Over 2 lakh Indian cases. Search powered by Google!

Case Details

M/S EXCEL HI TECH PVT. LTD.,GHAZIABAD versus STATE OF U.P. & OTHERS

High Court of Judicature at Allahabad

Case Law Search

Indian Supreme Court Cases / Judgements / Legislation

Judgement


M/S Excel Hi Tech Pvt. Ltd.,Ghaziabad v. State Of U.P. & Others - WRIT TAX No. 257 of 2001 [2005] RD-AH 2619 (9 September 2005)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

RESERVED

CIVIL MISC. WRIT PETITION NO. 257 OF 2001.

M/S Excel Hi-Tech Pvt. Ltd, Ghaziabad. Petitioner.

Versus

State of U.P. and others.         Respondents.

...............

Hon'ble R. K. Agrawal, J.

Hon'ble Rajes Kumar, J.

(Delivered by Hon'ble Rajes Kumar, J)

By means of the present writ petition, the petitioner has claimed the following reliefs.

i) issue a writ, order or direction in the nature of certiorari quashing the impugned order dated5.1.2001 passed by the Respondent no.2 and also the notice dated 6.2.2001 issued by the respondent no.3 (Annexure No.5 and 7 to the writ petition) and to allow the application of the petitioner for deferment/moratorium of payment of tax;

ii) issue such other and further writ, order or direction which this Hon'ble court may deed fit and proper ind the nature and circumstances of the present case,

  iii) award costs of the petition to the petitioner.  

The brief facts of the case-giving rise to the present petition are as follows:

The petitioner is a private limited company incorporated under the Indian Companies Act, 1956. The petitioner established a new industrial undertaking for the manufacture of ferrous and non-ferrous castings and steel fabrication situate at F-23, Section 17, Kavi Nagar Industrial Area, Ghaziabad. Being a new unit, the petitioner applied for eligibility certificate under section 4-A of the U.P. Trade Tax Act (hereinafter referred to as "the Act") under the notification no.780 dated 31st March 1995 and notification no. 781 dated 31st March, 1995 under section 4-A of the Act both for exemption under the U.P. Trade Tax Act and Central Sales Tax Act. The Divisional Level Committee issued an eligibility certificate no.5053 dated 28th January, 2000 granting exemption for a period of eight years from the date of first sale i.e. from 15th September, 1998 to 14th September, 2006. The petitioner contended that in the exemption application moved under section 4-A of the Act, the petitioner has specifically requested for the grant of eligibility certificate in respect of trade tax exemption under the deferment scheme. According to the petitioner after the receipt of the eligibility certificate dated 28th January, 2000, it moved an application to the Commissioner of Income Tax, U.P., Lucknow for the grant of moratorium under section 8 (2-A) read with rule 43 which was received in the office of the Deputy Commissioner (Executive), Ghaziabad on 7.2.2000. The Commissioner of Income-tax vide impugned order dated 5th January, 2001 rejected the claim of moratorium under section 8 (2-A) of the Act on the ground that the petitioner has not realised any tax during the period 15.9.1998 to 19.2.1999 and availed the benefit of exemption under section 4-A of the Act. It has been held that since the petitioner has availed the exemption under section 4-A of the Act during the aforesaid period in view of Rule 43 (8), the petitioner is not entitled for moratorium under section 8 (2-A) of the Act..

We have heard Sri Ashok Kumar, learned counsel for the Petitioner and Sri S.P. Kesharwani, learned Standing Counsel appearing on behalf of the respondents.

Learned counsel for the petitioner submitted that while applying for the eligibility certificate under section 4-A of the Act, it had been specifically stated in the application that trade tax exemption was being sought under the deferment scheme. He submitted that during the period 15th September, 1998 to 19th February, 1999, the tax has not been realised and exemption has been claimed because the exemption application was pending which was finally decided on 28th January, 2000 and when the eligibility certificate was issued from the month of February, 1999, the petitioner has realised the tax and has retained with it under the deferment scheme. He submitted that the provision of Section 4-A of the Act has been introduced with the object to increase the industrialization and production. He submitted that it was open to the new unit either to avail the exemption on the sale turnover or to avail the benefit under the deferment scheme. He submitted that both the options were available to the petitioner and since in the application petitioner has clearly specify that the exemption was being claimed under the deferment scheme, it cannot be rejected merely because for a short period i.e. from 15th September, 1998 to 19th February, 1999,.tax  has not been realised and exemption on the sale turnover under section 4-A of the Act has been claimed. He submitted that the provisions should be construed liberally and the benefit of deferment scheme should not be denied. He further submitted that under section 8 (2-A) of the Act moratorium is in lieu of exemption under section 4-A of the Act, therefore, moratorium should be allowed for the balance period excluding the period during which exemption under section 4-A of the Act has been availed from February, 1999. In support of his contention he relied upon the decisions in the case of Minda Switch Auto Ltd., Delhi Versus State of U.P. and others reported in 1992 UPTC 1004 and CST Versus Industrial Coal Enterprises reported in 1999 UPTC 250. He further submitted that too hyper-technical or legalistic approach should be avoided in looking at a provision, which must be equitably interpreted and justly administered. In support of his contention he relied upon the decision in the case of Saroj Aggarwal Versus Commissioner of Income Tax, U.P. reported in (1985) 156 ITR 497.

