Judgment:
1. This is an application Under Section 8 of the West Bengal Taxation Tribunal Act, 1987 which is in the nature of a writ application challenging the order dated September 18, 1997 of respondent No. 2 (Assistant Commissioner) and the revisional order dated November 25, 1999 of respondent No. 1 (Deputy Commissioner) affirming the order of rejection by Assistant Commissioner in respect of the petitioner's company's application praying for granting eligibility certificate Under Section 39 of the West Bengal Sales Tax Act, 1994.
The case of the petitioner-company is that it is a limited company which set up a new industrial unit in a portion of premises No.98/98/1B at Biren Roy Road - East, Calcutta - 41 as a tenant for manufacture of bright bars, sheet-plate, structural fabrication and pressure die casting components (non-ferrous), the company's application for provisional certificate was granted by respondent No. 2 Under Section 26 of the West Bengal Sales Tax Act, 1994 on due enquiry as per law. Plants and machinery required for setting up the new unit were purchased from M/s. Ayan Natural Corporation for Rs. 7,35,300 which was paid by account payee cheque which was duly encashed by the said seller. For inclusion of raw materials, amendment of provisional certificate which was applied for was duly made. The commercial production in the petitioner's small scale industrial unit started on December 1, 1995 and the first sale of manufactured goods took place on February 9, 1996. But petitioner-company's application for registration was allowed only as a re-seller and as such the petitioner being aggrieved challenged the same before this Tribunal by filing RN-81 of 1996. The Tribunal by order dated October 10, 1996 {Enfield Industries Ltd. v. Assistant Commissioner of Commercial Taxes [1998] 109 STC 442) set aside the registration as reseller and sent the matter to respondent No. 2 for fresh decision on full enquiry. In the meantime, permanent registration as a small scale industrial unit was given by Directorate of Cottage and Small Scale Industries. Moreover, various records of the petitioner's company had been seized by the Central Excise Authorities. The Excise Authorities issued fresh certificate of registration to the petitioner-company accepting it as a manufacturer.
The enquiry as directed by the Tribunal regarding petitioner's application for eligibility certificate was initially conducted by one Sri S.K. Dey, Assistant Commissioner and thereafter by one Sri Sajal Kumar Barui-his successor-in-office and Sri Barui by impugned order dated September 16, 1997 (vide pages 139 to 151 of the paper book) rejected the application for eligibility certificate on the ground inter-alia that the company had been running an old unit of M/s.
Enfield Industries-a proprietorship concern of one of the Directors of the company in the garb of a new unit. That finding having been affirmed in revision by the Deputy Commissioner-respondent No. 1, the petitioner moved an application which was registered as RN-67 of 1998 before this Tribunal. By order dated January 5, 1998, the Revisional order of Deputy Commissioner was set aside. As it appeared that respondent No. 1 did not apply his mind on some of the aspects over relevant facts and over the arguments and objection of the applicants before him, direction was issued on respondent No. 1 to call for the documents from the Excise Department by taking resort to the provision of section 65 and if necessary of Rule 86 of the Act of 1994 and then to decide afresh according to law and as per observation made in the body of that judgment. Sixteen week's time was allowed for the same.
That hearing was commenced accordingly by respondent No. 1. Ultimately by order dated December 18, 1998 (vide pages 241 to 255) the revisional application was rejected by respondent No. 1 mainly on five grounds out of which the first ground being not after due enquiry, the Tribunal which was moved by the petitioner by filing RN-42 of 1999 directed by order dated April 22, 1999 (vide pages 256 to 262 of the paper book) respondent No. 1 after setting aside the order dated December 18, 1998 to give fresh hearing on the grounds taken in the said order dated December 18, 1998 after enquiry/investigation and granting inspection and copies of various records to the petitioner and thereafter to pass an order within sixteen weeks. Prayer for extension of time was made as enquiry could not be completed by the time granted. The Tribunal on being moved, by order dated August 6, 1999 in the record of case No.RN-42 of 1999 granted extension by a period of sixteen weeks from the date of that order, i.e., August 3, 1999 for passing of the order.
