9911796707
TMI Blog2006 (7) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... granted with effect from May 5, 1995 for a period of nine yeas. Subsequently, notice was issued on March 28, 2002 asking the petitioner to show cause as to why eligibility certificate be not withdrawn on the ground of discontinuance of its business since April 13, 1999. The stand of the petitioner was that figures of production were being maintained for the period from April, 1999 to 2003 and 141 employees were engaged in manufacturing process and, therefore, there was no ground for withdrawal of eligibility certificate as the business of the petitioner was continuing. After considering the reply of the petitioner, the decision to withdraw eligibility certificate was taken by the Higher Level Screening Committee. It was observed: "It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before the Sales Tax Tribunal which has been dismissed by the opinion of the majority of the members. The relevant discussions in the impugned order are: "13. As already discussed above in the present case up till July 14, 1998 the appellant was manufacturing bulk drugs as owner of those drugs and also sold the same, but after the said date when Ranbaxy company had obtained the patent in respect of such drugs the appellant started manufacturing the bulk drugs by way of job-work with the help of raw material supplied by the Ranbaxy Company and the appellant is using its fuel, electricity, etc. and its machines for the purpose and obviously the bulk drugs manufactured by him after July 14, 1998 were not in the ownership of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding him no longer eligible for sales tax exemption his eligibility certificate was ordered to be withdrawn. It will not be out of place to mention here that the exemption certificate was never issued on the basis of eligibility certificate initially issued to the dealer. When the above order of the HLSC is viewed from the factual and legal position from the angle discussed above it is found that the finding of the HLSC in its impugned order that the industrial unit has contravened the provision of sub-rule (8)(a)(ii) of 28-A of the Rules having discontinued the business for a period exceeding 6 months and, therefore, the eligibility certificate is liable to be withdrawn is based on the earlier part of the impugned order that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich reads as under: 'The exemption/entitlement certificate granted to an eligible industrial unit shall be liable to be cancelled by the Deputy Excise and Taxation Commissioner concerned in the following circumstances after affording an opportunity of being heard to the unit: (i) discontinuance of its business by the unit at any time for a period exceeding six months or closing down of its business during the period of exemption/deferment'." (From the opinion of D. R. Yadav) The main contention raised on behalf of the petitioner is that so long as the petitioner continued production, the ground for withdrawal of exemption, namely, "discontinuance of its business" was not made out. It is further submitted that there is no b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner unit was manufacturing bulk drugs by way of job-work for Ranbaxy situated in the State of Punjab and since no sale were being made, there was no question of sales being made either local or inter-State. From the facts on record in the form of exemption certificate, it is evident that the unit of the petitioner, which came into production on May 5, 1995 and was entitled to exemption for a sum of Rs. 299.85 lakhs, availed of exemption of Rs. 34,67,035 merely up to June 30, 1995. In the next year up to June 30, 1996 a sum of Rs. 67,29,802 was availed of as exemption. During the year ending June 30, 1997, a sum of Rs. 3,28,943 was availed of. From these figures, it is evident that a substantial amount of benefit available to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which some tax liability is there. In case a unit is to carry out the business on someone else's behalf, no benefit accrues to such a unit under the Rules as no tax liability is there. In addition to this, sub-rule (11) of rule 28A puts certain conditions on the beneficiary industrial unit even after the exemption/deferment has already been availed of. The same being that the unit will continue "its production" for at least 5 years and not below the level of average production of the preceding five years after having availed of the benefit. Further, there is a complete bar on carrying out sales outside the State for the next five years by way of transfer or consignment of the goods manufactured by it. The bar on transfer or consignment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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