GIST OF JUDGMENTS

 

 
   
August 20, 2006  
 

Civil Writ Petition Nos. 17062 , 17063 , 17064 , 17065 & 18536 of 2004

Jai Bharat Trading Co.
vs.
State of Punjab and Others

Date of Decision : 12.07.2005

 

Whether assessee is required to present an application for refund where any amount is to be refunded by the Assessing Authority to any person by virtue of an order issued under the Act?

 

Held-No, A perusal of the above provision would show that sub-sections (1) and (3) of Section 12 of the Act operate in different fields. Sub-section (1) is applicable if the amount of tax, penalty or interest is paid in excess of the amount due or the amount of tax so paid is in respect of the sale or purchase of any declared goods and such goods are sold in the course of inter-State trade or commerce. The proviso to sub-section (1) contemplates that the claim for refund is required to be made within a period of three years from the date on which such claim accrues. The said claim is based upon the action of the dealer in deposit of the tax, interest or penalty and consequently there is limitation for claiming refund on the basis of action of the dealer alone. Under sub-section (3) of Section 12, the Assessing Authority is to give effect to the orders issued under the Act. Thus, if the order of assessment has undergone modification or reversal by the authorities under the Act, the same is to be given effect by the Assessing Authority. The said provision does not contemplate any application of refund on the part of the assessee.

 
PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
   
 

General Sales Tax Reference Nos. 60 to 62 of 1986

Haryana Conductors Pvt. Ltd.
vs.
State of Haryana

Date of Decision : 23.08.2004

 

Whether the electricity conductor, manufactured by the applicant-firm by twisting six stands of aluminium wire and one strand of steel wire together to form a conductor capable of transmitting electricity, is a wire and entitled to concessional rate of tax within the meaning of Government Notification dated July 7, 1972 ?”

 

Held-No, As regards the question whether in the term “wires” entitled for concessional rate, the term “conductors” was included, the Tribunal rightly held that the conductors were different commercial items.

Contention on behalf of the assessee is that where the article in question retains its basic character and is given the same treatment, it could not be held that it was a different article liable to different rate of tax. This contention misses the point that mere retaining of the same characteristic was not enough for holding that the article remained the same.

 
PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
   
 

Civil Writ Petition Nos. 17062 , 17063 , 17064 , 17065 & 18536 of 2004

Jai Bharat Trading Co.
vs.
State of Punjab and Others

Date of Decision : 12.07.2005

 

Whether assessing authority was justified in refusing interest on refundable amount which, as per order issued under the Act, was found in excess of the amount due under the Act?

 

Held-No, Under sub-section (3) of Section 12, the Assessing Authority is to give effect to the orders issued under the Act. Thus, if the order of assessment has undergone modification or reversal by the authorities under the Act, the same is to be given effect by the Assessing Authority. The said provision does not contemplate any application of refund on the part of the assessee. The interest for the delay can be denied if such delay is beyond the control of the authority or attributable to the dealer. The mere fact that the dealer was not running around the Assessing Authority to seek refund is not a reason which can be attributed to the dealer for delay in allowing the refund. In fact, the respondents have not given any reason which can be said to be beyond the control of the Assessing Authority for the delay in allowing refund nor any other reason is attributed to the dealer.

 
PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
   
 

General Sales Tax Reference Nos. 60 to 62 of 1986

Haryana Conductors Pvt. Ltd.
vs.
State of Haryana

Date of Decision : 23.08.2004

 

Whether the Tribunal was legally justified in holding that in view of judgment of the P unjab and Haryana High Court in Prem Raj and Sons vs. Sales Tax Officer [1967] 19 STC 531, a subsequent decision of the Hon'ble Supreme Court would be a valid ground for suo motu revision?

 

Held-Yes, it is clear that under Section 40 of the State Act read with Section 9 (2) of the Central Act, the power of suo motu could be exercised.
That on the facts and in the circumstances of the case, suo motu power of revision could be exercised on the basis of a subsequent judicial pronouncement.

 
PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
   
 

Trade Tax Revision No. 759 of 1998

Commissioner of Trade Tax, U.P., Lucknow
vs.
S/s Durga Form Product Ltd., Sudhiya – Kunwa, Gorakhpur

Date of Decision : 23rd September, 2005

 

Whether the Trade Tax Tribunal was legally justified in holding that the balanced cattle feed is exempt in view of the notification No.3714 dated 5.6.1985?