Learned Standing Counsel has brought to the notice of the court through second supplementary affidavit dated 9.11.2004 the copies of the returns in Form-4 relating to the U.P. sale and Form No.1 relating to the Central sale for the period September, 1998 to February, 1999. He referred the returns filed by the petitioner for the aforesaid months and submitted that in the returns for the month of September, 1998 to January, 1999, the petitioner has claimed the exemption on the sale turnover under section 4-A of the Act. In the return for the month of February, 1999 the realised tax has been adjusted under the deferment scheme. Thus, according to own showing of the petitioner, the exemption has been claimed under section 4-A of the Act on the sale turnover of the manufactured products for the period September 1998 to January, 1999. He submitted that since the petitioner has availed the exemption for the aforesaid period under section 4-A of the Act, the petitioner is not entitled for moratorium under section 8 (2-A) read with Rule 43 (8). In support of his contention, he relied upon the Division Bench decision in the case of Bindal Batteries Versus State of U.P. reported in 2003 UPTC 462.

We have given our anxious consideration to the submissions made by the learned counsel for the parties. Section 8 (2-A) of the Act and Rule 43 of the U.P. Trade Tax Rules 1948 reads as follow.

"8 (2-A).- Notwithstanding anything contained in sub-sections (1), (1-A), (1-B), (1-C) or (2), the commissioner may, on the application of a manufacturer with such time and in such manner as may be prescribed grant in lieu of exemption, under Section 4-A, moratorium for payment of the admitted tax subject to such conditions as may be prescribed. The State Government may withdraw any such moratorium in the circumstances in which it could have withdrawn the exemption under section 4-A but no such withdrawal shall be made with retrospective effect.

43. Condition for grant of moratorium under section 8 (2-A).-The commissioner, on application of a manufacturer may, in lieu of exemption under section 4-A grant moratorium for payment of tax admittedly payable by such manufacturer on sale of goods manufactured by him beyond the period prescribed in Rule 41 subject to the following conditions, namely,-

(1) the facility shall be available only to the manufactured who is registered under the Act and has been granted an eligibility certificate under section 4-A and has filed the returns of his turnover as per rules;

(2) the facility shall be available-

     (a) only for the period for which exemption from or reduction in rate of tax is admissible according to eligibility certificate issued under section 4-A of the Act.

     (b) for the amount upto which exemption from or reduction in rate of tax is admissible according to the eligibility certificate plus fifty percent of the fixed capital investment mentioned in the eligibility certificate;

(3) the moratorium for payment of tax admittedly payable for each of the assessment years may be granted for a period of five years the computation of which shall be done from the last date for furnishing the last return according to sub-rule (1), (2) or (3) of Rule 41 for the assessment year concerned. The amount of tax admittedly payable for each assessment year shall be paid by the manufacturer in a lump sum within one month of the expiry of the period of moratorium;

(4) the moratorium shall cease and the total amount of the tax admittedly payable shall become payable-

       (a) on the date of discontinuance of business where the manufacturer discontinues business, within the meaning of sub-section (1) of Section 18 of the Act,

       (b) on the date on which the unit becomes ineligible for exemption under section4-A, and the amount shall be paid in lump sum within three months of its so becoming payable;

(5) the facility shall not be admissible in respect of the amount of tax assessed in excess of the tax admittedly payable by the manufacturer on the turnover admitted by him in the returns filed or in any proceeding under the Act, whichever is greater, whether the excess tax so assessed is due to detection of any evasion of tax made, or disallowance of any exemption claimed. By such manufacturer or for any other reason, and the amount of tax so assessed in excess shall be paid in accordance with the provisions of the Act and the rules;

