Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Section 4A UP. Trade Tax Act Extent of C benefits available 1948 Benefit of. from payment of trade tax |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | UP. Trade Tax Act, 1948: Section 4 A-Exemption Notification of 1991-Benefit of from payment of trade tax, to industrial units undergoing expansion under-Extent of benefits available-Held: Benefit of 1991 Notification is limited to a percentage of the additional fixed capital investment and not to a percentage of the aggregate of the original and additional fixed capital. Section 4 A-Exemption Notification of 1991-Benefit of from payment of trade tax, to industrial units undergoing expansion-Expansion of units thrice within period of five years-Assessee claiming exemption under 1991 notification that during the period of five years there as one single expansion in three phases-Sustainability of : Held: Admitted facts that there were three separate expansion-Each time assessee made additional investment, increased its capacity to produce and in fact produced goods there was expansion-When expansion done unit was in production for less than three years-Three separate applications were maintainable and not one composite application for three years-Hence, finding of tax Authority that there were three expansions upheld and claim of assessee not sustainable Section 4 A explanation 4-Fixed capital invtestments-Meaning of- Preoperative expenses, if includible-Held: Preoperative expenses like interest to financial institutions, rights shares issue expenses, foreign technician expenses and foreign travel expenses does not reflect value -of items forming part of fixed capital investment for 1991 Notification and the Act-Hence, not includible under head of fixed capital investment for purpose of section 4A-Also cannot be brought within the definition by any principle of statutory interpretation. Sections 4A, 8A, 15A(1)(qq)-Exemption Notification of 1991-Grant of eligibility certificate pursuant to Order of High Court-Assessee units not A collecting or realising any tax-Also order not stayed by this Court-Unit finally not entitled to exemption-Relief against recovery of tax-Entitlement of-Held: Assessee unit is not entitled to any relief-State Government is entitled to recover tax from the unit-Dealer has to pay tax which it did not collect from customers even if it was under fear of punishment under section 15A(1)(qq)(viii). Respondent-Company having obtained industrial licence in 1988 was engaged in manufacturing and selling of ceramic tiles since then. The annual production capacity of the respondent was 12000 tonnes per annum (TPA). The respondents obtained six years tax exemption from 1988-1994 in terms of the Notification of 1985 issued under section 4A of the U.P. Trade Tax Act, 1948. The annual production capacity of the respondent was increased from 12000 TPA to 26000 TPA, from 26000 TPA to 40000 TPA and from 40000 TPA to 60000 TPA respectively during the period in year 1990, 1991 and 1994. The respondents were granted eligibility certificate. There was total additional investment in three expansions. Meanwhile, the Notification of 1991 was issued and exemption was granted to a new unit and to units which had undertaken expansion, diversification or modernization. A Circular of 1993 was also issued whereby units which had started production upto 31.3.1990 and which could enjoy unlimited exemption for a fixed period, and which had undertaken expansion, diversification or modernization would get the benefit of exemption. After exemption period from 1988-1994 came to an end, respondent filed application under 1991 Notification claiming that there was one expansion during the period from 1988-1994 by which annual production capacity of the respondent's unit was increased from 12000 TPA to 60000 TPA. Meanwhile the 1995 Notification was filed which granted benefits to units which were either new or had undertaken expansion, diversification or modernization on or after 1.4.1995 but not later on 31.3.2000. Division Level Committee (DLC) ignored the first two expansions for achieving the expansion of 40000 MT and granted an exemption only in respect of the last expansion of the unit from 40000 TPA to 60000 TPA taking 40038 MT as base production with the production commencing from 28.3.1994. DLC included the cost of land and site building and plant and machinery in the total fixed capital investment but excluded expenses such as interest payable to financial institutions, expenditure incurred for rights issue, foreign travel and foreign technician expenses as claimed by respondents. Thereafter, an eligibility certificate was issued. Aggrieved respondent filed an appeal. The Tribunal held that there was only one expansion and that the benefit under the 1991 Notification was to be calculated as a percentage of the additional fixed capital investment and not as a percentage of the fixed capital investment prior to the expansion. It, however, included the expenses on rights issue, foreign technicians, foreign travel, laboratory equipment, fire fighting equipment and establishment of water distribution schemes in the value of the fixed capital investment Both the appellants and the respondent filed a revision. The High Court held that the tax benefit would be calculated at the specified percentage of the original and additional fixed capital investment and struck down the Circular of 1993 and directed the DLC to issue a revised eligibility certificate. Hence the present appeals. The questions which arose for consideration in these appeals are: (i) Whether under the 1991 Notification, unit undergoing expansion is entitled to the benefit of exemption on the additional fixed capital investment or the total fixed capital investment?(ii) Whether the respondents' claim of one integra~ed expansion from 12000 TPA to 60000 TPA during 1988 to 1994 is sustainable in fact or in law? (iii) Whether certain preoperative expenses form part of 'fixed capital investment"' under section 4A of the Act and the 1991 Notification? (iv) Whether the respondents, allegedly not having collected or realized any tax after the grant of the eligibility certificate, pursuant to the High Court's judgement, and which was not stayed by this Court, are entitled to any relief? |
Judge | Hon'ble Ms. Justice Ruma Pal |
Neutral Citation | 2005 INSC 288 |
Petitioner | Commissioner Of Trade Tax, U.p. And Anr. |
Respondent | M/s. Kajaria Ceramics Ltd. |
SCR | [2005] Supp. (1) S.C.R. 437 |
Judgement Date | 2005-07-12 |
Case Number | 4601 |
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