TMI Blog1993 (6) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 1941, they purchased some machineries from Messrs. Eversharp Blades (P) Limited, a registered dealer under the West Bengal Sales Tax Act, 1954, which is engaged in manufacturing carbon steel blades and blade machineries. The said firm is a private limited company in which two of the partners of the applicant-partnership firm are directors. The said company was the owner of trade/brand names of "Oasis", "Panna" and "Raja". The said company and its brand names did not at any point of time enjoy any tax-holiday benefit under any of the sales tax laws. The said company agreed to assign the trade names, namely, "Panna", "Raja" and "Oasis" in favour of Messrs. Dayal Industries. On such assurance the applicants used the said three brand names in the blades manufactured by them along with their own brands. The company, however, assigned only two brand names, namely, "Panna" and "Oasis" by executing a deed of assignment, dated March 2, 1990. The first sale of the goods manufactured by the applicants took place on October 1, 1989 and having fulfilled all the conditions laid down in Notification No. 1177-F.T. dated March 31, 1983, they submitted an application for eligibility certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d clause was not mandatory but directory and as substantial compliance of the conditions of the notification has been made, eligibility certificate should have been issued. In the alternative, the applicants should be entitled to tax exemption with effect from April 1, 1991, from which date they stopped selling "Raja" brand blades. The applicants have also taken the plea of delay in disposing of their application for eligibility certificate by the respondents as they could not collect sales tax during the relevant period causing prejudice to them. 7.. The respondents have resisted the application by filing a counter. They claimed that the applicants are not entitled to tax-holiday as they have violated a specific embargo by using the brand name of an existing industrial unit. A case has been made out in the said counter that the present business of manufacturing blades was started with a view to availing of the exemption by adopting illegal and unfair means. Certain facts have been brought on record which transpired from enquiries held by the Commercial Tax Officer. These indicate that packets containing Raja brand blades found in the factory of the applicants bear the name of Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein. Its validity has to be judged by the reasons so mentioned and fresh reasons in the shape of subsequent affidavits cannot be allowed to supplement and buttress the same. In other words, a lame order cannot be propped up by adventitious crutches of new facts and reasons. 12.. There is no reference to the enquiry report in the order of the Assistant Commissioner, nor are its conclusions considered in the said order. These cannot, therefore, be brought in at the stage of the counter-affidavit now. The allegation that the enquiry report influenced the Assistant Commissioner in making the order the way he did has lost its relevance and is of hardly any consequence now, because the Additional Commissioner rejected the conclusions, which could be assumed to be based on such enquiry report. He only upheld the ground that the applicants violated one of the vital conditions of the tax-holiday scheme by using the brand names of an existing industrial unit. 13.. The main question for decision is, therefore, whether the dealer has used the brand name of a product of an existing industrial unit in violation of clause (vi) of the Explanation in Notification No. 1177-F.T., dated March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed liberally so as to advance the objective of the provision and not to frustrate it. 17.. Elaborating his proposition Mr. Bose contended that it was the objective of the scheme to encourage the growth of new industries and to restrict the benefit to those dealers, who have not enjoyed tax-holiday earlier in any form and manner. This, according to him, is fundamental to the policy underlying exemption. He further contended that having regard to the fact that neither the brand name, "Raja" nor Messrs. Eversharp Blades (P) Ltd. enjoyed tax exemption earlier, the applicants should have been granted eligibility certificate. Mr. Bose emphasised that clauses (vi) and (vii) should be read together to ascertain the intention of the Legislature, which is that neither the brand name nor the unit should have availed of any such benefit earlier. He argued that it is against this background that the stringency and mandatory nature of the provision should be judged in the light of the purpose intended to be secured. 18.. The Supreme Court in Mangalore Chemicals Fertilizers Limited v. Deputy Commissioner of Commercial Taxes [1991] 83 STC 234 underlined a distinction between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Union of India v. Wood Papers Ltd. [1991] 83 STC 251. It has been laid down there that "liberal and strict construction of an exception provision are to be invoked at different stages of interpreting it". While explaining this principle the apex Court made the following observation: "When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction." 22.. If we apply this principle to the present case, the position will be like this. The notification provides for tax exemption to "newly set up small-scale industry", which has been defined. One has to be a new unit first. At this stage there cannot be any liberal construction. This provision has to be strictly construed as it is in the nature of an exception. It is only thereafter that there may be scope of interpreting liberally the conditions, which are required to be fulfilled by such new unit, to give full play to the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales of products of their own brands, in case it is decided that the use of brand name "Raja" was hit by the embargo. They claimed that apart from the three brand names, which were agreed to be transferred by Messrs. Eversharp Blades (P) Ltd., they also manufactured blades having their own brand names of "Sagar", "Mix Master" and "Tapan". It was submitted that separate accounts of sales of each brand of the commodity have been maintained. It was also claimed by the applicants that since eligibility certificate is granted on year to year basis, they should at least be entitled to such certificate on and from April 1, 1991 when the use of the brand name of "Raja" was discontinued. 27.. Here we are concerned with the issue of eligibility certificate for the period from October 1, 1989 to September 30, 1990, so the question of its issuance from April 1, 1991 is not relevant. But the question whether a unit which is not a newly set up small-scale industry at all now can become such a unit subsequently does assume relevance in the facts and circumstances of the case. The alternative prayer that exemption should be allowed in respect of products bearing their own brand names only was du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligibility certificate, though in the meantime the case was transferred to the Assistant Commissioner, Central Section from the Assistant Commissioner of Chowringhee Circle, vide Commissioner's circular dated December 5, 1990, published in (1991) 24 STA 59. He further explained that detailed enquiries and voluminous investigation at the field level had to be conducted before disposing of the matter. He alleged that the applicants also had their share of contribution to the delay. He repelled the contention that on the ground of delay alone the application for eligibility certificate should be allowed even when a vital condition has not been fulfilled and the delay also has not been due solely to the respondents. He cited in this connection our decision in an unreported case Ruby Tea Allied Industries (Pvt.) Ltd. [RN-174 (T) of 1989]. In that case the application for renewal was disposed of after about one year of the conclusion of the period for which the renewal was sought. 31.. The case of Standard Vacuum [1988] 71 STC 220 (Cal); (1989) 22 STA 113 (Cal) is not likely to come to the aid of the applicants. It does not lay down any ratio or proposition of law as has been claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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