Accordingly respondent No. 1 held further enquiry, got some of the documents and thereafter passed the impugned order dated November 25, 1999 (pages 363 to 392) confirming once again the order of rejection of the application by petitioner for granting eligibility certificate. The petitioner on being aggrieved has come up before this Tribunal again praying for setting aside this revisional order dated November 25, 1999 with the original order of Assistant Commissioner dated September 16, 1997.
2. It is contended by the respondent that there has been no violation of natural justice and that the facts brought out on enquiry clearly revealed violation of the conditions and restrictions prescribed under Rule 98 of the West Bengal Sales Tax Rules, 1995 and the allegation to the contrary as made is not true and therefore the application being not bona fide or being of a speculative nature should be dismissed.
3. The petitioner filed affidavit-in-reply where the petitioner relied on the averments already made in the main application- besides giving the details of the hearing taken by the respondent No. 1 to focus as to how the principle of natural justice has been violated.
4. The only point for consideration is whether the revisional order dated November 25, 1999 passed by respondent No. 1 affirming the order dated September 16, 1997 of respondent No. 2 rejecting the application for eligibility certificate can be sustained or not? 5. In order to claim the exemption from payment of tax, a dealer under the law is to establish that he has strictly complied with all the requirements of law and fulfilled the conditions laid down for the purpose. If the provisions are not complied with strictly, he is not entitled to claim the exemption. Only on complying with the conditions and restrictions, no tax shall be payable by a dealer for such period as may be prescribed in respect of his sales of goods manufactured by him in his newly set up small scale industrial unit situated in the prescribed area. In calculating his taxable turnover of sales under sub-Rule (3) of Rule 17, that part of his gross turnover of sales which represents the turnover of sales of such goods shall be deducted from his gross turnover of sales under sub-clause (viii) of clause (A) of sub-Rule (3) of that Rule. Conditions and restrictions for getting tax holidays for new small-scale industrial units Under Section 39 are prescribed in Rule 98 read with Rules 99 to 101 of the West Bengal Sales Tax Rules, 1995. A dealer shall not be eligible for deduction unless he obtains and possesses a valid certificate of eligibility and keeps :-- (a) Sale bill or cash memo in respect of purchase of plant and machinery etc.
(b) Separate set of serially numbered sale bills or cash memos in respect of sales of goods manufactured in his unit where such dealer makes sales of goods other than those manufactured in his unit.
(c) Stock register for purchases and issue of raw materials and packing materials, if any for use in the manufacture of and packing of goods so manufactured in his unit.
(d) Stock register showing records of production of goods in his unit and issue of such goods by way of sale or otherwise.
Besides, books of account that is required to be maintained Under Section 62 of the Act shall also be maintained. The newly set up small scale industrial unit has been defined under Explanation 1 to Rule 98.
The amount of investment on plant and machinery must not exceed Rs. 35 lakhs. The unit must be registered with the Directorate of Cottage and Small Scale Industries, Government of West Bengal. It must start production for the first time on or after the appointed day and the unit must be established solely with plant and machinery other than the plant or machinery used by another newly set up small scale industrial unit which has earlier availed of the benefit of exemption from tax under this Rule. It must not use the trade mark or brand name of any product of any other industrial unit, etc. How and when an application for certificate of eligibility is to be made has been given in Rule 100. Rule 101 empowers the concerned authority to declare such certificate invalid from such date, if satisfied that the dealer has contravened any of the provisions referred to in Sub-Rule (2) and sub-Rule (3) of Rule 98. Of course a reasonable opportunity of hearing must be given before passing the final order.
6. Keeping in view the aforesaid legal provisions we are to consider the facts that have come up on enquiry and also to see if the decision on facts suffered from any infirmity or otherwise, or if there has been any violation of the principle of natural justice in the hearing before the respondent No. 1.
