Saumitra Dayal Singh ORDER
Saumitra Dayal Singh, J.
1. Heard Sri N.C. Gupta, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the opposite party-revenue.
2. The present revision has been filed by the assessee against the order passed by the Full Bench of the Trade Tax Tribunal, Lucknow dated 16.01.2007 in Appeal No. 134 of 1997 (under Section 4-A). By that order, the Tribunal has rejected the assessee's appeal and thereby rejected the claim for exemption made by the assessee under Section 4-A of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act').
3. The present revision was filed on four questions of law and was admitted without reference to any particular question of law, however, today, submissions have been advanced with reference to question no. 1 and 2 as framed in the memo of revision that are quoted below:
"(i) Whether the Trade Tax Tribunal was justified in taking into consideration the total value of the machines despite the fact that this Hon'ble Court has given finding that 20% of the total investment made cannot be termed as negligible ?
(ii) Whether the Trade Tax Tribunal was justified in rejecting the appeal filed by the applicant/revisionist without giving any finding to the effect that the aforesaid two motors were acquired for use anywhere in India ?"
4. Earlier, by a common judgment dated 25.05.2006 passed in Trade Tax Revision No. 334 of 2000 (Vishnu Rice Mill, Mutthiganj, Allahabad Vs. Trade Tax Tribunal, Lucknow Bench, Lucknow and Another) and Trade Tax Revision No. 220 of 2005 (Commissioner Trade Tax, U.P., Lucknow Vs. M/s. Vishnu Rice Mill, Mutthiganj, Allahabad) this Court had allowed the those revisions and set aside the earlier order of the Tribunal, dated 18.07.1998. The Tribunal was thus required to record specific finding with respect to the following issues:
"(a) Whether the machines have actually been purchased by the assessee or not having regard to the documents which are available on record ?
(b) Whether the machines have been used or acquired for any other factory or not, in light of the provisions of Section 4-A ?
(c) Whether the value of the machines in question can be terms negligible having regard to the total investment made, having regard to the law laid down by this Court ?"
5. Upon remand, the Tribunal has returned findings to the effect that the value of the disputed machines was not negligible. Its finding is based on the decision of this Court dated 25.05.2006 in Trade Tax Nos. 334 of 2000 and 220 of 2005 referred to above. The Tribunal has also recorded two other findings - the assessee was unable to establish it had purchased the disputed machines from the dealer as disclosed by him. Then, the Tribunal has further reached a conclusion that the assessee has failed to discharge the burden to establish that the disputed machines had not been earlier put to use or had not been acquired for use before being sold to the assessee.
6. On such reasoning, the Tribunal has dismissed the appeal filed by the assessee and thus rejected the claim of exemption made under Section 4-A of the Act.
7. Learned counsel for the assessee submits, in the first place undisputedly, the assessee had set up a new rice mill unit against total investment of Rs. 2,51,000/-. The investment made in the two disputed machinery being electric motors was of Rs. 41,000/- only. There being no dispute to the fact that the assessee had set up a new unit and there being further no dispute as to the balance investment of Rs. 2,10,000/-, the exemption should have been allowed to the assessee. In this regard, reliance has been placed on a decision of the Supreme Court in the case of Commissioner of Sales Tax Vs. Industrial Coal Enterprises reported in MANU/SC/0138/1999 : 1999 UPTC 250 to submit that in matters of exemption a liberal approach should be adopted and the benefit of exemption should therefore have been granted to the assessee without getting entangled in the accuracy of minor or every fact stated by the assessee.
8. Second, it has been submitted a proper inquiry should have been made by the Tribunal pursuant to the order of the remand made by this Court before recording the finding of fact noted above. It is submitted that the Tribunal did not conduct any inquiry and merely referred to certain documents and report already existing on record. Therefore, it has been submitted that such a finding recorded by the Tribunal are liable to be set aside as they suffer from the same inadequacies as had been noted by this Court on the earlier occasion when the matter was remanded. In this regard reliance has been placed on a Division Bench decision of this Court in the case of M/s. Star Wood, NOIDA, Dist. Ghaziabad and Another Vs. State of U.P. and Others reported in 1995 UPTC 1.
