CONTINENTAL CHEMICALS LIMITED Vs. SALES TAX OFFICER

JUDGEMENT

(1.) The appellant commenced a manufacturing unit with manual labour without getting it registered under the Factories Act or before the Directorate of Industries. It got a sales tax registration certificate on 23-11-1985. Earlier it had purchased raw material and started trial run pursuant to which the first sale was effected on 1-11-1985.

(2.) The appellant, however, purchased land and building and started manufacturing unit on a property of its own and at that time it applied for and obtained permanent registration from the Deputy Director of Industries as small scale unit. The actual registration certificate was issued on 11-9-1986 by the Deputy Director of Industries. That unit started production on 3-3-1986 and the first sale was effected on 5-3-1986. The appellant had also applied for a loan from the U. P. Financial Corporation for a sum of Rs. 49 lakhs in October, 1986 of which a sum of Rs. 35 lakhs was sanctioned. On December 6, 1986, the appellant applied for exemption under Section 4-A of the U. P. Sales Tax Act, 1948 (for short "the Act") for a period of six years from payment of sales tax under the Notification dated 26-12-1985 stating that the date of first sale was 5-3-1986.

(3.) The 2nd respondent issued a sales tax exemption certificate on 25-7-1989 for a period of four years from 1-11-1985. The reasoning of the 2nd respondent was that the appellant had on its own showing commenced trial run, purchased raw material and started production in November, 1985 and the first sale was effected on 1-11-1985. At that time, as the appellant had not invested amounts in excess of Rs. 3 lakhs, the appellant was entitled to exemption only for a period of four years from the date of first sale, namely, 1-11-1985. On that basis, the claim of the appellant for exemption for six years from 5-3-1986 was rejected.