7. It appears on perusal of papers appearing at page 65, pages 86 to 90 and pages 274 and 275 of the paper book that at the time the provisional certificate (PC) was issued to the petitioner-company it was given on perusal of some documents and upon a visit once on November 16, 1995 at the site by the Assistant Commissioner respondent No. 2. It was the view of the respondent No. 2 that the project given by the petitioner is likely to come up and said view was duly endorsed by respondent No. 1, Deputy Commissioner in the file and the note there is to the effect that adequate arrangement for carrying through the proposed manufacturing project having been made, as it appears, prior approval as proposed by the respondent No. 1 is accorded for granting of provisional certificate. The respondent No. 1 also found at the time of his visit at the site on November 23, 1995 that some plant and machinery have been installed. Some raw materials admittedly were subsequently included by way of amendment of the provisional certificate. In the enquiry regarding the granting of provisional certificate the enquiry that is made is limited to the proof by the petitioner that the petitioner has a bona fide interest to establish a manufacturing business. It is undisputed that exemption of sales tax on purchase extends also under the provisional certificate-to plant and machinery which are also goods intended for use directly in the manufacture of goods within the meaning of Rule 27 of the Rules 1995.
Admittedly the petitioner company initially got registration as a reseller and not as manufacturer and for that the petitioner came before this Tribunal which directed fresh enquiry and thereafter Assistant Commissioner as it appears from his report appearing at pages 291 to 294 visited the site of the factory at 98/98/1 Biren Ray Road, East, Calcutta and the office at Vivekananda Road in May, 1997 and found list of machines as mentioned in the file shown to him to be installed. He also found eight workers. This registration admittedly as per law gives some special benefits to a dealer but eligibility certificate is a special document for giving special benefits only for small scale units. To avail of this benefit, the petitioner-company on time prayed for granting eligibility certificate. Granting of Registration Certificate implies that the Assistant Commissioner was satisfied on enquiry that the information furnished as regards carrying manufacturing business and other particulars by the petitioner-company in its application for registration were true and correct. It may be mentioned that the application praying for eligibility certificate was rejected by the impugned order dated September 16, 1997 of Sri S. Barui respondent No. 1 Assistant Commissioner. The copy of that order is to be found from page 139 to page 151 of the paper book. Failure to show the original invoice showing purchase of plant and machinery from the Ayan Industrial Corporation due to denial by Ajay Kr. Samui proprietor of Ayan Industrial Corporation about the such sale, among others, led respondent No. 1 to come to such a decision. The tenancy of the factory premises was disbelieved for want of tenancy agreement. For the failure to produce electric bill of CESC, etc., the power consumed could not be verified. That place was used by M/s. Enfield Industries under the proprietorship of S. Santalia one of the Directors of the petitioner-company- Enfield Industries Ltd. It was held for this and for some other reason given in the order that the petitioner-company is not a new unit but the same is run by the M/s. Enfield Industries under subtle veil only by change of name of business for unlawfully enjoying tax holiday. It has been also held that sale bills are not maintained in one continuous serial as mandated. Moreover, dealer has not actually produced goods as shown in the production register. Dealer purchased iron materials and sold them as manufactured goods. The petitioner-company against that order moved respondent No. 1 in revision and thereafter this Tribunal which by order dated August 31, 1998 set aside the respondent No. 1 is order dated January 5, 1998 affirming the order of Assistant Commissioner-in revision. Respondent No. 1 as per direction of the Tribunal heard afresh the revision and held the petitioner-company not eligible for eligibility certificate on grounds namely : 1) Non-production of original purchase bill of plant and machinery due to loss of the same by robbery and the indirect evidence produced in support of such payment are disbelieved.
2) There has been non-compliance of the provision of Rule 98(2)(b) regarding maintenance of serial number of sale bills as petitioner-company sold scrap and waste materials which are not manufactured goods.
3) Employee's Attendance Register is not sufficient proof of their presence.
4) Voucher of generator payment charge is unreliable as address of the recipient is not given and the probe regarding transaction over purchase of plant and machinery is necessary.
5) Manufacture of the quantity of goods claimed to have been manufactured is not feasible in that industrial unit.