9. Third, it has been submitted the assessee had placed on record the original bills of purchase made by it and the same could not have been ignored. In this regard, reliance has been placed on a division bench decision of this Court in the case of M/s. Calcutta Silicate & Chemical Industries, Meerut and Another Vs. State of U.P. and Others reported in MANU/UP/1261/2003 : 2003 NTN (23) 635 (All.).
10. Alternatively, it has been submitted that even in cases where the assessee being a new unit may not be able to establish the identity of the seller of new machines, it may not be decisive of the issue whether the machinery is new inasmuch as even in respect of purchases made from unregistered dealers, a new unit may remain entitled to claim exemption. In this regard, reliance has been placed on another division bench decision of this Court in the case of M/s. Jawahar Metal Industries (P) Ltd., Sahibabad Vs. State of U.P. & Others reported in 1995 UPTC 812 and a decision of a learned Single Judge of this Court in the case of M/s. Progressive Components (Pvt.) Ltd. Agra Vs. Commissioner of Trade Tax reported in 2000 UPTC 131.
11. Learned Standing Counsel on the other submits that the Tribunal has not committed any error in rejecting the appeal inasmuch as though it may not be denied that in the operative part of the earlier order dated 25.05.2006 passed in Trade Tax Revision Nos. 334 of 2004 and 220 of 2005, a direction had been issued to the effect that the Tribunal may record a finding whether the disputed investment of Rs. 41,000/- may be termed as negligible, at the same time, in view of the specific finding recorded in that order that the disputed amount of Rs. 41,000/- against the total amount of Rs. 2,51,000/- was not negligible, the Tribunal had not committed any error in recording a finding to that effect.
12. Then, it has been submitted that in exemption matters arising in the context of a fiscal statute, a strict interpretation is to be made as to eligibility to exemption. No concession may be claimed at that stage. Since the assessee in this case has not been able to establish his eligibility to exemption, no benefit may be had to the principle laid down in the case of Commissioner of Sales Tax Vs. Industrial Coal Enterprises (supra).
13. As to the ground raised that no inquiry was conducted by the Tribunal before passing the final order, it has been submitted that this Court had in the judgment dated 25.05.2006 noted above specifically provided that the issue whether disputed machines had been purchased by the assessee or not may be decided on the basis of the documents available on the record of the Tribunal. Thus, it has been submitted that this Court had passed an order limiting the exercise by the Tribunal to record a fresh finding upon argument on the same material. In such facts, it has been submitted it was not open to the Tribunal to have made a fresh inquiry or to have called for any fresh evidence to be led by either party. Therefore, it has been submitted the Tribunal has not committed any procedural error in that regard.
14. As to the submission that the documents filed by the assessee in the shape of copies of invoice have been ignored, it has been submitted that the Tribunal has considered the claim made by the assessee but also noted the other admitted position of fact being that upon due inquiries made in the year 1993 itself i.e. within few years from the date of alleged purchase of machinery, the firm held M/s. R.K. Electricals was found to be non-existent. Also, the firm from whom the said M/s. R.K. Electricals is claimed to have purchased the goods namely electric motors that is M/s. Mercury Electricals at Kanpur was also found non-existent. In this regard, the assessee was further unable to produce before the Assessing Officer (in the year 1993 itself) the proprietor of the firm M/s. R.K. Electricals. Coupled with the above, it was also found recorded in the inquiry conducted by the Assessing Officer that at one stage the assessee disclosed to have purchased the disputed motors from a mechanic.
15. Whatever be the exact status of the seller from whom the assessee may have acquired the disputed machinery, at present, it appears that the assessee made a specific claim of having purchased those machineries from a dealer M/s. R.K. Electricals. The assessee never claimed to have purchased machineries from an unregistered dealer. Such suggestion only emerges from an observation in the report made by the assessing officer and not in the proceeding before the Tribunal. Further it remains undisputed that the assessee could not substantiate the claim of having made purchase from M/s. R.K. Electricals inasmuch neither the registration numbers of the seller were found recorded on the bill nor had the payment been made through banking channel as may have offered any inquiry to be made by the revenue authorities as to the genuineness of the sale.
