TMI Blog2001 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... It is stated that since unit No. 1 was already in existence, exemption application was moved under the Expansion Scheme of Section 4-A of the Act. The case of the revisionist is that the application was duly examined and thereafter, eligibility certificate was issued on 6th August, 1994 by the Divisional Level Committee. The period of exemption was from 26th May, 1991 to 25th May, 1999 (or till availing the benefit of exemption to the extent it was granted whichever is earlier) but no exemption for a period from 26th May, 1991 to 5th December, 1991 was granted as the revisionist had realized the tax and deposited the same for the said period. Before granting the eligibility certificate, survey was made on 30th May, 1992 by the Assistant Commissioner (Assessment), Muzaffarnagar to verify the claim for exemption and it was only after proper examination and verification that the eligibility certificate was granted by the Divisional Level Committee, Meerut which consists of Divisional Level Committee, Joint Director Industries and Deputy Commissioner, Trade Tax who is also Commissioner. The revisionist has further alleged that in view of the eligibility certificate, the revisionist co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following grounds: (i) Certificate granted by the Divisional Level Committee cannot be cancelled by the Commissioner. He can file an appeal under Section 10 (2) of the Act against grant of eligibility certificate. Powers under Section 4-A (3) of the Act cannot be exercised as second appeal against the order of grant of eligibility certificate lies. Decision of this High Court in the case of Mansarover Botling Company Limited, Bijnor v. The Commissioner, Trade Tax, 1999 U.P.T.C. 864, Allahabad has been relied upon. (ii) Power under Section 4-A (3) of the Act, cannot be exercised by the Commissioner on debatable question of fact and law. Decision in the case of Commissioner of Trade Tax v. M/s. R. K. Coal Sales Pvt. Ltd. and others, 1999 U.P.T.C. 1147 has been relied upon. (iii) Eligibility certificate has been granted by the State Level Committee of which the Commissioner of Trade Tax is one of the Members. Powers under Section 4-A (3) of the Act cannot be exercised administratively and the same can be exercised judicially. The decision in the case of M/s. Suraj Banaspati Ltd. v. The Commissioner of Trade Tax, 1999 U.P.T.C. 1154 Allahabad has been relied upon. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct can be exercised by the Commissioner in certain cases while in other cases the eligibility certificate granted earlier could be challenged in appeal before the Tribunal. The cases which would fall under the first category would be those cases where the eligibility certificate has been obtained by concealment of facts or misrepresentation of facts. In other cases where dealer is not guilty of any concealment or mis-representation and entire facts have been correctly placed before the Divisional Level Committee, the eligibility certificate has been granted considering those facts by the Divisional Level Committee, the remedy lies by way of filing an appeal under Section 10 (2) of the Act against grant of certificate. The Commissioner cannot be a Judge of his own cause and cannot sit in appeal of his own order. The view taken by the Court is supported by a decision of this Court in Mansarovar Bottling Company Limited v. The Commisisoner of Trade Tax, reported in 1999 U.P.T.C. 864. After quoting the amended Section 4-A (3) of the Act by amending Act 26 of 1998 the Court in paragraph No. 7 of the judgment observed that: 7. Thus, by the amendment it has been clarified that the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a rational debate. 8. It may be pointed out that even though the application for grant of eligibility certificate was moved by the firm before its dissolution but the same was reconstituted, five partners taking one unit and four partners taking another unit. This fact was never concealed or misrepresented by the revisionist and the eligibility certificate was granted on consideration of all the materials including the factum of reconstitution. Therefore, if the Commissioner was aggrieved by the decision of the Divisional Level Committee, in the facts and circumstances of the case he could not have exercised powers under Section 4-A (3) of the Act and should have challenged the order of the Divisional Level Committee by filing an appeal before the Tribunal under Section 10 (2) of the Act. In the case of M/s. Suraj Banaspati Limited v. The Commissioner of Trade Tax, reported in 1999 U.P.T.C. 1154 it was held that the power under Section 4-A of the Act is discretionary and this discretion has to be exercised judicially only to prevent the scrupulous dealer from claiming exemption by fraud or misuse of facility. It cannot be exercised where there was no fault on the part of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision in M/s. Jaidurga Detergents and Chemicals Pvt. Ltd., Kanpur v. Commissioner of Sales Tax, 1999 U.P.T.C. 89. The instructions issued are as follows: Therefore, the disentitlement (not entitled to) must arise out of an act of omission or commission by the unit holder. A legal or factual error made by the authority granting the eligibility certificate would not a cause to bring the unit holder within the words 'not entitled to'. It is difficult to conceive cases, which may not come within the scope of misuse or breach of conditions of grant and yet need withdrawal or modification of the eligibility certificate. An eligibility certificate might have been procured by misrepresentation or concealment of material fact. Such misrepresentation or concealment, if discovered later, can authorize the Commissioner to act under Section 4-A (3) of the Act. 11. I am now coming to the argument of the learned Standing Counsel that with effect from 1st November, 1991, the firm which applied for exemption stood dissolved. In view of the explanation of sub-section (1) of Section 18 of the Act, the firm taking over the business of the dissolved the firm could have applied in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an application under sub-section (2-B) of Section 4-A of the Act within sixty days and thereafter, within six months on showing sufficient cause even though the period of sixty days had expired before the aforesaid amendment became operative but the period of six months was still available. It is submitted that in view of the aforesaid Circular letter. The revisionist bona fidely believed that now there was no need for moving an application under Section 4-A of sub-section (2-B) of the Act. There is no doubt that this amendment was operative from 1st January, 1992. The benefit of it could be availed by the revisionist under bona fide belief that now there was no need of moving an application under sub-section (2-B) of Section 4-A of the Act. This aspect of the matter does not appear to have been considered either by the Trade Tax Commissioner or the Tribunal while dismissing the appeal. 12. Having carefully considered the rival arguments. I am of the view that the order passed by the Commissioner, Trade Tax cancelling the eligibility certificate of the revisionist and the order by the Tribunal in second appeal cannot be upheld. 13. The revision is, therefore, allowed and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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