 

Held-Yes,

        A learned Single Judge in the case of Ram Chandra Asha Ram vs. Commissioner of Sales Tax 1996 U.P. Tax Cases 1328 interpreted the aforesaid entry and held that the items referred in the entry of cattle fodder are by way of illustration. Any thing that is called cattle fodder in the general or trade sense of the word has to be treated as such unless it comes within the excluded items namely oil cake, rice polish, rice bran or rice husk. The definition is only illustrative and excludes certain specific items and includes certain items by way of illustration. Therefore, a thing which is admitted to be cattle fodder and is not within the excluded item has to be treated as cattle fodder by virtue of the aforesaid notification, no tax can be levied.

        The above judgment has been approved by the Apex Court in Commissioner of Sales Tax, U.P. vs. M/s Ram Chandra Asha Ram 2000 UPTC 636. The Supreme Court has held as follows: -

        “What is exempted under the notification of 5th June, 1985 is cattle fodder. In generic sense the expression “cattle fodder” is inclusive of everything that is fed to cattle including damaged wheat. In the decision relied on by the learned Counsel for the appellant this aspect is noticed but in the particular case fodder was defined as “fodder except cotton seed and oil cakes”. In the present case there is no such exclusion of the damaged wheat that is processed and used as for the cattle. If that is so, we do not think that there is any justification to interfere with the view taken by the High Court.”

        In the present case, as pointed out above it was not disputed even by the Assessing Authority, that the items sold by the dealer are fed to cattles. The ingredients of the product in question do not include the excluded items, specifically excluded in the above notification relating to cattle fodder. In this fact situation there is no illegality in the order of the Tribunal holding the product as cattle fodder and granting exemption under the aforesaid notification dated 5th of June, 1985.

        This view is further fortified by the fact that subsequently above entry relating to the cattle fodder has been amended by the State Government by specifically excluding the balanced cattle feed from the entry of cattle fodder.

        It may be pointed out that the notification dated 5.6.1985 was subsequently amended by the notification No. 1381 dated 6th of June, 1996 and as the result of the aforesaid amendment, the balanced poultry feed, cattle feed or fish feed has been excluded from cattle fodder. The present controversy is being decided on the basis of the notification dated 5th of June, 1985 which was in operation upto 5th of June, 1996.

 
ALLAHABAD HIGH COURT
   
July 14, 2006
Civil Appeal No. 2635 of 2006
(Arising out of SLP (C) No.1811 of 2005)
Dhampur Sugar Mills Ltd.
vs.
Commissioner of Trade Tax, U.P.
 
Date of Decision : 12th May, 2006
 

Sale-The U.P. Trade Tax Act, 1948-Section 2(h)- Sale, Barter or exchange-Valuable consideration-Adjustment of price of molasses from the amount of licence fee-A sale of molasses.


Whether the adjustment of price of molasses from the amount of licence fee would amount to sale within the meaning of Uttar Pradesh Trade Tax Act, 1948?

 
Held-Yes,
        It is inconceivable in law that a licence fee can be a subject matter of barter or exchange. A barter or exchange indisputably is distinct and different from a sale. A contract of sale denotes a transfer of property in goods by mutual consent. Such a transfer of ownership must be in relation to transfer from one person to another. The consideration would be a price in the form of money. Only when the consideration for transfer consists of other goods, it may be an exchange or barter. Such is not the position here.
        An adjustment of price in a case of this nature, in our opinion, therefore, would come within the purview of the term "other valuable consideration", inasmuch as both the appellant and the Company, were aware that they have to fulfill their respective terms of obligations, i.e., (i) payment of licence fee on monetary terms; and (ii) payment of price of molasses supplied by the appellant to the Company, which is again on monetary terms. Parties, therefore, by mutual consent only have agreed to adjust the price of molasses supplied with the amount of licence fee. The rate for supply of molasses was to be determined by the Central Government. In that view of the matter, presumably one party or the other shall make good the shortfall or the excess upon taking into consideration the price of molasses fixed by the Central government. The transaction, in our opinion does not constitute an exchange or barter. It was not a transaction by way of transfer of stock. It was also not a transfer by way of a mortgage or lease.
        The Company was to use the molasses for the purpose of manufacture of sugar in its factory. Transfer of such molasses by the appellant to the Company, would not be a transfer by way of transfer of stock. It is transfer of the ownership in goods wherefore the Company was to pay the price to the appellant. The transaction, therefore, beyond any doubt, answers the description of "sale" within the meaning of the provisions of the U.P. Trade Tax Act, 1948. For each supply of molasses the appellant would be entitled to the price thereof. The amount towards the price of the goods could be paid either by way of cash or deferred payment. Instead of cash, the price of molasses was to be adjusted from the amount payable by the appellant to the owner by way of consideration for use of the mill. Such a mutual arrangement is merely one for the purpose of adjusting the accounts. The transactions between the parties are in effect and substance involve passing of monetary consideration. It would, thus, come within the purview of the expression "any other valuable consideration", which expression would take colour from deferred payment being a monetary payment, but does not loose its character of some other monetary payment by way of mutual arrangement. The parties are not bartering or exchanging any goods so that the element of monetary consideration is absent. Money is a legal tender.
        Cash is, however, narrower than money. The words "deferred payment" and "other valuable consideration" enlarge the ambit of consideration beyond cash only. Entry 54 of List II of the Seventh Schedule to the Constitution of India provides for "sale of goods". Once a sale of goods takes place, the State becomes entitled to impose tax on sale or purchase of goods. For construction of the words "sale of goods", now the Court is not necessarily required to fall upon the definition of sale of goods, as contained in the Sale of Goods Act, 1930. It has to be governed by its enlarged definition under Clause (29-A) to Article 366 of the Constitution of India. Once an essential component of sale takes place, Sales tax would, indisputably, be payable.
 
