L.N. Ray (Chairman) -
(1.) THIS is an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 in the nature of one under articles 226 and 227 of the Constitution of India. The question raised in this application is whether the authorities below were justified in rejecting the prayer for renewal of eligibility certificate (E.C.) for the period from July 30, 1997 to July 29, 1998 under Section 41 of the West Bengal Sales Tax Act, 1994 (the 1994 Act). The question involves two points, namely, whether the applicant No. 1 (company) can be said to manufacture rolled bars, and whether it has violated the relevant rules framed under the 1994 Act by not maintaining separate accounts in respect of manufactured goods in its unit, by not maintaining serially numbered bills or cash memos, etc., in respect of sales of goods manufactured in its newly set up industrial unit and also by not maintaining production and stock registers. The relevant rules are Rule 151(2)(a), 151(2)(b) and 161(2)(d) of the West Bengal Sales Tax Rules, 1995 (the 1995 Rules).
(2.) THE prayer for renewal of E.C. under Section 41 was rejected by respondent No. 2, the Assistant Commissioner of Commercial Taxes, Special Cell by order dated November 12, 1997. He held that rules 151(2)(a) and (b) of 1995 Rules were violated for non -maintenance of separate accounts and separate serially numbered bills, cash memos, delivery notes or challans in respect of sales of goods manufactured in its newly set up industrial unit. He also held that Rule 151(2)(d) was violated for non -production of production and stock registers, thereby making it impossible to check or verify the manufacturing activity. According to him, applicant -company did not maintain separate registers for stock of goods purchased for direct use in manufacture of goods and for stock of manufactured goods. In the absence of such registers the quantity of ingots manufactured could not be checked or verified. He held that rolled bars or steel bars were not manufactured in the unit of the applicant -company, because the company manufactured ingots in its unit but got the bars manufactured in other units. Moreover, the company maintained a single set of serially numbered bills for sales of ingots manufactured in its unit and steel bars or rolled bars which were not manufactured in its unit. The Assistant Commissioner also held that the balance sheet as on March 31, 1997 showed fixed assets of Rs. 3,07,17,455,95, but the applicant furnished details of fixed assets worth Rs. 3,02,69,312.73 in connection with prayer for E.G. for the period from July 30, 1996 to July 29, 1997. No details about the difference of Rs. 4,48,143.22 had been furnished. The Assistant Commissioner did not find on October 6, 1997 any manufacturing activity or operation of plant and machinery. Hence, he rejected the prayer for E.C. Being aggrieved by this order, the company preferred a revision before the Deputy Commissioner, respondent No. 1. It was contended before respondent No. 1 on behalf of the company that the job of conversion of steel ingots to steel bars (rolled bars) was done outside the company's own unit on payment of labour charges, but the company conducted the activities of sizing, straightening and colouring of the bars in its own unit. The contention was that under the Central Excise Rules the company was not permitted to maintain separate accounts and registers for steel ingots and steel bars and was required to maintain a single set of accounts, books and registers for those items. Thus, on behalf of the company, it was contended that there was no violation of rules 151(2)(a) and (b). Similar contention was made that the company maintained separate stock registers in the factory according to Central Excise Rules. This argument was made in relation of Rule 151(2)(d). Even though the ingots were converted to bars in other units, it was contended before respondent No. 1 that despite such conversion, the company was manufacturing the bars. Respondent No. 1 held that the applicant -company was not manufacturing rolled bars or steel bars. Hence, he agreed with the findings of respondent No. 2 that the aforesaid rules and specific conditions had been violated and that no separate accounts in respect of its own manufactured products, namely, steel ingots, were maintained according to the rules. Therefore, respondent No. 1 confirmed the order of respondent No. 2. Hence, this application. Respondent No. 1 did not give his finding on the points taken by respondent No. 2 to the effect that (i) the discrepancy between the figure of fixed assets shown in the balance sheet and the figure supported by details in connection with issuance of E.C. for the earlier period has not been explained, and (ii) that on October 6, 1997 respondent No. 2 did not find manufacturing activity or operation of plant and machinery at the time of his visit to the unit. These two points were also not agitated by either side before us at the time of hearing. The points urged by the learned Advocate, Mr. G.C. Mookerji on behalf of the applicant -company are (i) that the rolled bars were manufactured products of the company's own unit, although the ingots were converted to bars in other units, and (ii) no separate registers, accounts or sale bills, cash memos, etc., could be maintained for steel ingots in view of Rule 52A of the Central Excise Rules, 1944. He also maintained in that connection that stock registers were maintained according to the Central Excise Rules. According to Mr. Mookerji, there is a conflict between Central Excise Rules and the rules framed under 1994 Act, and hence the applicant -company cannot be held to have violated rules 151(2)(a), (b) and (d). Mr. M.C. Mukhopadhyay, learned State Representative appearing for the respondents, defended the orders of respondents 2 and 1 respectively and submitted that the bars were not the manufactured products of the applicant's unit, and there was violation of the aforesaid rules.
