A two-judge bench of the Allahabad High Court has directed the State Govt to dispose of all the pre-GST cases so that the businesses can plan their business properly.
The petitioner-Company, engaged in the manufacture and sales of electric and electronic goods, had availed exemption under Section 4-A of the U.P. Trade Tax Act, 1948. The State Government had from time to time has issued various notifications granting exemption from payment of tax to the new unit or to the units undertaken expansion, diversification, modernization within a period prescribed upon conditions.
In the relevant year, the petitioner established a new unit with the investment of more than Rs. 50 crores and commenced its commercial production on 9.3.1998. The petitioner was granted Eligibility Certificate for a period of 15 years from the date of the first sale i.e. 27.3.1998 or to the extent of 200% of the fixed capital investment i.e. Rs. 1,02,75,90,892/-, whichever is earlier.
Even after the introduction of UP VAT Act also, the Government continued the exemption. This continued up to 31st December 2007 from 1st January 2008. U.P. VAT Act was introduced in which Section 42 provides for treatment of industrial units availing exemption or reduction in the rate of tax under erstwhile Act and sub-section (4) of Section 42 provides that the units were required to deposit the tax and on the strength of entitlement certificate they shall be entitled to exemption by way of refund of net tax paid along with the return of the Tax period in prescribed manner and on fulfilling the conditions.
Justice Bharati Sapru and Justice Piyush Agrawal observed that under U.P. VAT Act regime the units were entitled to exemption only after they deposit the Tax and then a refund of only net tax paid only with the return of the remaining amount mentioned on the Entitlement Certificate were refunded or within the period as mentioned therein.
“Now, after the introduction of Goods and Service Tax with effect from 1st July 2017, there is no scheme of exemption. The matter in question relates to the grant of exemption initially granted under Sales Tax Act then under Trade Tax Act and then under U.P. VAT Act but, no exemption under GST Act. It is not appropriate to accept the contention of the respondent that the petitioner has an alternative remedy and the petitioner is relegated back as if aggrieved by the order passed by the Commissioner, as presently only notice under Section 4A-(3) of the Act is issued. The case of grant or rejection of exemption should be decided at the earliest so that businessman can plan his business accordingly. The case in hand shows that four tax regime has changed and presently country in under new G.S.T. Regime, the old pending cases should be decided at the earliest which will be in the interest of both the parties i.e. petitioner as well as the State and we, therefore, reject the contention of the respondent for relegating back the petitioner to approach the Commissioner in pursuance of notice issued under Section 4-A(3) of the Act,” the bench said.
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