Against the same by order dated April 22, 1999 in RN-42 of 1990 this Tribunal setting aside the order dated December 18, 1998 directed the respondent to call for the records and documents lying with the Central Excise Department and with further direction to get those documents examined by the Deputy Commissioner himself allowing the petitioner to inspect, to take copy, etc., if so desired by petitioner. It was also directed to give fresh finding on the grounds maintained in the order dated December 18, 1998. Thereafter this impugned order dated November 25, 1999 of respondent No. 1 which discusses afresh the grounds as made in his previous order dated August 30, 1998 on the relevant points on the basis of materials on for the enquiry as directed, on receipt of papers and documents from Excise Authorities and comes to the conclusion that the petitioner failed to prove the payment for plant and machinery allegedly purchased from Ayan Industrial Corporation. The respondent No. 1 agreed with the finding on other points also on fresh enquiry.
8. A writ court generally does not interfere with the finding of fact arrived by fact-finding authorities. So fact-finding is to be given due weight unless it is found that such a finding is either based upon on evidence or irrelevant evidence or incorrect principles. We have perused minutely the details of the enquiry of the facts, the different documents different reports of different times of the authorities and the various orders or judgments based over the matter in controversy.
9. On the matter of Attendance Register, that he has every doubt if there is any permanent employee in that concern. He also has doubt on the said register since only "P" was referred for signifying "presence" and "A" as "absence". Since there is no signature in that Attendance Register, it was held by him that it may be termed as a sufficient proof of the non-existence of any permanent employee there. But we find that in July-August 1997 presence of 12 workers were found and even the Assistant Commissioner found at least five permanent workers and during the enquiry in the registration proceeding the Assistant Commissioner found presence of eight workers. Thus we have every reason to hold that the finding on the Attendance Register as made by Deputy Commissioner is not based on proper evidence or it is based on irrelevant evidence.
There is no basis, as it appeared from the facts, for the Deputy Commissioner, to doubt the record-the Attendance Register-and the entries therein. The observation of the Deputy Commissioner that the petitioner-company has nothing to say over Attendance Register-is not correct since at para 39 of RN-42 of 1999 where respondent No. 1 was a party, petitioner clearly put forward its stand over it.
10. On the quantum of production, it has been sought to be maintained that production figure showing such huge production with such small investment is impracticable and there is no ratio to be found between the power consumed and the production made. Such a conclusion has been arrived at by the respondent Nos. 1 and 2 comparing production of this unit with that of Bharatiya Bright Stainless Steel Ltd. But we find that there are materials showing the quantum of production as actually made by the petitioner-company. From the records of the Central excise authorities, from the production return furnished by the company to the Director of Cottage and Small-scale Industries as well as from the assessment regarding production made by Small-scale Industries Service Institute, Government of India picture of quantum of production is revealed. That institute determined the production capacity of the company in respect of bright bars only. The respondent fell into an error assuming that the said assessment relates to entire brand of different items of production. The respondent also failed to take note of the fact that the company worked for four months in 1995-1996 and for nine months in 1996-1997 with four shifts and that led to the huge difference in production for the two periods in question. This fact also explains the variation in the expenses on electricity charge and there is nothing unnatural in that. On the issue of payment for hire of generator there are bills and cash receipts showing such payment.
Simply because on four occasions amount of more than ten thousand has been disbursed in cash violating income-tax Rules such payment cannot be said to have been not made in fact.
11. On the sale of scraps, it is the observation of respondent No. 1 that it is very likely the lot of rusted iron rods lying at the factory has been waiting for sale as scrap or as raw material. But the scrap as per the petitioner-company was not any raw material but the scrap generated in course of this company's manufacturing process or manufacturing operation. Such allegation was not made by respondent No.1 earlier in his order. Books and records of the petitioner's company which were examined by excise authorities prove that the allegation of sale of raw material is based on surmise or conjecture and not based of any cogent material. So it does not appear at all that the finding about iron rods as scrap sale and as sale of raw material by the petitioner-company is based on evidence. Separate set of serially numbered sale bills or cash memo is not to be maintained in such case where the dealer makes sales of those goods only which were manufactured in the unit. So the allegation of non-maintaining of serially numbered cash memo as made in the impugned order loses force.
