Exemption from trade tax in certain cases (1) Notwithstanding anything contained in this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any districts or parts of districts in particular, it may on application or otherwise, in any particular case or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such notification which may be the date of the notification or a date prior or subsequent to the date of such notification and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to tax at such reduced rate as it may fix:
PROVIDED that in respect of goods manufactured in a new unit having a fixed capital investment of [five] crore rupees or more or in an existing unit which may make fixed capital investment of 1[five] crore rupees or more in expansion, diversification, modernisation and backward integration or in any one of them, within such period not exceeding five years as may be specified in the notification, the exemption from or reduction in the rate of tax may be granted. Ic9560* * *]
(2) It shall be lawful for the State Government to specify in the notification under sub-section (1) that the exemption from, or reduction in the rate of tax, shall be admissible
(a) generally in respect of all such goods manufactured subsequent to the date of such notification; or (b) in respect of such of those goods only as are manufactured in a new unit, the date of starting production whereof falls on or after the first day of October, 1982; or (bb) in respect of those finished goods which are manufactured in a unit which has undertaken backward integration; or (c) in respect of those goods only which are manufactured in a unit which has undertaken expansion/diversification or modernisation on or after April. 1, 1990 and which, in the case of diversification, are different from the goods manufactured before such diversification, and in the case of expansion or modernisation are additional production as a result of such expansion or modernisation; and (d) only if the manufacturer furnishes to the assessing authority an eligibility certificate granted by such officer, in accordance with such procedure as may be specified.
(e) with effect from a date prior to the date of the notification.
(2A) Notwithstanding anything to the contrary contained in sub-section (2) or any notification issued in pursuance thereof, the State Government may grant exemption, under this section, to a new unit which has obtained power connection, if it has, after the date of starting production and before the twentyninth day of January, 1985, consumed at least 25 per cent of the total sanctioned electricity load in manufacture of goods as distinct from the consumption in connection with the establishment of the factory or workshop.
(2B) If there is discontinuation of business, within the meaning of sub-section (1) of section 18, of the manufacturer who was eligible for exemption from or reduction in rate of tax under sub-section (1), whether such exemption from or reduction in the rate of tax was already granted or not, and if he is succeeded by another manufacturer, by means of sale, licence, contract, lease, managing agency or in any other manner, such successor manufacturer may, subject to the provisions of sub-section (3), apply to the officer competent to grant eligibility certificate under clause (d) of sub-section (2), within sixty days of such succession, for the grant, under this section of exemption from or reduction in the rate of tax for the unexpired portion of the period for which exemption from or reduction in the rate of tax was or could be granted to the former manufacturer:
PROVIDED that the aforesaid officer may, in its discretion and for adequate and sufficient reasons to be recorded in writing, entertain an application moved within six months of the date of the expiration of the period specified in this sub-section:
PROVIDED FURTHER that such manufacturer and successor manufacturer for the purpose of liability of tax shall be treated as the transferor and the transferee under section 3C.
PROVIDED also that in computing the unexpired portion of the period, the period during which the production of successor manufacturer remains closed on account of an order passed by any court or Board for Industrial and Financial Reconstruction or Appellate Authority for Industrial and Financial Reconstruction shall be excluded.
(3) Where the Commissioner 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 there is any legal or factual error in issuing such eligibility certificate 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 pass 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 such 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.
(4) For the removal of doubts, it is hereby declared that where an eligibility certificate has been cancelled or amended under sub-section (3), the dealer shall be liable to pay tax on his turnover of the period during which the facility of exemption or reduction under this section is not admissible to him.
(5) A manufacturer shall be entitled to the facility of exemption from, or reduction in the rate of tax, notified under sub-section (1),
(a) if he applies for such facility within six months from the relevant date of commencement of the period of facility referred to in that sub-section or within six months from the date of notification issued under that sub-section or by September 30, 1992 whichever expires later, for the entire period notified under that sub-section;
(b) if he applies for such facility later than the date specified in clause (a) only for part of the period notified under sub-section (1); which shall be computed from the date of the application and not from the relevant date of commencement of the period of facility referred to in sub-section (1) till the end of the period of facility;
(c) in relation to a new unit referred to in explanation (1), where the conditions specified in clauses (a) to (d) of the said Explanation (1) are fulfilled on a date later than the date of commencement of the period of facility notified under sub-section (1), then subject to the provisions of clause (b), only for part of the period, notified under sub-section (1), which shall be computed from the date on which all the conditions referred to in the said clauses (a) to (d) have been fulfilled on July 20,1992 whichever is later till the end of the period of such facility, so, however, that a manufacturer who was eligible for such facility under clause (c) as it stood prior to July 20,1992 and had applied for the facility prior to the said date shall be entitled to the facility in accordance with the said clause (c);
(d) in relation to a new unit manufacturing same goods established on or adjacent to the site of an existing factory or workshop by a person who has interest in the existing factory or workshop as proprietor or partner or agent or managing director or promotor director or as holding company or subsidiary company, if the production of the existing factory or workshop is not less than the base production:
PROVIDED that if the production of the existing factory or workshop falls short of the base production the turnover of the sale of the new unit to the extent of the quantity covered by such short fall from base production shall be liable to tax.
Explanation: For the removal of doubts it is hereby classified that the facility of exemption from or reduction in rate of tax under this clause shall not be admissible from a date prior to July 20, 1992.
(6) Where the State Government is of the opinion that the purpose for which the facility of exemption from or reduction in the rate of tax was granted under this section has been fulfilled or that the continuation of such facility is no longer in public interest or is against the public interest, it may, by notification, withdraw such facility granted to any industry, dealer or class of dealers:
PROVIDED that no such facility shall be withdrawn with retrospective effect.
Explanation: For the purposes of this section:
(1) new unit during the period ending with March 31st, 1990 means an industrial undertaking set up by a dealer on or after October 1, 1982 but not later than March 31, 1990:
(a) which is licensed or in respect whereof a letter of intent has been issued or which is registered, permanently or otherwise by the appropriate authority in accordance with any law for the time being in force relating to licensing or registration of industrial undertakings;
(b) (i) which is registered under the Factories Act, 1948, or (ii) an application for registration in respect whereof has been made under that Act, or (iii) after making an application for a term loan from any financial corporation or company owned or controlled by the Central or the State Government or any bank whether such term loan is sanctioned and disbursed before or after the undertaking is set up (where the capital investment in the undertaking does not exceed three lakh rupees);
(c) on land or building or both owned or taken on lease for a period of not less than seven years by such dealer or allotted to such dealer by any government company or any corporation owned or controlled by the Central or the State Government;
(d) using machinery, accessories or components not already used, or acquired for use, in any other factory or workshop in India, (e) fulfilling all the conditions specified in this Act or rules or notification made thereunder in regard to grant of facility under this section on the date from which such facility may be granted to him, and includes an industrial undertaking fulfilling the conditions laid down in clauses (a) to (e) set up by a dealer
(i) already having an industrial undertaking manufacturing the same goods at any other place in the State,
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