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TMI Blog1994 (10) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... s provisionally registered by the Directorate of Cottage and Smallscale Industries, Government of West Bengal, in November 21, 1989. The unit was permanently registered on June 1, 1991. In the month of December, 1990 the cost of the plant and machinery of the unit was Rs. 11.86 lakhs. During the period January, 1991 to March 31, 1992, further additions were made to the plant and machinery of the company aggregating to Rs. 5.01 lakhs. Apart from the said plant and machinery, the company also installed, in June, 1991, three storage tanks in the unit at an aggregated cost of Rs. 1,53,725. The first sale of the goods manufactured in the unit was made on May 24, 1990. The company, upon an application, was duly registered under the provisions of the West Bengal Sales Tax Act, 1954 (hereinafter referred to as "the Act"). (ii) The company placed order for fabrication of three storage tanks which were required to store acid slurry which is one of the raw materials required by the company for manufacturing its products. The company approached its sister concern M/s. Pushpa Chemical Industries, pending the delivery and installation of the storage tanks ordered by it, for permission to use t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two customers on its goods in its own right. The company is required to affix the trade marks/brand names of the said two customers only on the goods supplied to them as an act of compliance with their specifications. 5.. The unit referred to in clause (vi) must be one, situated in West Bengal. This is borne out, inter alia, by clause (iv) of the Explanation as well as by the provisions of rule 22(7A) and rule 22(8A) of the West Bengal Sales Tax Rules, 1954 which provide for remission of tax in respect of new industrial units. In the present case, Shaw Wallace and Company Limited does not have any existing industrial unit in the State of West Bengal for the purpose of manufacture of detergent cake and powder. Although TOMCO has an industrial unit for the manufacture of soap in West Bengal, the said unit does not manufacture detergent cake or powder having the same trade marks/brand names as the goods manufactured by the company. Therefore, clause (vi) has no application in this case. 6.. The company was entitled to exemption from payment of sales tax granted under the notification in respect of the goods manufactured in its smallscale industrial unit including those sold to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as it appears from the affidavit-in-opposition, is as follows: (i) The applicant had hired two storage tanks from M/s. Pushpa Chemical Industries, a sister concern of petitioner No. 1 for storing acid slurry. These two storage tanks are part and parcel of the plant and machinery. Since the petitioners have hired the said storage tanks from M/s. Pushpa Chemical Industries, there was violation of condition as prescribed in the notification. Clause (v) appended to the Explanation states that a "newly set-up small-scale industry" shall mean a new industrial unit......................... "(v) which is not established solely or substantially with the plant and machinery- (a) of another newly set-up small-scale industry which earlier availed of the exemption under this notification or under Notification No. 1809 F.T. dated April 1, 1976 and..............which is not engaged in the business of manufacturing such plant and machinery, or (b) hired, leased or rented from, or lent by, a manufacturing dealer registered under the said Act or the Bengal Finance (Sales Tax) Act, 1941." The petitioner has clearly violated the condition mentioned above by way of hiring the storage tanks from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited and the petitioners cannot by any means use and/ or sell the said product and/or material, in the open market. As such the petitioners cannot sell the goods in the market using the brand name of existing industrial unit utilizing their goodwill in the market. They cannot have the benefit of not facing any competition on the open market for the sale of such products. The reason behind insertion of the proviso regarding brand name in the notification is to remedy a situation where units having the backing of established trade mark or brand name lay a claim on the financial concessions from Government which it does not need. 13.. Mr. Bose further argued that TOMCO and Shaw Wallace had no industrial unit in West Bengal making "Chek" or "TOMCO" and therefore it cannot be said that there was violation by the petitioners of clause (vi) to the Explanation in the notification. Mr. Bose also referred to the judgment of this Tribunal in P.C.I. Papers (Private) Ltd. v. Additional Commissioner of Commercial Taxes [1995] 96 STC 251; [1990] 23 STA 298 to the effect that the use of brand name and use of other plant and machinery cannot be straightaway said to be a violation of the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Taxes, by his order dated July 24, 1991 and thereafter the revision petition was rejected by the Additional Commissioner of Commercial Taxes on April 30, 1992. In view of this inordinate delay in disposing of the application, the petitioners have been highly prejudiced as they could not realize sales tax from its customers. In view of the decision of the Calcutta High Court in the case of Standard Vacuum Equipment v. Commissioner of Commercial Taxes [1988] 71 STC 220; (1989) 22 STA 113 the rejection of the application for issuing the eligibility certificate cannot be justified and should be allowed. 