However, it is seen that month wise serial of goods manufactured in the unit is maintained by the petitioner. It has been recorded in the order that the petitioner company is none but the M/s. Enfield Industries the proprietor of which is one of the directors of the petitioner's company Enfield Industries Ltd. and the said proprietory concern having been dissolved, in the guise of the said proprietorship concern by using its plant and machinery this unit company has been set up with the purpose of unlawfully claiming the benefit under this section. Only by changing the name of business, the petitioner-company is trying to hold out as if it is a new business with the objective of claiming benefit Under Section 39. It is submitted by the respondent that the said old concern was closed in February, 1996 and in January huge stock of raw material and finished goods namely Bright Bars were found lying there. But unfortunately nothing was found as stated by respondent-authorities when they visited and inspected prior to granting of registration certificate to this company. The respondent authority's contention appears to be that in the place of the old M/s. Enfield Industries, a new unit Enfield Industries Ltd., has been set up but it appears that several times the petitioner brought to the notice of the sales tax authorities that Enfield Industries Ltd., has a site plan which would show the area of the petitioner's factory, godown and office and that those are separate from any other units including M/s. Enfield Industries. It has been also placed before the respondent-authorities that the said address-98/98/1 Biren Ray Road East, Calcutta has provision for 5/6 such units. It is also on record that on November 20, 1998 the petitioner invited the respondent-authorities to inspect on this point. But it appears that no enquiry on this point has been ever made and the reports which are filed are silent over this point.
Moreover, before the granting of provisional certificate and the registration certificate, there have been inspections made duly by the Assistant Commissioner and none found the existence of this company on the site of M/s. Enfield Industries though admittedly both co-existed and M/s. Enfield Industries did not cease to produce at the relevant time. The applicant got its requirement of electricity from the four meters of Santhalia Chemicals on consent of M/s. Santhalia Chemicals and there are evidence of the petitioner-company reimbursing the cost as per the said CESC bills. M/s. Enfield Industries used to occupy a separate portion of the said premises while it was in operation and the said portion is a portion separate from the portion occupied by the petitioner-company. Moreover, due to fault of the electrical contractor the meter No. of M/s. Enfield Industries was noted when petitioner-company applied for separate electric connection in his factory and simply for that without any other cogent and convincing evidence it cannot be concluded that the petitioner-company is nothing but the old M/s. Enfield Industries in new form. So we hold that the said finding has not been made by respondent No. 1 on proper appreciation of evidence.
12. We next enter on the point of alleged purchase of plant and machinery by the petitioner-company from Ayan Industrial Corporation (AIC). The petitioner admittedly has not been able to produce the original four invoices-two dated November 20, 1995 and other two dated November 21, 1995. The petitioner's explanation is that the said two original purchase bills or invoices which were with the sales tax files have been robbed in an incident of robbery and as such cannot be produced in original. The petitioner produced the copy of FIR showing loss of its sales tax file. Of course it was not mentioned there specifically that the original invoice was inside that file. The respondent authority could not rely on that statement and nor could they rely on the copy of the said invoices produced. As such and as Ajay Samui proprietor of AIC, alleged seller-declined to have received the payment and to have signed the form 8, the petitioner-company had to prove through statement in the bank account of AIC that it actually received the cheque which was deposited in the account of AIC and credited duly in the bank account in AIC. That Ajay Samui even after that alleged to have made statement before the sales tax authority that he was not the sole proprietor and the business was converted into the partnership with Shashi Bhusan Lodha as one of the partners with him.
