Tax Act 1994 - show cause notice was issued as to why the application for renewal of the eligibility certificate should not be rejected on the ground that the respondent no. 1 had closed its unit nos. I and II at Salt Lake and shifted usable plant and machinery to its unit outside the State of West Bengal and the manufacturing unit No.3 at Salt Lake which was granted remission Held that - once a unit as defined as expanded unit has got the benefit of remission its continuance depends as such upon the fact whether the said unit fulfils the conditions of eligibility or not. There is no provision in the Acts or Rules disentitling an expanded unit to the benefit of remission on the ground of closure of the original unit when the expanded unit is functioning eligibility period for deferment of payment of tax shall be available only subject to fulfillment of conditions and restriction contained in Section 40 of the Act and the Rules made thereunder expanded unit of the respondent has not violated any of such conditions and thus the concerned authority illegally refused renewal of the benefit and the learned Tribunal rightly restored no substance in the present writ-application and the same is accordingly dismissed

Summary

Issues Involved:
1. Whether the closure of the original unit at Salt Lake disqualifies the respondent from claiming remission of tax for the expanded unit at Durgapur.
2. Compliance with the terms and conditions of the eligibility certificate for tax remission.
3. Interpretation of relevant sections and rules under the West Bengal Sales Tax Act, 1994, and the West Bengal Value Added Tax Act, 2003.

Detailed Analysis:

Issue 1: Closure of Original Unit and Eligibility for Remission
The primary issue for determination was whether the closure of the original unit at Salt Lake disqualified the respondent from claiming remission of tax for the expanded unit at Durgapur. The court examined definitions under Section 40 of the West Bengal Sales Tax Act, 1994, and Section 118 of the West Bengal Value Added Tax Act, 2003. The court noted that "existing industrial unit" means an industrial unit that exists in West Bengal and manufactures goods immediately before starting commercial production in its expanded portion. The court concluded that there is no provision in the Acts or Rules that disqualifies an expanded unit from the benefit of remission due to the closure of the original unit, provided the expanded unit is functioning and complies with the conditions of eligibility.

Issue 2: Compliance with Terms and Conditions of Eligibility Certificate
The respondent argued that none of the terms and conditions prescribed in the eligibility certificate had been violated. The court referred to Rules 146 to 151 of the West Bengal Sales Tax Rules, 1995, and Rules 177, 184-187 of the West Bengal Value Added Tax Rules, 2005, which govern the grant and renewal of eligibility certificates. The court found that the expanded unit of the respondent had not violated any conditions of eligibility. Therefore, the refusal to renew the eligibility certificate by the Joint Commissioner of Sales Tax was deemed illegal.

Issue 3: Interpretation of Relevant Sections and Rules
The court analyzed various provisions, including Section 41 of the West Bengal Sales Tax Act, 1994, and Section 118 of the West Bengal Value Added Tax Act, 2003, along with corresponding rules. The court emphasized that the benefit of remission can only be withdrawn if the unit violates any terms and conditions of the eligibility certificate. The court found that the respondent had complied with all relevant provisions and rules, and thus, the Tribunal correctly restored the benefit of remission.

Conclusion
The court concluded that the expanded unit at Durgapur was entitled to the renewal of the eligibility certificate for tax remission, despite the closure of the original unit at Salt Lake. The writ application was dismissed, and the Tribunal's order to restore the benefit was upheld. There was no order as to costs.