(6) the facility shall be available to the manufacturer on creating first or second charge on its property in favour of the State Government, sufficient to cover the amount of tax in respect of which moratorium has been granted;

(7) if the amount in respect of which moratorium has been granted is not paid within the period specified in Clause (3) or (4), as the case may be, the manufacturer shall, in addition to any penalty which the assessing authority may deem fit to impose under Section 15-A be liable to pay interest in accordance with sub-section (1) of Section 8 for the entire period during which the amount remained deferred and subsequently till the time of its payment;

(8) A manufacturer who has availed the facility of exemption from or reduction in the rate of tax whether wholly or in part under section 4-A shall not be entitled to the grant of moratorium."

Plain reading of Section 8 (2-A) of the Act shows that it contemplates moratorium for payment of admitted tax in lieu of exemption under section 4-A of the Act subject to such conditions as may be prescribed. The condition has been prescribed in Rule 43. Rule 43 (8) of the Act provides shows that if the manufacturer has availed the facility of exemption from or reduction in the rate of tax whether wholly or in part under section 4-A shall not be entitled for the grant of moratorium. Thus, sub-rule (8) of Rule 43 is exception to Section 8 (2-A) of the Act, which grant moratorium for payment of the admitted tax in lieu of exemption.

It is true that while moving the application under section 4-A of the Act, the petitioner has specifically stated that the exemption application is under the deferment scheme, but for the claim of moratorium under section 8 (2-A) of the Act in lieu of the exemption under section 4-A of the Act, the petitioner should stick to its claim and should realize the tax and retain it under the deferment scheme, but instead of claiming the benefit under the deferment scheme, the petitioner during the period 15th September, 1998 to 19th February, 1999 has not realised any tax. This shows the intent not to avail the benefit under the deferment scheme. Moreover, in the returns in Form No.4 and Form No.1 both relating to U.P. sale and Central Sale respectively, the exemption has been claimed on the turnover of the manufactured goods under section 4-A of the Act. This clearly shows that the petitioner has availed the facility of exemption under section 4-A of the Act and therefore, in view of sub-rule (8) of Rule 43, the petitioner is not entitled for the grant of moratorium which has been rightly refused. Similar question came up for consideration before the Division Bench of this Court in the case of Bindal Batteries Versus State of U. P (supra). In the said case also the claim of moratorium has been refused because the dealer had availed the benefit of exemption under section 4-A of the Act for certain period. This Court upheld the denial for grant of moratorium under section 8 (2-A) of the Act in view of Rule 43 (8). This Court held as follows:

It is first principle of interpretation that the statute should be read in its ordinary, nature and grammatical sense. As observed by the Supreme Court of India.

"In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the Court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the Court need not call into aid and other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear" vide M/S Hiralal Ratanlal Versus Sales Tax Officer, 1974 UPTC 115 (SC): AIR 1973 SC 1034.

This principle is applied with particular emphasis while interpreting taxing statutes vide Income Tax Officer Versus Nadar, AIR 1968 SC 623, and the fundamental principle of interpreting taxing statutes is the principle of strict construction. In this respect taxing statutes are to be interpreted differently from beneficial legislation (e.g. labour laws) vide S.K.Verma Versus Industrial Tribunal, AIR 1981 SC 422, or the Constitution vide State Trading Corporation Versus Commercial Tax Officer, AIR 1963 SC 1811, where the principle of liberal interpretation applies"

The principle of strict interpretation of taxing statues was best enunciated by Rowlatt, J. in his classic statement vide Cape Brady Syndicate Versus IRC., (1921) 1 KB 64 :

"In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

In a taxing statute if a dealer or assessee falls within the four corners of the statute then the statutory provision will apply, but if he does not it will not apply. There is no scope for arguments of hardship, equity etc. in interpretations of a taxing law.

A perusal of Rule 43 (8) shows that the language of the said provision is clear and unambiguous.

No doubt it has been held in certain decisions that if two interpretations of a taxing provision are possible then the one in consonance with equity and fairness should be preferred vide Commissioner of Income Tax versus M.P. Jatia (1976) 4 SCC 92; Saroj Agarwal Versus Commissioner of Income Tax (1985) 4 SCC 540, etc. However, the language of Rule 43 (8) is plain and unambiguous, and hence the above rulings will have no application."

