Taxman have no jurisdiction to cancel Eligibility Certificate under the Sales Tax Waiver Scheme: Madras HC [Read Order]

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In a recent order of Madras High Court has held that, the Deputy Commercial Tax Officer does not have jurisdiction to cancel eligibility certificate under the Sales Tax waiver scheme.

The petitioner M/s.Padmashri Oil Refineries Pvt. Ltd., is a registered dealer under the provisions of the Tamil Nadu General Sales Tax Act, 1959, and Central Sales Tax Act, 1956.

The petitioner was granted an eligibility certificate under the Sales Tax Waiver Scheme, by a Certificate, dated 14.05.1999, by the Industries Department. By virtue of the said certificate, the petitioner was entitled for waiver of sales tax, for the sum, not exceeding Rs.80,41,000/, for the period of five years, from the month in which the petitioner’s unit commenced its commercial production, i.e., from 06.08.1998 to 05.08.2003.

The petitioner-industry was established for manufacturing of refined oil from kernals with oil coke and soap stocks. Pursuant to the eligibility certificate granted to the petitioner, the Assessing Officer, namely, the second respondent passed a consequential order on 11.02.2000, permitting the petitioner to avail the waiver of sales tax to a sum of Rs.80,41,000/-, for five years from 06.08.1998 to 05.08.2003, as per the conditions prescribed therein.

The petitioner was unable to procure sufficient quantity of kernals / seeds, as a result of which without raw material, they could not undertake manufacturing process to manufacture edible oil. Therefore, they approached the Industries Department to amend the Eligibility Certificate, requesting them to manufacture edible oil for kernals / seeds as well as Refined edible oils from seed / crude oil, like, sunflower, soya and palmolein etc., and bye-products as well as oil and oil cake and oil waste muddy (soap stock). This request made by the petitioner was accepted by the Industries and Commerce Department and Eligibility Certificate, issued on 14.05.1999, was amended.

The petitioner, thus, effected, import of crude oil, palmolein and sunflower oil, from Malaysia and had been effecting manufacture of edible oil. At that juncture, a notice was issued by the first respondent, on 24.07.2002, stating that the petitioner has reported the sales turnover of the refined sunflower oil and RBD Palmolein oil, liable to be taxed at 4%, from 2001-02 and 2002-03. Further, they have not paid the tax. On a perusal of the Eligibility Certificate, it revealed that the petitioner was granted waiver of sales tax and sales of oil cake manufacture, out of kernals / seeds soap cakes only.

Therefore, the Deputy Commercial Tax Officer proposed to deny the benefit of waiver to the petitioner.

While quashing the notice of Tax department, Justice T.S.Sivagnanam observed that, “the petitioner’s Eligibility Certificate has been amended and the Eligibility Certificate has not been cancelled or declared as null and void by the respondents, who are Sales Tax Authorities. As long as the petitioner’s Amended Eligibility Certificate, dated 28.08.2002, is valid and not been cancelled by the competent authority, the petitioner is entitled to the benefit of waiver scheme. If that is the legal position, then, obviously, the respondents could not have assessed the petitioner to tax, ignoring the said Eligibility Certificate”.

The Court also noted that, no record is being placed before this Court, by the respondents, to show that the amended Eligibility Certificate, dated 28.08.2002, has been either modified, cancelled or amended further by the competent authority and the respondents have no jurisdiction to cancel such eligibility certificate.

Read the full of the order below.

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