VUAY ENTERPRISES Vs. SALES TAX OFFICER

JUDGEMENT

(1.) The matter is being disposed of at the stage of admission after hearing both sides.

(2.) The petitioners in these appeals have filed the S.L.P. against the order of the Allahabad High Court. The petitioners belong to a re-established small scale industrial unit for manufacturing cycle stands and carriers during the year 1984-85. They applied for power connection in December, 1984 but it was sanctioned on 19-1-86.Meanwhile the petitioners, however, started production manually with effect from 1-3-85. They effected their first sale of the manufactured goods on 30-3-85. It is their case that they purchased a diesel unit and installed it on 4-3-85. According to them the total investment including the cost of diesel unit was more than Rs. 3,00,000/- as on 30-3-85, when the first sale was effected. The petitioners applied for exemption from the payment of sales tax under S. 4-A of the U.P. Sales Tax Act and the notifications thereunder issued from time to time. The Divisional Joint Director by his order dated 25-4-1988 informed the petitioners that exemption was granted under S. 4-A for a period of three years only commencing from 1-3-85. A review was filed by the petitioners contending that the exemption should be with effect from 20-5-86 on which date the power connection was given and production commenced with the help of electricity and on that date their capital investment was more than Rupees 3,00,000/- and therefore the exemption should be for five years. By proceeding dated 23-12-1988 the petitioners were informed that 30-3-85 has been accepted as the date of first sale, but their plea that the date of starting of production should be 20-5-86 was rejected. Questioning the same a writ petition was filed befor the High Court.

(3.) The High Court accepted the petitioners' plea that 30-3-85 is the date of first sale of manufactured goods by the petitioners. However, the plea of the petitioners that the date of getting power connection i.e. 20-5-86 should be taken as the date of starting production was rejected. The High Court also observed that the date of first sale, namely 30-3-85, should be taken as the date of commencement of the period of exemption. Having thus found, the High Court, however, was not prepared to accept the petitioners' plea that the capital investment in the unit was more than Rs. 3,00,000/- during the period between 1-3-85, i.e. the date of starting production, and 30-3-85, i.e. the date of first sale. In the result, it was declared that the petitioners were entitled for exemption only for a period of three years from the date of first sale, namely 30-3-85, in view of S. 4-A of the Act and the relevant notifications.