STAR WOOD Vs. STATE OF U P

JUDGEMENT

(1.) In view of exchange of affidavits, the present petition is being disposed of finally at the stage of admission in accordance with the rule of court. We have heard learned counsel for the petitioner and learned Standing Counsel. The petitioner seeks quashing of order dated June 19, 1990, passed by respondent No. 2 (annexure 15 to the writ petition) rejecting the petitioner's review application as against earlier order rejecting its claim for the grant of eligibility certificate under section 4-A of the U. P. Sales Tax Act, 1948. The petitioner established a unit for the manufacture of T. V. cabinet. For getting exemption the petitioner applied for the grant of eligibility certificate under section 4-A of the U. P. Sales Tax Act and also annexed other documents pertaining to the same (annexure 1 to the petition ). According to the petitioner, he was not aware but he did receive an intimation letter that the said application has been rejected when the matter was put up before the Divisional Level Committee on July 30, 1988. The rejection was only on the ground that the verification of the machinery worth Rs. 4,000 could not be made which is alleged to have been purchased from a firm of Delhi. In other words, the question was whether the said machinery was a new or old one. According to the case of the petitioner, the investment made in the said unit up to June 3, 1987, was Rs. 2,12,310. 10 and Rs. 31,959 which pertains to the investment on the building, land and machinery. The petitioner thereafter preferred a review application on August 1, 1988. The petitioner challenged the inspection report of the Sales Tax Officer, which was foundation of reliance by the respondent authority. It was averred that the machines purchased by the petitioner was from a genuine party, who had discontinued the business later on. The said machine was taken delivery by the petitioner's manager from the said firm, viz. , M/s. Hydrolic Engineering Works on May 26, 1987. It was further stated that the Sales Tax Officer from Noida made enquiries from the landlord of the proprietor of the said firm and he informed him that the said workshop did exist in his premises. The petitioner further annexed bills and receipts and other relevant documents pertaining to the said purchase. The petitioner No. 2 also filed affidavit that the cutter machines were purchased from the said firm of Delhi. To the same effect is the affidavit of Deputy Manager Sri Rajiv Sharma as well as of Jai Prakash, which were filed before the respondent No. 2 and which have been annexed as annexures 7 and 8 respectively to the writ petition. The further evidence of the import of said machine on form 31 was also filed, which has also been annexed as annexure 10 to the writ petition. In the various affidavits the case of the petitioner is that the said machine which was only for Rs. 4,000 was new and any finding to the contrary made by the respondent No. 2 is not legal or proper. Similarly, the petitioner averred that a purchase of small tools from M/s. S. S. Engineering Works for Rs. 879 was also made. This bill consists of 38 small items which has been supplied at the site of the petitioner's factory. The life of the said tools, according to the petitioner, is not even one month. The contention of the petitioner is, in spite of the aforesaid affidavits annexed and the contention raised in the review application, the said review application has been rejected by the respondent No. 2 by a cryptic order dated June 16, 1990. The rejection again is solely on the ground of the report as referred in the earlier order of the Sales Tax Officer that no such unit or factory exists at the site as mentioned by the petitioner from whom it was purchased. In view of this, the clarification along with the review application was not accepted and it was held that the machinery used by the petitioner was old one. Having heard learned counsel for the parties and having perused the impugned order we find that the said order almost reiterated what was done in the earlier order when petitioner's application under section 4-A was rejected. A reading of the impugned order makes it clear that there was non-application of mind in not considering the various affidavits filed by the petitioner including other evidence showing that the machinery was a new one. The finding, which the respondent has to record before rejecting the claim that the petitioner is not entitled for grant of exemption has to that the machinery used by the petitioner been used in any factory or company. In case, any machinery is alleged to have been purchased from a firm or a company if it ceases to function or ceases to exist the respondent has yet to apply its mind, to record its finding on the basis of evidence on record as adduced by the petitioner and if any by the assessing authority whether the machinery used by the petitioner and his unit has been used earlier or not. Only because a firm from whom a machinery has been purchased ceases to function an inference is drawn that the petitioner is not entitled for grant of exemption is not proper or legal. In the present case the evidence did exist and the authorities were to scrutinise the same and arrive at its own conclusion whether the machinery used in the petitioner-unit was used earlier or not in terms of section 4-A. Hence, on this ground alone, the impugned order is not sustainable. Learned counsel for the petitioner made reliance in the case of J. K. Steels v. State of U. P. (decided by this Court on August 24, 1994) (printed at page 573 supra) wherein this Court considered the rejection of exemption application in a case where an insignificant or small part of machinery was found to be old. In that case an old machine worth only Rs. 1,453 against total investment of Rs. 1,04,104 was alleged to have been used. The question was whether in such a contingency the respondent-authority will be well within its jurisdiction to refuse to grant exemption under section 4-A. The said authority made reliance in the case of Bajaj Tempo Ltd. v. Commissioner of Income-tax [1992] 196 ITR 188; 1992 UPTC 857 wherein the Supreme Court held : ". . . . . . . . . a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. " As held in the aforesaid case of J. K. Steels (printed at page 573 supra} and the Supreme Court decision in Bajaj Tempo Ltd. [1992] 196 ITR 188; 1992 UPTC 857, we direct the respondent No. 2 to decide afresh the review application of the petitioner taking into consideration the various evidence filed before it in the light of the observations made above and also in the light of the observations made in the aforesaid cases of this Court as well as the Supreme Court. Until disposal of the review application further assessment proceedings for the assessment years 1986-87 to 1988-89 both under the Central and U. P. Sales Tax Acts shall remain stayed. With the aforesaid directions, this writ petition is allowed. The impugned order dated June 19, 1990 (annexure 15 to the petition) passed by the respondent No. 2 is quashed. The respondent No. 2 will decide the review application afresh preferably within a period of three months from the date a certified copy of this order is filed before the said authority. The petitioner will file a certified copy of this order within two weeks from today. A certified copy of this order shall issue to the petitioner on payment of usual charges within one week. Writ petition allowed. .