Samui also stated that the format of the invoice shown to him is not the format used in his concern-the AIC. This Samui gave two statements before the sales tax authority one on August 28, 1997 and the other on September 4, 1999. Both the statements are contradictory with each other and also with the sales tax records and the bank account of AIC.However, Ajay Samui disowned subsequently the above statement by submitting a fresh statement alleging as if those were obtained by the sales tax authority by coercive measure. An affidavit was also sworn by him to that effect. Samui stated to respondent No. 1 that the records of business of AIC are not with him but with Mr. S.B. Lodha-the other partner whereas Mr. Lodha states otherwise. His version is that the records of AIC are not with him but with Mr. Samui. In this way when the matter was brought for rehearing before respondent No. 1 as per direction of this Tribunal, Samui was examined but Lodha could not be since he has problems concerning heart. It may be mentioned that as per fresh direction of Tribunal the time for disposal by respondent No. 1 was upto first week of December. It appears that the respondent No. 1 did not show initially any sincerity in getting back the seized documents of the petitioner company from the Excise Authorities. He only issued initially a notice upon the Central Excise Authorities for production of the same lying with them since seizure from the petitioner's company. Petitioner wrote several letters requesting the respondent No. 1 to get the documents early. However when the petitioner with the consent of the respondent No. 1 wrote to the Excise Authorities, the Excise Authorities ultimately made over the documents which were produced by petitioner on the next date of hearing before respondent No. 1 in November, 1999. It also appears strange that the respondent No. 1 got the several matters concerning the enquiry-inspected by the Inspectors of Bureau of Investigation who submitted their report as late as on November 10, 1999 and November 15, 1999. Some additional documents were also produced by respondent No. 1 only two days before the final hearing - thus giving not enough time to the petitioner to go through the same minutely. The petitioner wanted to examine the books of accounts, sales tax records and bank records of AIC. The petitioner filed application for the same but the respondent No. 1 without paying heed to the said prayer got the hearing closed abruptly perhaps for the fact that the time granted to it by the Tribunal had been running out. The respondent appears to have come to his conclusion from the statement and deposition of Ajay Samui, from the entry regarding nature of goods in the Registration Certificate of AIC and from the return filed by the AIC and nature of assessment of AIC. These led respondent No. 1 to render his decision that the petitioner failed to prove the payment of Rs. 7,35,300 on account of purchase of plant and machinery from AIC. But we see that this Ajay Samui on whom the respondent No. 1 put reliance is not a person to be relied upon. He had first submitted that his concern AIC is a proprietorship concern. He did not disclose initially that it was converted subsequently into a partnership firm. He did not disclose this to the sales tax authority though the Rules demanded it. He speaks one thing at one time and subsequently denies having said so. Despite clearance of the cheque of the petitioner-company both Samui and Lodha submitted before respondent No. 1 that it is a paper transaction and that the amount though received was returned to the petitioner-company.
That is the reason the petitioner wanted to inspect books of account, sales tax record and bank records of AIC. The respondent No. 1 admittedly relied on portion of such records without granting inspection of the same to the petitioner. The reason for rejection of the same has been given and it is that Rule 93 of the Act of 1994 forbids it but as we peruse the said section we find that to arrive at the truth that is to ensure realisation of the purpose of the Act, production of the document concerning assessment of another dealer can be permitted under sub-Rule (3) of Rule 93. So there was no legal bar as suggested in getting those documents of AIC produced for inspection to ascertain the truth concerning the dispute-as to whether AIC received the payment or it was simply a paper transaction. The direction of the Tribunal was clear on the point and it appears that the said direction has not been completely carried out. So we hold that this matter of payment or not for purchase of plant and machinery from AIC has not been properly gone into. The matter of payment or not for the purchase of plant and machinery only as such requires rehearing, other points having been already decided in favour of the petitioner as discussed hereinbefore.
13. After setting aside the impugned order we direct respondent No. 1 to call for the books of account, sales tax records and bank accounts of AIC and also other relevant records and documents as applied for by the petitioner-company in writing. He shall allow the petitioner to inspect those records and documents, give copy of all or any of those if applied for and then after due hearing render his finding touching only on this point, namely, if there has been at all any payment made by the petitioner to the AIC for purchase of plant and machinery or, in other words, if the transaction in question is merely a paper transaction. Shashi Bhusan Lodha may also be examined, if he is found fit only to arrive at a just and proper decision. Respondent No. 1 is further directed to render his decision concerning the eligibility certificate within a period of three months from this date.
14. With this directions the present application is finally disposed of. No order is made as to costs.