16.. Mr. T.N. De, learned State Representative argued that the eligibility certificate has been refused on two grounds: (i) that a part of the equipment has been obtained by the company on loan, an action which is against the express provisions in the notification of the scheme; and (ii) that the applicant has used the brand name of other units. There is no basis for the argument that storage tank is not an equipment of the unit as has been argued by the applicant. In this connection, he referred to a judgment in the case of Metcoke India Private Ltd. v. Assistant Commissioner of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to the benefits of the scheme at least from the date when they purchased their own storage tanks and no longer utilized the storage tanks of M/s. Pushpa Chemical Industries also was not tenable. The industry could not be conceived to be a newly set up industrial unit in June, 1991. Once it is admitted that their first sale was conducted on May 24, 1990 it must be held that on the day when they purchased their own storage tanks, they were an already existing unit and not a newly set up industry. In this connection, the decision of this Tribunal in the case of Dayal Industries v. Commissioner of Commercial Taxes [1996] 100 STC 215, was referred to by Mr. De. 17.. Regarding the use of brand name, Mr. De submitted that the reason why the use of brand name has been prohibited in the scheme has been spelt out clearly by this Tribunal in the case of P.C.I. Papers (Private) Ltd. v. Additional Commissioner of Commercial Taxes [1995] 96 STC 251; [1990] 23 STA 298. The Tribunal had held there that the objective of the tax holiday scheme is to encourage new entrepreneurs, who need financial incentives, to set up small-scale industries in the State. Government need not give such assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat of the petitioner not having maintained purchase vouchers of all the machineries. It was observed by him that the petitioner was using three cylindrical storage tanks for the purpose of production. But two of such tanks belonged to M/s. Pushpa Chemical Industries, a sister concern, within the same compound. Therefore, the petitioner did not have any purchase voucher for such machinery. Since a storage tank is a part of machinery, such non-maintenance of the purchase vouchers was reason for rejection of the application for eligibility certificate. The Additional Commissioner has also held that the cylindrical storage tanks were admittedly on hire, and therefore it cannot be disputed that a portion of the machinery is hired. This decision of the Additional Commissioner appears to be unreasonable in view of the fact that such tanks were obtained on loan from M/s. Pushpa Chemical Industries in the month of September, 1990 (vide annexure "C"). The unit commenced commercial production on May 22, 1990 and the first sale of the goods manufactured therein was made on May 24, 1990. It was urged before the Commercial Tax Officer (vide annexure "C") and it has been reiterated by the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the specific terms of contract between M/s. Tata Oil Mills Company Limited and M/s. Shaw Wallace and Company on the one hand and the applicant on the other. The applicant has argued that the such use of trade marks or brand names in the instant case did not amount to the unit's violating clause (vi) of the explanation in the notification as the avowed object of the said clause, according to the petitioner, was to prevent misuse or abuse of trade marks or brand names owned by, and belonging to, other industrial units protected by Trade and Merchandise Marks Act. Nothing in the said clause, it was submitted in the petition filed before the Assistant Commissioner, Commercial Taxes (annexure H) could imply that even owners of trade marks or brand names should themselves be debarred or restrained from using or assigning them either directly or by assignment or by consent in favour of production units to facilitate countrywide production and distribution of their own goods at different places and points (emphasis* by me). This contention of the applicant cannot be accepted. As has already been held by this Tribunal in the case of P.C.I. Papers (Private) Ltd. v. Additional Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te clear, there is no reason to hold that such an interpretation is reasonable. We, therefore, have to hold that the petitioner's unit has violated clause (vi) of the explanation in the notification. 22.. As far as the alleged inordinate delay in disposal of the application is concerned, the case of Standard Vacuum Equipment v. Commissioner of Commercial Taxes [1988] 71 STC 220 (Cal); [1989] 22 STA 113 is not of any help to the applicants. It was not held in this case that in case of a delayed rejection, eligibility certificate has to be issued even though one is not otherwise eligible. In the facts and circumstances of the instant case, the disposal of the applications by the Assistant Commissioner and the Additional Commissioner could not be held to suffer from inordinate delay. In any case since a vital requirement of the eligibility certificate [viz., the condition of clause (vi) of the explanation in the notification] is not fulfilled, the applicant cannot legitimately urge the plea of prejudice on account of the delay in the rejection of his application. 23.. In the result, the application fails. The petition is dismissed without any order as to cost. Let the operation of ..... 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