TMI Blog1993 (2) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... tomobile parts and accessories for sale. It was registered as a dealer under the 1941 Act with effect from November 5, 1985 and it was also registered with the Directorate of Cottage and Small Scale Industries, Government of West Bengal, with effect from May 8, 1986 as a small-scale industry. It filed an application on April 8, 1986 for eligibility certificate for exemption from sales tax under rule 3(66a). The application was rejected on June 15, 1989 by the Assistant Commissioner of Commercial Taxes on various grounds, all of which related to purchase of machineries. The applicants had preferred revision before Additional Commissioner of Commercial Taxes who disposed it of on October 30, 1989, confirming the order of rejection passed by the Assistant Commissioner. Out of four objections taken by the Assistant Commissioner regarding purchase of machineries, the Additional Commissioner upheld three, but confirmed the order of rejection on the fourth objection. That order was challenged before this Tribunal in RN-510 of 1989. By a judgment dated May 2, 1991 (Kwik Fit Otto Parts Private Limited v. Assistant Commissioner of Commercial Taxes) that case was disposed of by this Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 3(66a)(i) as one of the grounds for rejection, the Additional Commissioner was not authorised in law to reject the application for eligibility certificate on that ground. Though the matter was remanded to the Additional Commissioner, it is stated that he should have left the point to be decided by the Assistant Commissioner without himself rejecting the application for eligibility certificate on that ground. The further case of the applicants is that the Additional Commissioner arrived at a wrong conclusion that the industrial unit of the company, for which application for eligibility certificate was made, could be treated as an expansion, addition or modification of an existing industrial unit. According to the applicants, so long as the earlier concern belonged to a single proprietor, namely, respondent No. 2, it was not an industrial unit at all within the meaning of rule 3(66a). The concern had not commenced any production before the company took it over. Unless production was started, there could be no question for tax exemption and therefore, the concern could not be said to be an industrial unit within the meaning of rule 3(66a). The use of the term "going concern" in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out referring the matter to the Assistant Commissioner. Secondly, he also argued that the Additional Commissioner might under rule 80A make such enquiry or cause such enquiry to be made by such officer as it may think fit before final disposal of the revision application. Since he had not taken recourse to rule 80A of the Bengal Sales Tax Rules, 1941, the Additional Commissioner could not reject the application for eligibility certificate on this ground. Mr. D. Majumdar, the learned State Representative, rightly submitted that as a revisional authority the Additional Commissioner had a jurisdiction which was co-terminous with that of the Assistant Commissioner and he was competent to enter into any relevant matter concerning the disposal of the application. He also rightly contended that after this Tribunal had directed the Additional Commissioner to consider the embargo of explanation (iv), he was obliged to consider that ground and to record his finding. In our view, the Additional Commissioner, as a revisional authority, under the provisions of the Bengal Sales Tax Rules, 1941 and the Bengal Finance (Sales Tax) Act, 1941, had the jurisdiction to enter into any material question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tarted before the company took over the concern from the proprietor. 9. Rule 3(66a) is intended to encourage setting up of new small-scale industrial units in the State of West Bengal. But the exemption from sales tax provided in the rule is subject to various conditions. The exemption is available for sales by a newly set up small-scale industry of goods other than those specified in Schedule X, if the goods were manufactured by the industry subject to fulfilment of the conditions laid down in rule 3(66a). The period during which the exemption can be availed of will start from the date of the first sale of such manufactured goods. The case of the applicants in the pleading that production of goods had not at all started before acquisition of the concern by the company, has not been countered by the respondents in their affidavit-in-opposition. Their case is that the use of the expression "going concern" indicated that it was an existing industrial unit. In our opinion, the expression, cannot be necessarily interpreted to mean "an existing industrial unit", as contemplated in explanation (iv). It is interesting to note that the Additional Commissioner in his impugned revisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company before him that the term "going" should be interpreted according to meaning attributed to it in the business or trade circle. At the same time he held that the term should be used in common parlance. Thus he was grossly mistaken, because common parlance meaning is nothing but the meaning given in the trade circle. The Additional Commissioner did not dispute that the proprietary concern of Tushar Kanodia did not start production before it was taken over by applicant No. 1 company. "Dictionary of Finance " by E.A. Avneyon, Macmillan Publishing Company, New York, 1988, contains meanings of terms concerning economics, trade, finance, investment, etc. According to it (page 220), "going concern" means "every business entity which is functioning and expects to function in the future for an unlimited time, as opposed to an entity which is on the verge of liquidation. ........Accountants, when preparing the financial statements for an enterprise, work under the assumption that the business is a going concern, and therefore the assessment of assets is based on this assumption rather than on forced sale value or break-up value.........". So, the expression, "going concern" is wide en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an expansion, addition or modification. Mr. S.N. Bose, the learned advocate for the applicants, opposed this submission. In the present case, there is no allegation that the applicant No. 1 company had already owned an industrial unit. So, it became owner of the sole industrial unit by acquiring the present concern from the proprietor. Therefore, if there is no actual alteration, addition, modification or expansion to the unit, mere acquisition thereof (as the company's only unit) by way of purchase cannot, in our opinion, amount to an expansion, addition or modification of an existing industrial unit within the meaning of explanation (iv) to rule 3(66a). The expression, "expansion, addition or modification of an existing industrial unit", clearly indicates some change, some addition or alteration in the unit. For instance, if after acquisition of a unit, the new owner adds some machinery, expands the manufacturing capacity or diversifies the manufacturing activities, one may perhaps say, of course depending on the facts and circumstances of each case, that there has been an expansion, addition or modification of an existing industrial unit. If the previous concern remains as befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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