Supreme Court of India
   
 
Civil Appeal No. 7147 of 2004
M/s Jai Beverages Pvt. Ltd.
vs.
State of Jammu & Kashmir and others

  Date of Decision : 12th May, 2006
(A)

Incentives to industrial prestigious units - Section 5 of the Jammu & Kashmir General Sales Tax Act, 1962 read with sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, - Notification No. SOR 247 of August 20, 1998-Conditions prescribed in the notification relaxed by the decision of the State Cabinet in the case of the assessee-Decision of the Cabinet not notified but Memorandum of Understanding signed in between the Assessee and the Industries Department-Assessee’s industrial unit entitled for incentives.


Whether the industrial unit of the assessee was entitled for availing tax incentives when there was nothing in the Policy or in the Notifications issued pursuant thereto, prescribing any date for the capital investment and the assessee had fulfilled the condition of capital investment as per subsequent decision of the State Cabinet in its case and the Industry Department of the State had signed a Memorandum of Understanding with the assessee?

 
Held-Yes,
        Having regard to the Industrial Policy announced by the Government of Jammu and Kashmir, the appellant, whose unit was registered as a medium scale industry, applied to the Government making a proposal for investment of Rs.25 crore or more pursuant to the Industrial Policy of the Government so that it could acquire the status of a "prestigious unit" and be entitled to all the incentives provided in the Industrial Policy for such a unit. The proposal was discussed in a meeting attended by the Chief Minister, Finance Minister, the Minister for Industries and Commerce, Chief Secretary, Principal Secretary, Managing Director SIDCO, and the Chairman of the appellant - Company. The revised proposal was considered and it was observed that no departure from the new industrial policy was involved if the investment materialized concurrently with the availment of incentives. However, it was felt that a liberal view needed to be taken of the policy to the extent that if the investment of Rs.25 crores or more materializes within the maximum period of six months from the date of commercial production, the company should be given the benefit of incentives. A Memorandum of Understanding (for short 'MOU') for this purpose had to be executed by and between J&K SIDCO and the appellant Company. The proposal had the concurrence of the Finance Minister where after a Memorandum was submitted to the Cabinet which was approved vide Cabinet decision No.7/2 dated January 19, 2000.
Accordingly, SIDCO respondent No.7, signed a MOU with the appellant Company on the above lines.
        A reading of the Memorandum of Understanding leaves no manner of doubt that the industrial unit to be set up involved a minimum capital investment of Rs.27.50 and was an industrial unit for the manufacture and bottling of Soft Beverages. It was also clearly understood that the commercial production was to start by end of March 2000 and the minimum investment of Rs.25 crores must be made within a period of six months i.e. by end of September 2000. In the event of the failure of the appellant to make investment as agreed, the appellant undertook to refund the incentive, if any availed of, as a "prestigious unit" together with interest. It was also clearly understood that the appellant shall become eligible to avail and be entitled to all incentives and subsidies currently applicable to "prestigious units" in pursuance of the Industrial Policy as published on May 27, 1998 from the date of the commercial production.
        It would thus appear from the Notifications, Orders and Certificates noticed above that the appellant signed a MOU with SIDCO pursuant to a Cabinet decision to set up an industry with a capital investment of more than Rs. 25 crores for the manufacture and bottling of soft beverages. As between the parties, it was clearly understood that the unit to be set up by the appellant shall be entitled to avail of the package of incentives offered by the Industrial Policy to the "prestigious units". The commercial production was to commence by March 30, 2000 and the investment of Rs. 25 crores or more was to be made on or before September 30, 2000. The certificates issued by the authorities establish that commercial production had commenced as agreed and that investment of over Rs.27 crores by way of capital investment had been made by September 30, 2000.
        Thus it would appear that the Government took a conscious decision to permit the appellant to complete the minimum capital investment of Rs. 25 crores latest by September 30, 2000. It also appears from the letter of the Industries and Commerce Department dated April 25, 2000 that while discussing the proposal of the appellant it was felt that a liberal view needs to be taken of the policy to the extent that if the investment of Rs. 25 cores or more materializes within the maximum period of 6 months from the date of commercial production, the appellant should be given the benefits of the incentives. This proposal had the approval of the Finance department as also the approval of the Cabinet, which did not consider it as a departure from the policy announced.