Sri Rajes Kumar learned Counsel for the petitioner has relied on the decision of this Court in Minda Switch Auto Ltd., Delhi V. State of U.P. and others 1992 UPTC 1004. In that decision there is no reference to Rule 43 (8) of the U.P. Trade Tax Act at all, and hence the same is distinguishable. Moreover, in that decision reliance was placed on the Notification dated 28th December, 1989 which stated that even if the Unit has availed of the benefit under Section 4-A and an Eligibility Certificate has been granted to it, the benefit under Section 8 (2-A) can still be extended to it though it will be for the unexpired period for which exemption was granted under Section 4-A. This position was not disputed by the learned Standing Counsel, in that case in which the above observation was made. Moreover, the aforesaid Notification is not applicable to the present case as the petitioner's Unit was established after 31st March, 1990.

Sri Rajes Kumar then submitted that in the present case the petitioner availed of the eligibility certificate dated 21st May, 1996 from 12th December, 1995 to 31st March, 1996, i.e., before it was granted. Copy of the eligibility certificate is Annexure-1 to the petition, and a perusal of the same shows that it was granted for the period from 1st April,1995 to 31st March, 2000, that is, partly retrospectively. Since the petitioner availed of the eligibility certificate from 12th December, 1995 to 31st March, 1996 Rule (8) squarely applies."

The cases cited by the learned counsel for the petitioner are not applicable to the facts and circumstances of the present case. In the case of Minda Switch Auto Ltd., Delhi Versus State of U.P. and others reported in 1992 UPTC 1004, the circular letter dated 19.9.1985 has been considered which provided that notwithstanding that eligibility certificate has been granted under section 4-A of the Act can also be extended to him in the alternative. The circular was applicable to the unit established between 1.10.1982 to 29.1.1988 and Rule 43 (8) has not been considered. This Division Bench decision has been considered by the Division Bench in the case of Bindal Batteries Versus State of U.P. (supra) and has been distinguished the same.

In the case of Saroj Aggarwal Versus Commissioner of Income-Tax reported in (1985) 156 ITR 497, the husband of the petitioner was a partner in a partnership firm, which suffered a speculation loss. The husband died. The widow petitioner joined as a partner three days later. There was no provision in the deed regarding continuance of the partnership. All the partners were member of the same family. The question was whether she was entitled to set off loss of deceased husband share in speculation profit.  It has been held by the Apex Court that succeeded by inheritance, the petitioner was entitled to the set off the deceased share by the speculation loss brought forward from earlier years against the share of the speculation profit of the assessee. The Apex Court observed that too hyper-technical or legalistic approach should be avoided in looking at a provision, which must be equitably interpreted and justly administered. The aforesaid observation has been made by the Apex Court on a background where it was  possible to draw two inferences from the facts and where there is no evidence of any dishonest or improper motive on the part of the assessee.. In the present case, the language of the provision is clear and there is no ambiguity. Thus the aforesaid decision is not applicable.

In the case of Ferolite Jointings Private Ltd. Versus State of U.P. and others reported in 1999 UPTC 713, the issue involved was different. The issue involved before the Court was whether under section 8 (2-A) of the Act, moratorium should be allowed for the period of eight years of five years. There was no question for consideration that if the exemption under section 4-A of the Act has been availed, the dealer was entitled for moratorium in view of Rule 43 (8).

It is true that the provision should be interpreted in a purposive manner to achieve the object of the Section. Perusal of Section 8 (2-A) of the Act shows that the grant of moratorium is in lieu of exemption under section 4-A of the Act. Therefore, it is open to the unit either to opt for exemption under section 4-A of the Act or for moratorium. Under Rule 43 (8) it has been specifically provided that in case if the exemption under section 4-A of the Act has been availed, dealer is not entitled for the grant of moratorium. The language of Rule 43 (8) is clear and unambiguous.

For the reasons stated above, we are of the considered view that there is no infirmity in the order passed by the Commissioner of Trade Tax, which is accordingly upheld.

In the result, the writ petition fails and is accordingly dismissed. However, there shall be no order as to costs.

Dated.09 .09.2005.

VS.


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

Advertisement

dwi Attorney | dui attorney | dwi | dui | austin attorney | san diego attorney | houston attorney | california attorney | washington attorney | minnesota attorney | dallas attorney | alaska attorney | los angeles attorney | dwi | dui | colorado attorney | new york attorney | new jersey attorney | san francisco attorney | seattle attorney | florida attorney | attorney | london lawyer | lawyer michigan | law firm |

Tip:
Double Click on any word for its dictionary meaning or to get reference material on it.