JUDGMENT M. Katju, J.
1. Heard learned counsels for the parties.
The petitioner is a partnership firm. It has filed this writ petition challenging the validity of the order dated June 5, 1992 rejecting the review application under Section 4A of the U.P. Trade Tax Act, 1948.
2. The petitioner established a new unit in pursuance of the Government order dated September 30, 1992 for the manufacture of polythene bags.
3. In pursuance of the partnership deed dated June 2, 1987 (annexure 1 to the writ petition) Atul Prakash, one of the partners, was authorised to represent the firm in all the offices and also to get or procure loans from any financial institution or bank, as the case may be.
4. The petitioner applied for a term loan from Syndicate Bank which was duly sanctioned to the petitioner through Shri Atul Prakash.
5. The petitioner was granted registration as a small-scale industrial unit for which the application was filed on December 13,1988 (vide annexure 3 to the writ petition).
6. In the registration certificate granted by the Director of Industries the date of commencement of production was mentioned as December 13, 1985, on which date the application was filed by the petitioner, which was duly received by the General Manager, District Industries Centre, Moradabad, as is clear from annexure 3 to the writ petition.
7. The exemption application was rejected by the Divisional Level Committee by order dated December 3, 1990 (annexure 5 to the writ petition) on two grounds:
(1) The unit was not registered with the industries department as a small-scale industry on December 13, 1988.
(2) The bank has given the term loan to Atul Prakash and not to the firm even though Atul Prakash is partner of the firm (vide annexure 5 to the writ petition).
8. The review application, vide annexure 6 to the writ petitions was also dismissed on June 5, 1992 vide annexure 7. This order repeated the same grounds as in the earlier order without considering the facts mentioned in the review application and the circular of the Commissioner, Trade Tax, U.P. Lucknow, dated March 10, 1987.
9. Shri Bharatji Agrawal, learned Counsel for the petitioner contended that the order dated June 5, 1992 annexure 7 to the writ petition is illegal and invalid being contrary to paragraph 7 of the circular dated March 10, 1987 (annexure 8 to the petition) in which it has been mentioned that the exemption application cannot be rejected on account of the difference of the dates mentioned in the SSI, registration certificate, i.e., date of issuance of the registration certificate and the date of the commencement of the production.
10. It has been mentioned in paragraph 7 of the said circular dated March 10, 1987 that it is natural that the date of issuance of SSI, registration certificate and the date of production will be different. However, on this ground exemption should not be denied. Hence in our opinion merely because the date of production is February 13, 1988 and the registration certificate was issued on August 23, 1989 in pursuance of the application for registration filed on December 13, 1988, the exemption cannot be legally denied in view of paragraph 7 of the circular dated March 10, 1987 which was referred to in the review application.
11. The circular of the Commissioner of Sales Tax, dated March 10, 1987 was binding upon the Divisional Level Committee as held by the Supreme Court in Commissioner of Sales Tax v. Indra Industries [2001] 122 STC 100 : [2000] UPTC 472 and in Raghunatyh Laxmi Narayan Spices Pvt. Ltd. v. State of U.P. [2000] UPTC 554, by a division Bench of this court. In the latter decision various Supreme Court decisions have been relied upon in paragraphs 7, 8 and 9, and it has been held in paragraph 11 that the circular issued by the Commissioner of Sales Tax is binding on the authorities.
12. This very controversy that the exemption under Section 4A cannot be denied on the ground of the difference in the SSI registration certificate granted subsequently and the date of starting production, has been finally decided by a division Bench of this Court in the case of Magnum Papers Private Limited v. State of U.P. [2006] 143 STC 445 : [2003] UPTC 354 (vide paragraph 9).
13. A perusal of annexure 9 to the writ petition, the letter of Syndicate Bank dated July 16, 1992 also clearly shows that the loan was disbursed to Atul Prakash as partner of the petitioner-firm.
14. Paragraph 6 of the partnership deed, annexure 1 to the writ petition also establishes that the partner No. 1, Atul Prakash was authorised to get and procure the loan of any kind from the financial institutions or bank for the firm.
15. In our opinion the order passed by the Divisional Level Committee is also contrary to the object of the Section 4A which is for encouraging setting up of the new industries. Hence only that interpretation should be taken which advances the object of the provision and not which defeats the same as held by the Supreme Court in Commissioner of Sales Tax v. Industrial Coal Enterprises .
16. In view of the above the writ petition is allowed, the order of the Divisional Level Committee dated June 5, 1992 rejecting the review application for grant of eligibility certificate is set aside and a direction is issued to the Divisional Level Committee to grant eligibility certificate to the petitioner under Section 4A forthwith. Till the issuance of the eligibility certificate realisation of tax for the assessment years 1988-89 to 1991-92 shall remain stayed.