        All these facts, therefore, lead to the only conclusion that having considered its new Industrial Policy, and having considered the proposal made by the appellant, the Government took a conscious decision to grant the package of incentives to the industrial unit being set up by the appellant provided it went into commercial production by the end of March 2000 and made the necessary investment of Rs. 25 crores or more on or before September 30, 2000. The documents and material on record disclose that the Government took this decision after full discussion on all aspects of the matter, and in particular by reference to the date by which the appellant was required to invest Rs.25 crores in the industrial unit being set up by it. The State cannot be permitted to ignore its own conscious decision to permit the appellant to invest a sum of Rs. 25 crores or more by September 30, 2000. The appellant acted on the basis of the decision taken by the State Government and incorporated in the Memorandum of Understanding. The fact that Rs.25 crores was invested by September 30, 2000 was not disputed in the several counter-affidavits filed before the High Court. In view of the voluminous evidence on record the State cannot dispute the fact that over Rs. 27 crores was invested by the prescribed date i.e. by September 30, 2000. In this background, the State cannot be allowed to say that the incentives cannot be extended to the industrial unit set up by the appellant because the amount of Rs. 25 crores or more was not invested by the date the unit went into commercial production, though the amount of Rs. 27 crores was invested within the period prescribed by the Government as incorporated in the Memorandum of Understanding.

(B)

Industrial Policy provided a negative list of certain Medium / Large scale industrial units for tax incentives-No such negative list in case of prestigious units having capital investment of Rs. 25 crore or above-Denial of tax incentives to prestigious units on the basis of negative list for Medium / Large scale industrial units not justified.


Whether negative list, of industries prescribed under the new Industrial Policy of the State for denying tax incentives to medium/ large scale industrial units, would also apply to prestigious units having capital investment of Rs. 25 crore or above, where the provision in the Policy relating to tax incentives to prestigious units did not provide any negative list?

 

Held-No,

         Having perused Annexure 'B' to G.O. No. 202 of 1988 of May 27, 1998; SRO 247 and SRO 249 issued on August 20, 1998, we are of the view that the negative list concept is not applicable to "prestigious units". Paragraph 10 of Annexure 'B' to G.O. No. 202 of May 27, 1998 in terms provides a special package of incentives for "prestigious units" and begins with the words "notwithstanding anything contained in paragraphs 7, 8 and 9" above. In paragraphs 8 (i), (ii) and (iii) certain benefits are conferred on small scale units, medium scale units and large scale units in the matter of payment of General Sales Tax, except on items brought in the negative list. There is no mention of the negative list in paragraph 10 of the G.O., which clearly brings out the intention of the Government to treat "prestigious units" on a different footing altogether. Similarly, SRO 247 which grants exemption to "prestigious units" from payment of General Sales Tax and Central Sales Tax does not refer to the negative list.
Even SRO 249 to which the negative list is appended as a Schedule, only refers to finished goods manufactured by newly established, "medium and large scale" industrial units but does not refer to "prestigious units" which are treated as a separate class altogether.

 
Supreme Court Of India
   
 
Trade Tax Revision No. 66 of 2006
The Commissioner, Trade Tax, U.P.
vs.
S/S Kesharwani Jarda Bhandar Sahson, Allahabad
  Date of Decision : 19th April, 2006
 
Refund- The U.P. Tax on Luxuries Act-Tax deposited by the assessee under the provisions of the Act- Subsequently, Act declared ultra vires-Admissibility of refund.
 
Where the assessee has deposited a tax under the provisions of an Act, which has subsequently been declared ultra vires, whether the assessee is entitled for refund of such tax?
 
