TMI Blog1986 (2) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Sales Tax Officer had no jurisdiction whatsoever to find out whether the petitioner's unit is entitled to exemption under section 4-A of the Act particularly when the petitioner had obtained an eligibility certificate under clause (d) of sub-section (2) of section 4-A of the Act. Since this question is arising frequently in a large number of cases and involves interpretation of a provision of law, we have heard the learned counsel for the petitioner and the learned Standing Counsel representing the respondents at some length and we propose to dispose of the writ petition at the admission stage finally under the provisions of Chapter XXII of the Rules of the Court. First, the essential facts: The petitioner's unit, which is engaged in manufacturing coal briquette (block of compressed coal-dust) is a small-scale industry in the district of Rampur. The petitioner applied for registration as a small-scale industry with the Director of Industries, U.P. The General Manager, District Industries Centre, Rampur, on behalf of the Director of Industries, U.P., granted a registration certificate dated 24th February, 1984. The date of commencement of production has been stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made liable to pay sales tax, he could go upon appeal against that order. We are not impressed by the preliminary objection in the present case. If the notice under rule 41(5) is wholly without jurisdiction then in that event this Court would be perfectly justified in quashing the said notice. If an authority has no jurisdiction to initiate a particular proceeding or to decide the same in law then in that event to direct the petitioner to appear before the said authority and contest the notice would only mean prolongation of the proceeding unnecessarily. Since this question is being raised frequently, we are of the view that it would be proper to decide the question raised in this petition as to the jurisdiction of the Sales Tax Officer to sit in judgment over the grant of an eligibility certificate by the joint Director of Industries or the authorities empowered so to do under the Act. If it is found that the Sales Tax Officer has jurisdiction to do so, of course, the petitioner would be directed to seek his remedy in the proceedings under rule 41(5) and if need be in the appeal therefrom. In case it is held that the Sales Tax Officer or the appellate authority has no such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an eligibility certificate granted by such officer, in accordance with such procedure, as may be specified. (3) Where the Commissioner of Sales Tax is of the opinion that facility of exemption from, or reduction in the rate of, tax obtained on the basis of an eligibility certificate referred to in clause (d) of sub-section (2) has been misused in any manner whatsoever, he may, by order in writing, cancel the eligibility certificate from such date, whether before or after the date of such order, as may be specified therein: Provided that no order under this sub-section shall be passed without giving the dealer concerned a reasonable opportunity of being heard.". A perusal of section 4-A(1) shows that exemption from sales tax for specified period can be granted only by the State Government where the State Government is of opinion that it is necessary for increasing the production of any goods or for promoting the development of industry in the State generally or in any district or in any part of any district. The State Government may issue, on an application or even otherwise, a notification declaring that the manufacturer would be exempt from sales tax or liable to tax at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committee consisting of the District Magistrate of the district, as Chairman, the General Manager, District Industries Centre as member convenor and the concerned assessing authority as member and in NOIDA area, the Deputy Chief Executive Officer, NOIDA, as Chairman, the Deputy Commissioner (Executive), Sales Tax, Ghaziabad, as member and the Area Development Officer, NOIDA, as member convenor. The divisional Level Committee is to take a final decision regarding grant or otherwise of eligibility certificate to the unit concerned. Similarly, the application from small-scale unit is to be forwarded to the Chairman, NOIDA, for his final decision. Similar provision was made for medium and large scale units also. It was then provided that eligibility certificate shall be issued in the case of small-scale units by the joint Director of Industries or as the case may be, by the Chairman, NOIDA, and in the case of medium and large scale units by the Director of Industries, U.P. It was further provided that if there was any disagreement between the Director of Industries and the Commissioner, Sales Tax, Uttar Pradesh, the matter would be referred to the Government for consideration by a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of industry in the State generally or in any district or part of districts which are industrially backward. This position existed in February, 1985, when the eligibility certificate was granted in the present case. Therefore, at the relevant period of time, i.e., February, 1985, the State Government alone was empowered to grant exemption. Whether the applicant was an industrial unit or not, whether the applicant was eligible for exemption or not had to be considered by the State Government or by an officer empowered by the State Government. There was no power with any officer of the Sales Tax Department of the Government in this behalf. Neither the Sales Tax Commissioner nor the Assistant Commissioner nor the Sales Tax Officer had been conferred any power either to grant any exemption or sit in judgment over the grant of exemption. The Commissioner of Sales Tax has been given the power to cancel the eligibility certificate vide U.P. Sales Tax (Amendment and Validation) Act, 1985 (U.P. Act No. 25 of 1985) where facility of exemption from, or reduction in the rate of tax obtained on the basis of an eligibility certificate has been misused in any manner whatsoever. It has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s empowering the Sales Tax Officer to raise these questions in assessment proceedings against such units. The contention of the learned Standing Counsel was that although the Sales Tax Officer has not been mentioned as having such power specifically, but it was there impliedly, for the unit would not be entitled to all the benefits of section 4-A if it had not fulfilled the requisite mentioned in the explanation of notification dated 27th August, 1984. The 'explanation in the aforesaid notification reads as follows: "Explanation: For the purposes of this notification: (1) 'Industrial unit' means an industrial unit holding permanent registration with the Directorate of Industries, Uttar Pradesh, as a small, handloom or handicraft industry or an industrial licence granted by the Iron and Steel Controller, or the Textile Commissioner or the Director, Sugar or the DirectorGeneral of Technical Development or the Government of India, and (a) registered under the Indian Factories Act, 1948, or established after obtaining a term loan from the U.P. Financial Corporation or a Scheduled Commercial Bank, in the case of units with capital investment not exceeding three lakh rupees; or ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction of section 4-A(2)(d). They would not be relevant for the purposes of this case. The provision requiring a manufacturer furnishing to the assessing authority an eligibility certificate granted by such officer was enforced only from 13th September, 1985. Therefore, the concluding words of the aforesaid subsection viz., "in accordance with such procedure as may be specified" would only be such procedure as has been specified after coming into force of section 4-A(2)(d). Prior to the coming into force of this section the stand of the respondents is that even if a matter was in consideration for grant of exemption or declaration that it is a new unit, no assessment was made. The position even after the amendment has been clarified by means of the notification dated 26th December, 1985. This notification has been issued under section 4-A of the Act which is exclusively in the domain of the State Government. It is relevant to mention here that in none of the notices issued by the sales tax authorities it has been mentioned that the person who granted the eligibility certificate was not empowered to grant it or in granting it he has not followed the procedure prescribed. In fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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