(3.) UNDER Section 41 remission of tax is available to a registered dealer who manufactures goods (other than those which may be prescribed by rules) in a newly set up industrial unit established by him or in an expanded portion of an existing industrial unit in West Bengal subject to such conditions and restrictions as may be prescribed by rules. There is no dispute that the applicant -company is a manufacturer of goods in its newly set up small -scale industrial unit located at village Vadua, P.O. Dankuni, District Hooghly. There is also no dispute that the company has been manufacturing steel ingots in that unit. The controversy relates to manufacture of rolled bars or steel bars. If it has not manufactured rolled bars, it will not be entitled to remission of tax under Section 41 for sales of such rolled bars. And, in that case, it will have a chain effect. If rolled bars are not manufactured by the applicant -company, in that case for the purpose of availing of the advantage of remission of tax, the company is required to maintain (a) separate accounts in respect of sales of steel ingots manufactured in its newly set up unit, (b) separate serially numbered bills or cash memos, delivery notes or challans in respect of sales of such manufactured goods, (c) purchase bills or cash memos in respect of purchase of the said goods including plant and machinery for direct use in manufacture of goods in that unit, and (d) separate registers for stock of goods purchased for direct use in manufacture of goods and for stock of goods manufactured in its newly set up unit. These requirements have been prescribed in Rule 151(2). The Assistant Commissioner, respondent No. 2, referred to non -compliance of Rule 151(2)(a), (b) and (d). The remission of tax available under Section 41 is not an unconditional entitlement. It is subject to conditions and restrictions as may be prescribed by rules. Those rules are rules 146 to 151. Rule 146 requires that an E.C. is necessary to claim remission under Section 41. Under Rule 148(2) an E.C. will be valid for a period not exceeding twelve months from the commencement of eligibility period. In the instant case, E.C. was granted for the first twelve months. The present dispute is regarding E.C. for the next period of twelve months. According to Rule 148(3), if the competent authority is satisfied, inter alia, that the dealer has not complied with the requirements of the provisions of the Act and the Rules for the purpose of Sub -section (1) of Section 41, he shall reject the application for reason recorded in writing after giving the dealer a reasonable opportunity of being heard. Regarding renewal of E.C., Rule 149(3) lays down that the competent authority shall reject the application for renewal for reason recorded in writing, when he is not satisfied that the dealer is eligible for remission of tax under Section 41(1). Some of the conditions and restrictions mentioned in Section 41(1) are prescribed in Rule 151(2), already referred to. Therefore, if the rolled bars are not manufactured by the applicant -company in its newly set up industrial unit, and if it has not maintained separate accounts in respect of sales of steel ingots which are goods manufactured in its unit, or it has not maintained separate serially numbered bills or cash memos, delivery notes or challans in respect of sales of aforesaid steel ingots, or it has not maintained separate registers for stock of goods purchased for use directly in manufacture of steel ingots and for stock of steel ingots manufactured in its unit, it has contravened the conditions and restrictions, and therefore, it is not entitled to remission of tax. It is undisputed that the company has not maintained separate accounts or separate serially numbered bills or cash memos, etc., or separate stock registers for purchases and also manufactured goods in respect of steel ingots alone. In other words, it is undisputed that the company has maintained common accounts, common serially numbered bills, cash memos, etc., and common stock registers in respect of steel ingots as well as rolled bars. There is a dispute regarding maintenance of stock registers which we will discuss later.;