JUDGMENT S.L. Saraf, J.
1. The case of the applicant is that it established its unit and was duly issued an eligibility certificate by the authorities concerned for exemption from payment of tax for a period of four years from the date of starting production, i.e., August 28, 1984. The said period expired some time on August 27, 1988. It is alleged that the Commissioner, Trade Tax, U.P., Lucknow on March 27, 1993 passed an order cancelling the eligibility certificate on the ground that the petitioner did not fulfil the condition for grant of eligibility certificate on the date of starting production, as such the same was cancelled.
2. As against the said order the applicant-assessee preferred an appeal before a Full Bench of the Sales Tax Tribunal, Lucknow. The Tribunal considered the matter and held that production was started on August 28, 1984 by the appellant-unit.
3. The applicant has contended that the existing conditions for grant of eligibility certificate was the notional date of starting production, i.e., the date when the raw materials were purchased or the unit got the electric connection. On that basis the applicant was given the eligibility certificate by the authorities under the provisions of Section 4-A of the Act, though the actual production at the unit commenced only on September 10, 1984. The applicant had also in fact applied for registration under the small-scale industries on May 4, 1984 in anticipation of its production being started at its unit. Under the existing conditions to give registration by the small-scale industry it was only when the actual production starts the certificates are issued. As such the authorities of the small-scale industries granted the registration certificate only from September 10, 1984 and not from August 28, 1984 when in fact the authorities under the trade tax has granted the eligibility certificate. According to the applicant it is suffering due to the two different conditions imposed by the two different authorities for no fault of its own. The applicant were given eligibility certificate on August 28, 1984 on the date of starting notional production whereas in fact the actual production started on September 10, 1984. The S.S.I, registered the unit on and from September 10, 1984, the date of actual production, though in fact the petitioner has applied much earlier, i.e., on May 4, 1984. The trade tax authorities while granting the eligibility certificate were fully aware of non-availability of the registration certificate of the S.S.I. on the date when they issued the eligibility certificate knowing that the same will come in due course. As a matter of fact the application was filed on May 4, 1984 much prior to the date of production or the date of notional production. They themselves instead of granting the certificate on September 10, 1984 granted the certificate on and from August 28, 1984. It appears that long after the applicant has enjoyed the exemption, as granted, which expired on August 27, 1988 and now being saddled with a huge liability under the amended provisions of Section 4-A(3) of the Act which was amended by the Amendment Act No. 28 of 1991 which has amended the previous provisions of the Act by inserting certain conditions on the basis of which an eligibility certificate could be cancelled even after the expiration of the date of such certificate.
"4-A(3). Where the Commissioner of Sales Tax is of the opinion that the facility of exemption from, or reduction in the rate of tax obtained on the basis of an eligibility certificate referred to in Clause (d) of Sub-section (2) or on the basis of any eligibility certificate issued under any executive orders of the Government issued before or after September 13, 1985 has been misused in any manner whatsoever or that the unit has committed breach of any of the conditions, subject to which the facility of exemption from, or reduction in the rate of tax was granted or that the new unit to which the eligibility certificate has been granted in accordance with the provisions of this Act. is not entitled to facility under this section or is entitled to such facility for a lesser period or from a different date he may, by order in writing passed before or after the expiration of the period of exemption or reduction, cancel or amend the eligibility certificate from a date specified in the order and such date may be prior to the date of the order so however, that in cases of misuse or breach, the cancellation of eligibility certificate shall have effect not before the date of such misuse or breach :
Provided that no order under this sub-section shall be passed without giving the dealer a reasonable opportunity of being heard."
On the basis of the aforesaid provisions of the Act Mr. Misra argues that the authorities have rightly interpreted the provisions of Section 4-A(3) and has cancelled the eligibility certificate as on the date of the facility the applicants were not entitled to such eligibility certificate.
4. Mr. Saxena submits that on the date when the eligibility certificate was given the authorities were in the knowledge of the fact that no S.S.I. registration has been received by the petitioner-unit and the same was to come subsequently which was issued on and from September 10, 1984 the date of actual production. On the date when such certificate was given the applicant was clearly entitled to the eligibility certificate. The availability of the S.S.I. registration only from the date of the grant of eligibility certificate was not a condition precedent so long as such certificate would be issued by the authorities in due course. A few days delay in issuing such certificate or issue of such certificate on and from a subsequent date in accordance with the rules and conditions of the S.S.I. authorities will not make the eligibility certificate issued as invalid or will be deemed to be without any authority of law. In this connection I refer to a decision of this Court as reported in Krisons Electronic Systems Private Limited v. State of Uttar Pradesh [1996] 100 STC 289 which reads as follows :
"As the amendment made by U.P. Act No. 28 of 1991 only requires the assessee to fulfil the conditions which were provided for and which were specified at the point of time when the production was started, it cannot be said that by means of the aforesaid amendment the petitioner will not be entitled to the benefits as provided in Government Order No. 8244 dated September 30, 1982."
5. In my view of the matter Section 4-A(3) was never intended to nor is intended to cancel the certificate which has been duly granted on consideration of all the existing facts by the authorities only on the ground that some condition which has been later on imposed were also not satisfied. In the present case the petitioner fulfils all the conditions which were provided for and which were specified at the time when the production was started. It cannot be said by means of the said amendment that the applicant was not entitled to the benefit as provided by the said eligibility certificate. Further, in any event if the Commissioner wanted to take a very strict view of the matter the Commissioner should have read the next line in provisions of Sub-section (3) "is entitled to such facility for a lesser period or from a different date". That means the Commissioner could have withdrawn the facility between the period August 28, 1984 to September 10, 1984, In the fact of this case that was only possible alternative to the Commissioner to do so, he could have cancelled the registration only for a period of 13 days. However, it appears that the Commissioner has acted arbitrarily in violation of the provisions of the Act and as such this action is totally without jurisdiction. The Commissioner should realise that for no fault of the applicant, the applicant should not be penalised for omission and commission of the department who were equally at fault in granting the eligibility certificate if according to them such certificate was not entitled by the applicant. In that view of the matter, I quash the order passed by the Trade Tax Tribunal dated May 27, 1984 as also the order passed by the Commissioner on March 27, 1993.
6. In the result the revision succeeds and is allowed. The orders dated May 27, 1984 passed by the Tribunal and the order dated March 27, 1993 are set aside. There will be no orders as to costs.
7. Let a copy of this order be sent to the Tribunal concerned under Section 11(8) of the Act.