Case: Commnr. Of Trade Tax, U.P Vs. M/S. Modipan Fibres Company

production at 12,222,827 metric tones. It disclosed sales of 313.206 metric tones in the State of U.P. and 1008.55 metric tones as interstate sales. 10,461.189 metric tones of goods were shown as stock transfer. The assessee thus claimed that total sale of the goods was 11782.945 metric tones. The base production according to the eligibility certificate granted to the dealer was 9460 metric tones. It claimed exemption from payment of tax on turnover (for the entire year) of sale of goods weighing 2,322.945 metric tones i.e. after reducing the base production from the total sale of goods in a year. The Assessing Authority, however, granted exemption to the extent of turnover on the sale of 1,321.756 metric tones of goods. The claim of the respondent was restricted on the ground that the base production was achieved on 4.1.1993 and the exemption from payment of tax can be granted on the sale of goods after the base production is achieved. 4. Aggrieved against the order passed by the Assessing Authority, respondent filed two appeals, i.e., one under the State Sales Tax Act and t he other under the Central Sales Tax Act before the Deputy Commissioner (Appeals), which were accepted by the order dated 4.2.1997. The order passed by the Assessing Authority was set aside and the respondent was granted exemption on the goods as claimed by it. Feeling aggrieved by the order passed by the Deputy Commissioner (Appeals), the Commissioner of Trade Tax, U.P. (for short the appellant) filed two appeals being Appeal Nos. 70/97 and 71/97, before the Tribunal, which by its order dated 24.9.1997 accepted the appeals, set aside the order passed by the First Appellate Authority and restored the order passed by the Assessing Officer. Aggrieved by the order passed by the Tribunal, the respondent filed revision petition in the High Court which have been accepted by the impugned order. The High Court has set aside the order passed by the Tribunal as well as the Assessing Authority and restored that of the First Appellate Authority. 5. Although before the High Court number of points were raised but the only submission advanced before us is: as to whether the assessee is entitled to avail of the exemption on the basis of the turnover of sale of goods in an assessment year minus the base production or on the sale of goods after achieving the base production. 6. Dr. Padia, learned senior counsel appearing for the appellants contends that the base production has to be achieved first, and it is only thereafter the question of exemption on the turnover of sale of goods in excess of base production can be considered. To support his submission Dr. Padia has referred to the provisions of Section 7 (1) read with Rule 41(1) and submitted that the dealer is required to file monthly return on the basis of actual turnover and not on hypothetical basis. The dealer is also required to deposit the admitted tax at the time of filing of monthly return. That in case the contention of the assessee is accepted then the provisions of Section 7(1) read with Rule 41 (1) and the notification under consideration cannot be interpreted harmoniously. 7. As against this, Shri Ganguli, learned senior counsel appearing for the respondents contends that the facility of exemption can be availed on the turnover of sale of goods in an assessment year in excess of the quantity referred to in sub-clause (a) of Clause 6 of the Notification. According to him, exemption is to be granted after taking into consideration the turnover of sale of goods of the entire assessment year. 8. Purpose of granting exemption under the dated 27.7.1999 was to promote the development of certain industries in the State. By the said notification exemption from payment of tax or reduction in rate of tax was granted to new units as also to the units which had undertaken expansion, diversification or modernization. The units of dealers in all the revisions are units, which had undertaken expansion/modernization. The units of the dealers (respondents) are covered by Clause (1-B) (a) of the Notification. Exemption granted is on the turnover of sales of quantity of goods manufactured in excess of base production. Under clause 6(a) of the said Notification, turnover of sale of goods in any assessment year to the extent of quantity covered by the base production of that year and balance stock of base production of previous years, shall be deemed to be turnover of the base production. Under clause 6(b) of the Notification, the facility of exemption can be availed on the turnover of goods in any assessment year in excess of the quantity referred to in sub-clause (a) of clause 6. 9. A conjoint reading of Clause (1-B) (a), clause 6(a) & (b) makes it clear that the dealer is entitled to claim exemption in respect of the turnover of sale of goods of an assessment year in excess of the base production. Assessment Year has been defined in Section 3 (j) to mean the twelve months ending on March 31. If that be the case then the extent of entitlement to exemption will depend on the sale of goods in the assessment year minus the base production determined under the Act. 10. Simply because dealer has to file returns from month to month and deposit the admitted tax at the time of filing of the return does not mean that question of exemption on the turnover of the production in excess of the base production can be considered only after the base production is achieved. Returns filed every month and the tax paid would be subject to adjustment at the time of the finalization of the assessment. Intention of the legislature is clear and unambiguous. Exemption is to be given on the turnover of sale of goods in an assessment year in excess of the base production. 11. We do not find any substance in the submission advanced on behalf of the appellants. 12.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Purpose of granting exemption under the dated 27.7.1999 was to promote the development of certain industries in the State. By the said notification exemption from payment of tax or reduction in rate of tax was granted to new units as also to the units which had undertaken expansion, diversification or modernization. The units of dealers in all the revisions are units, which had undertaken expansion/modernization. The units of the dealers (respondents) are covered by Clause (1-B) (a) of the Notification. Exemption granted is on the turnover of sales of quantity of goods manufactured in excess of base production. Under clause 6(a) of the said Notification, turnover of sale of goods in any assessment year to the extent of quantity covered by the base production of that year and balance stock of base production of previous years, shall be deemed to be turnover of the base production. Under clause 6(b) of the Notification, the facility of exemption can be availed on the turnover of goods in any assessment year in excess of the quantity referred to in sub-clause (a) of clause 6.A conjoint reading of Clause (1-B) (a), clause 6(a) & (b) makes it clear that the dealer is entitled to claim exemption in respect of the turnover of sale of goods of an assessment year in excess of the base production. Assessment Year has been defined in Section 3 (j) to mean the twelve months ending on March 31. If that be the case then the extent of entitlement to exemption will depend on the sale of goods in the assessment year minus the base production determined under the Act.Simply because dealer has to file returns from month to month and deposit the admitted tax at the time of filing of the return does not mean that question of exemption on the turnover of the production in excess of the base production can be considered only after the base production is achieved. Returns filed every month and the tax paid would be subject to adjustment at the time of the finalization of the assessment. Intention of the legislature is clear and unambiguous. Exemption is to be given on the turnover of sale of goods in an assessment year in excess of the base production.We do not find any substance in the submission advanced on behalf of the appellants