GITANJALI ASSOCIATES Vs. STATE OF UTTARAKHAND

JUDGEMENT

(1.) M/s Bhushan Steel Ltd. is engaged in the manufacture of steel and iron in Uttar Pradesh and holds an eligibility certificate under Section 4-A of the U.P. Trade Tax Act pursuant to the notification dated 21st February, 1997 granting exemption from payment of tax for a period of 15 years from 31st December, 1998 to 30th December, 2013 or to the extent of 150% of the fixed capital investment which was made within the specified period of 5 years as provided in clause 3(a) of the notification dated 21st February, 1997. On 9th November, 2000, the State of Uttaranchal (now Uttarakhand) was created under the U.P. Reorganization Act, 2000 and in view of Section 87 of the U.P. Reorganization Act, 2000, all enactments, namely, the Acts, Rules and Notifications which were in force in the State of Uttar Pradesh were made applicable to the State of Uttarakhand. Consequently, the notification issued under Section 4-A of the U.P. Trade Tax Act also became applicable in the State of Uttarakhand. In 2 this regard, a Notification No. 50 dated 26th December, 2000 was issued by the State of Uttaranchal, under Section 5 of the U.P. Trade Tax Act for granting exemption from payment of tax in respect of the goods which was manufactured in a unit established in the State of Uttar Pradesh and who possessed an eligibility certificate issued under Section 4-A of the U.P. Trade Tax Act whose validity commenced prior to 9th December, 2000.

(2.) On 1st October, 2005, Uttaranchal Value Added Tax Act, 2005 (hereinafter referred to as the Act ) was enacted repealing Uttaranchal (U.P. Trade Tax Act, 1948) Adaptation and Modification Order, 2002. Under this Act, whatever tax was payable by a selling dealer holding an eligibility certificate whose unit was located either in Uttar Pradesh or in the State of Uttarakhand was exonerated from payment of tax and was not required to realize the tax from the purchasing dealer. This provision was provided so that the benefit of exemption under the eligibility certificate could reach the ultimate purchaser. The benefit of exemption to the subsequent purchaser is provided under Section 76 of the Act which provides for grant of benefit of Input Tax Credit to the purchaser who was purchasing the goods from an exempted unit. For facility, the provision of Section 76(6) of the Act, which is relevant to the controversy involved, is extracted hereunder:-

(3.) A perusal of Section 76(6)(b) indicates that dealers who were enjoying exemption of tax for any period prior to 1.10.2005 when the Act came into force would also be entitled for exemption for the remaining period of exemption. Section 2(17) defines Input Tax . For facility, the said provision is extracted hereunder:-