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2019 (9) TMI 573

..... ate No.4324 dated 26.11.1998, as amended by Eligibility Certificate No.1596 dated 4.12.2003, could have been denied by the Commissioner in exercise of its power under Section 4-A(3) of the Act, when there was no allegation of any misuse of that Eligibility Certificate? HELD THAT:- In the instant case, it is wholly debatable whether the assessee was entitled to exemption on the investment made on dyes and moulds, merely because such dyes and moulds had been given out to job workers who used the same to manufacture the components that came to be used in the manufacture of the end product by the assessee, namely colour television sets. It appears to be debatable as the revenue could not point out any specific provision, either in the Act or under the exemption notification, as may dis-entitle a new unit from exemption on the value of such dyes and moulds used by job workers to manufacture component parts for the new unit. Section 4-A of the Act continuing to exist and similar nature and purpose of the notified schemes of exemption, it appears to be prima-facie permissible in law for a 'new unit' to be entitled to avail exemption, though some part of the manufacturing activity .....

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..... it but whose value had been written off subsequently. In that regard, it is the assessee's case that the value had been written off in the months of November and December 2002 well after expiry of five years from the date of starting production, being 17.04.1997, whereas, according to the revenue, that date was not clear. The order of the Commissioner has been upheld by the Tribunal on the reasoning that the assessee did not lead evidence with respect to moulds and dyes and on the further reasoning that it was not established whether the value of the machinery of the other machines had been written off after five years from the date of starting production. 3. The revision had been admitted without reference to any question of law, however, the same has been heard on the following questions of law: "Whether, in the context of section 4-A(3) of the U.P. Trade Tax Act, 1948, there was any legal or factual mistake in the eligibility certificate issued to the assessee with respect to the value of machinery that came to be subsequently written off and/or with respect to the value of dyes and moulds that were given out to job workers, to manufacture components used in the end pro .....

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..... ng the period 30.11.2002 to 31.12.2002. Details of the same had been brought on record by means of paragraph 2 (a)(iv) of the written reply dated 20.06.2007 submitted by the assessee in response to the notices issued under Section 4-A (3) of the Act, dated 05.09.2006 and 22.05.2007. Those dates being beyond the period of five years from the date of production, it has been submitted, the exemption had been rightly granted. 7. Also, a direct challenge has been raised to the very power and jurisdiction of the Commissioner. It has thus been submitted that the power under Section 4-A(3) of the Act was restricted to rectifying clerical and arithmetical errors which may be patent and apparent from record and not errors about which there may be a rational debate. Reliance has been placed on a decision of a learned Single Judge of this Court in the case of Mansarovar Bottling Company Ltd. Vs. Commissioner of Trade Tax, U.P. Lucknow, (1999) 115 STC 530, as approved by a Division Bench of this Court in the case of Sunny Packagers Private Ltd. Vs. State of U.P. & Ors., (2015) 85 VST 253. 8. Also, it has been submitted that the act of writing off the value of machineries took place after th .....

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..... duce the exemption on the reasoning that the goods Coca Cola and Fanta were similar to those being manufactured by that assessee from before. Therefore, the assessee was not entitled to claim exemption. While the Commissioner had passed an order against the assessee which was affirmed by the Tribunal, the learned Single Judge of this Court held as below: "In my view such an interpretation of the law is not feasible. As pointed out above, the Divisional Level Committee consists of senior officers and is prescribed over by an officer of the same rank as the Commissioner and it is inappropriate to assume that under Section 4-A(3) of the Act the Legislature intended to vest in the Commissioner the powers of an appellate authority that could correct all mistakes whether of law or of fact in the matter of the grant of an eligibility certificate would become redundant and the Commissioner would become a Judge in his own cause. In my view the two provisions have to be given a harmonious interpretation and when the provisions of sub-section (3) confer powers of correcting legal or factual error made by the authority granting an eligibility certificate, this power has to be restricted t .....

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..... ption on the value of such dyes and moulds used by job workers to manufacture component parts for the new unit. Such issue is further rendered debatable in view of the clear language of the circular letter of the Commissioner of the Trade Tax dated 23.12.1985. Though, that circular was issued during the currency of an earlier notification issued under Section 4-A of the Act, however, in view of the same provision of law namely Section 4-A of the Act continuing to exist and similar nature and purpose of the notified schemes of exemption, it appears to be prima-facie permissible in law for a 'new unit' to be entitled to avail exemption, though some part of the manufacturing activity may have been got done on a job work basis. In absence of any disabling clause, the investment made to obtain manufacture of components on job work basis may remain entitled to exemption. 14. At the same time, it may be clarified that no definite conclusion is being drawn as to whether such entitlement exists in law, as claimed by the assessee and granted by the Divisional Level Committee while issuing the eligibility certificate dated 26.11.1998, as rectified and amended from time to time. That q .....

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