16. The argument that purchases made from unregistered dealer also be eligible for computation of fixed capital investment has been resisted on the ground that in the present case, no such plea has been raised. Even in the case of unregistered dealer the identity would remain to be examined. In the present case, that identity having not disclosed, the argument is not available to the assessee. It has been thus submitted that the Tribunal has not erred in rejecting the genuineness of the purchases claimed by the assessee and or the documents relied upon by the assessee.
17. Last, it has been submitted that over and above the findings recorded by the Tribunal that the machineries were old, once the assessee failed to establish the identity of the seller of the machines, he effectively prevented any further inquiry to be made by the revenue authorities as to whether the machinery in question had been used or acquired for use before being purchased by the assessee.
18. Having considered the arguments so advanced by the learned counsel for the parties, it is seen in the first place, it being a case of eligibility to exemption, a liberal approach is not warranted at this stage. The burden was strictly on the assessee to establish its entitlement to exemption. Only if the assessee was found to fall within the four corners of the scheme of exemption, a liberal approach may become available for the remaining purpose.
19. Keeping that test in mind, it is next seen in view of the specific finding recorded by this Court to the effect that the investment of Rs. 41,000/- was not negligible in the context of total investment of Rs. 2,51,000/-, the Tribunal has not erred in recording the finding to that effect. Once the Tribunal was rejecting the entire claim made by the assessee, with respect to both the disputed machineries, it was never open to the Tribunal to record a finding contrary to that recorded by this Court.
20. Mere mention of the same in the operative part of the order would not vest any authority with the Tribunal to examine that issue de novo. That issue may have become open if upon remand, the Tribunal may have reached a conclusion that one of the two machines was new. In that event, the cost of the remaining machinery may have been required to be examined to determine whether that was negligible. That is clearly not the case here.
21. Then, as to the objection that no fresh inquiry was conducted by the Tribunal, this Court had restricted the proceedings before the Tribunal to the material already available before it. This restriction was specifically placed before the Tribunal for the purpose of determining the purchase of the machinery claimed by the assessee. To that extent, therefore, the Tribunal has not erred in allowing any fresh material to arise.
22. As to the documents that were available before the Tribunal, obviously, the Tribunal took note of the bill relied upon by the assessee but has not accepted the same in view of the other material and evidence that was available chiefly in the shape of inquiry report of the Assessing Officer of the year 1993 wherein it was found recorded that the selling dealer was non-existent. Besides the affidavit of such selling dealer, the assessee was unable to substantiate the claim of genuineness of such selling dealer.
23. As to the alternative plea set up by the assessee as to the entitlement of exemption against purchases made from an unregistered dealer it is seen that such a case was never set up by the assessee on facts. A plea to that nature would essentially be have to be specifically set up at the appropriate stage before the fact finding authority. Even in that case, it would remain open to the revenue to examine whether the unregistered dealer/seller claimed by such assessee was genuine and not a mere pretence or false claim made to evade any further inquiry.
24. In the facts of the present case, no such plea had been ever raised. It therefore does not become available to the assessee at this stage. There is no principle if the identity of the registered dealer/seller is not disclosed or established by the assessee, benefit may be given treating that purchase to be of new machinery made from unregistered dealers.
25. Once the assessee failed to establish the identity of the seller and the genuineness of the bill documents against which such purchases were claimed to have been made the assessee prevented the revenue from making any further inquiry to determine whether the machinery in question had been or had not been used or acquired for use anywhere else, before being purchased by the assessee. Therefore, the Tribunal has rightly rejected the claim made by the assessee.
26. Accordingly, the questions of law framed above is answered in the affirmative i.e. in favour of the revenue and against the assessee.
27. Consequently, the revision lacks merit and is accordingly dismissed.
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