M/S Lg Electronics (INDIA) PVT LTD vs. State Of U.P. And 04 Others

Held

The Court held that the Commissioner of Commercial Tax had not exercised its power judicially in issuing the impugned notice dated April 2, 2018, under Section 4-A(3) of the U.P. Trade Tax Act. The Court reasoned that the Divisional Level Committee, after considering reports from the G.M.D.I.C. and the Joint Commissioner (Executive), had rightly included the petitioner's investment in moulds, dyes, and jigs in the fixed capital investment. The Court relied on the Supreme Court judgment in the case of State of Andhra Pradesh and Ors. vs. M/s L.G. Electronics (India) Pvt. Ltd. (2005) 6 SCC 292, which held that the Department of Industries & Commerce, having issued an Eligibility Certificate after due scrutiny, could not be overridden by the Commercial Taxes Department. Furthermore, the Court noted that once the Commercial Tax Tribunal had remanded the matter, and the respondent chose not to file a revision against the Tribunal's order or an appeal against the Divisional Level Committee's subsequent order, they could not re-agitate the matter through a Section 4-A(3) proceeding. The Court found that the legal issue regarding the eligibility of such investment had been settled by judicial pronouncements, including the case of Honda CL Cars India Limited, and could not be re-litigated. Consequently, the impugned notice was quashed, and the writ petition was allowed.

Facts

The petitioner, M/s Lg Electronics (India) Pvt Ltd, is challenging a notice dated April 2, 2018, issued by the Commissioner of Commercial Tax, U.P., under Section 4-A(3) of the U.P. Trade Tax Act, 1948. This notice proposed to cancel an order dated February 19, 2018, which gave effect to a decision by the Divisional Level Industrial Development Authority Committee on October 25, 2017. The petitioner had availed exemption under Section 4-A of the Act for establishing a new unit and subsequent expansions. A dispute arose regarding the inclusion of an investment of Rs. 19,99,91,721/- in moulds, dyes, and jigs given to vendors for manufacturing components for refrigerators. This investment was initially rejected by the authorities, leading to a review application and an appeal to the Commercial Tax Tribunal. The Tribunal remanded the matter for further inquiry.

Key Issues

1. Whether the Commissioner of Commercial Tax had the power to issue a notice under Section 4-A(3) of the U.P. Trade Tax Act, 1948, to recall an order that gave effect to a decision by the Divisional Level Industrial Development Authority Committee, especially after the matter had been remanded by the Commercial Tax Tribunal and subsequent inquiries were conducted. Petitioner's arguments: The petitioner contended that the Divisional Level Industrial Development Authority Committee had passed its order after due verification of materials and detailed inquiries by the G.M.D.I.C. and Joint Commissioner (Executive), who submitted reports supporting the inclusion of the investment. They argued that the Commissioner's action under Section 4-A(3) was not judicial and that the issue had been settled by judicial pronouncements, including the Tribunal's order and the case of Honda CL Cars India Limited. They further argued that if the respondent was aggrieved by the Tribunal's remand order or the Divisional Level Committee's order, they should have filed a revision or appeal, which they failed to do. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or state respondents regarding the specific issues raised by the petitioner. However, the issuance of the impugned notice by the Commissioner of Commercial Tax indicates their stance that the order giving effect to the exemption was erroneous and liable for recall.