TMI Blog1997 (2) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... establishing this unit the applicant secured a total loan of Rs. 75,50,000 from State Bank of India. After establishing this unit the applicant. on observing all formalities applied for the EC under section 10-F of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the 1941 Act") for deferment of payment of tax at the first instance for the period from February 19, 1991 to February 18, 1992. But on examination of the books of accounts of the applicant the Assistant Commissioner of Commercial Taxes, Special Cell (respondent No. 1) by his order dated September 29, 1995 has rejected the applicant's prayer on the sole ground that the production in the applicant's factory has been totally stopped on account of a virtual clos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the applicant is to blame itself for closure of the factory. Section 10F is intended to provide help to a new industrial unit, which has bona fide intention to grow and to be self-supporting in due course, but not to such a unit which jeopardise its own survival by irresponsible acts. If enquiry by competent authority reveals an industrial unit's financial inviability, a prayer for E.C. can be rejected. 3. The affidavit-in-reply of the applicant is reiteration of stand taken by the original application and denial of all material allegations contained in the affidavit-in-opposition. 4.. The moot issues calling for decision here are whether lack of financial viability can be ground for rejecting a prayer for E.C. under section 10F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax to the period subsequent to such eligible period. Any event or non-event constituting disqualification for a holder of the E.C., in the subsequent period is irrelevant so far as the exempted tax is concerned. Effects expire with the eligible period itself and do not spill into any subsequent period. Accordingly, subsequent financial inviability of the dealer has no bearing with such exempted tax. 7.. But the second type of E.C. as provided in section 10F and the related rules, concerning deferment of tax stand altogether on a different footing. Such EC is to remain operative for a prescribed period, not exceeding 9 years (may be extendable for two years in special circumstances) subject to fulfilment of certain specific conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l viability of the dealer, the primacy of the idea of repayment in the scheme of deferment of tax make such a condition impliedly an integral part of the scheme. Absence of express mention does not negate what is intrinsic in the scheme. Therefore, if before the issue of an EC under section 10F for a particular period applied for, it comes to the open that the concerned industrial unit has come to such a pass that its very source of financial viability, viz., the production in its factory, has come to a standstill with no foreseeable prospect of recommissioning, the authority competent to issue the EC may logically and, in our opinion, competently refuse to issue the certificate. 8.. An industrial unit's financial viability, after the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal is that the E.C. for exemption of tax issued under section 4AA of the West Bengal Sales Tax Act, 1954 (read with Notification 1177-F.T. dated March 31, 1983) cannot be refused for an event, viz., detection of irregularities in accounts, occurring subsequent to the period for which such certificate was sought for. All these decisions are in connection with the E.C. for exemption of tax and not for deferment of tax. Hence, for the reasons stated above the ratio of these decisions are not applicable to the case before us. 9.. In the instant case before us, the applicant started a new industrial unit with a loan of Rs. 75,50,000 from the State Bank of India. Admittedly, it has failed to pay the instalments to this bank which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, because the amendment became effective from April 15, 1993, i.e., posterior to the period for which the EC was applied. Even assuming that this new provision would apply to the period, the position of the applicant does not improve because a closed unit can avail of such benefit only under special circumstances as enumerated in section 10H and if the unit has been declared as "closed" by the State Government and not otherwise. The applicant's unit has not been so declared by the Government. 10.. From the discussion above, it is evident that in the instant case the very survival of the newly established industrial unit of the applicant is at stake. The C.T.O., cannot, therefore, be expected to grant EC for deferment of tax when the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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