Held- That the issue lies in the principle enshrined under Section 29-A of the Trade Tax Act as well as the principles of undue harassment as formulated by the Hon’ble Supreme Court of India in the case of Mafatlal Industries vs. Union of India; 1997 (5) SCC 536.
        On the aforesaid principles it is apparently clear that refund of tax can be directed in favour of the Assessee only if he able to establish that the burden of tax has not been passed upon the purchaser. Therefore, before any refund can be directed to the Assessee, it is but necessary for the authorities under the Trade Tax Act to record a categorical finding on the basis of the material on record of which may be led in evidence by the Assessee, as to whether the burden of tax has been passed over on to the purchaser or not. If the answer to the issue is in favour of the Assessee, it is only then that the Assessee would be entitled to refund the tax, which has been deposited. If the answer is adverse to assessee, the application has necessarily to be rejected.
 
Allahabad High Court
   
 
Trade Tax Revision No. 459 of 2006
M/s Roadways India Jalpaiguri (West Bengal)
vs.
Commissioner, Trade Tax, U.P., Lucknow
&
Deputy Commissioner, Trade Tax Help Center, Ghaziabad
  Date of Decision : 27th April, 2006
 
Seizure of Goods-The U.P. Trade Tax Act, 1948 –Section 13-A(1)(1-A)-Goods declared on Transit authorization as ‘Stranded wire, cables, plated bands’ –On Exit check-post, copper wire found on vehicle –Seizure of copper wire-Demand of security for release of goods.
 
Where the description of the goods as disclosed in the export declaration form accompanying the consignment which read as ‘Stranded wire, cables, plated bands, and the actual goods found on the vehicle at the exit check post was copper wire, whether there the officer concerned was justified in making seizure of goods under Section 13-A (1-A) of the Act?
 

Held-yes,

        In view of the description of the goods as disclosed in the export declaration form accompanying the consignment which read as ‘Stranded wire, cables, plated bands, and the actual goods found on the vehicle at the exit check post was copper wire, there was material before the officer concerned for reason to believe that the goods found in the vehicle were not identical, as such the exercise of power of seizure under Section 13-A (1-A) by the officer could not be said to be arbitrary.

(B)
Whether, in the facts and circumstances of the case, for release of the seized goods, demand of security under Section 13-A (6) of the Act equivalent to 10% of value of goods, was arbitrary?
 

Held-No,

        Counsel for the revisionist had not been able to establish that the demand of 10% of the total value of the goods covered by the consignment, as demanded by the Tribunal, exceeded the amount as would be sufficient to cover the tax and the penalty which might be imposed on the conclusion of the proceedings initiated under Section 13-A (1-A) with reference to Section 15-A (q) of the U.P. Trade Tax Act.
        In such circumstances the demand of 10% of the total value of the goods cannot be said to be contrary to the provisions of Section 13-A (6).

 
Allahabad High Court
   
 
Trade Tax Revision No. 626 of 1997
Commissioner, Trade Tax, U.P., Lucknow
vs.
S/S Raghunath Laxmi Narain, Varanasi

  Date of Decision : 09th March, 2006
 
Sale in the course of the export-The Central Sales Tax Act, 1956-Section 5-Export of goods to Nepal- Purchase order received from Nepal party-Goods dispatched to Nepal- Delivery of the goods taken by the Agent/authorized representative of Nepal party at Indo-Nepal border- Copy of Form-B, Cess receipt, Transport receipt and Custom certificates produced by the selling dealer -Custom certificates not found genuine- The movement of the goods up to the Custom Frontier of India and the payment of Cess and issue of Form-B by the Custom Frontier of India not in dispute-Tribunal justified in holding the sale in the course of export to Nepal.
 
Where, -
(i) in pursuance of the order received from Nepal party, goods were dispatched and delivery of the goods were taken by the Agent/authorized representative of Nepal party at Indo-Nepal border;
(ii) goods were carried to Nepal by such Agent/ authorized representative; and
(iii) Copy of Form-B, Cess receipt, Transport receipt, Nepal custom certificates and the books of account etc. were produced before the Assessing Authority by the selling dealer,
whether the Tribunal was justified in treating the sale as sale in the course of export of goods to Nepal especially when Custom certificates, alleged to have been issued by the Custom Department of Nepal, were not found genuine?

 

Held-Yes,

        In the case of Commissioner of Trade Tax vs. M/s Bansal Trading Company, Gorakhpur (supra), the Court held as follows:-
        “Tribunal further held that the dealer had paid the Cess at the Custom Station, Sanauli and merely because the entry in the record of the Custom Department of Nepal about the payment of Custom duty was not found, which may be with the view to avoid the payment of Custom duty but the movement of the goods to Nepal cannot be disputed and its sale inside the State of U.P. cannot be presumed. Finding of the Tribunal is finding of fact. Perusal of the order shows that in the original proceedings, the Assessing Authority had accepted the movement of goods to Nepal in pursuance of the order of the Nepal parties in the course of export. It is true that on the basis of the information that the Custom Certificate of Nepal was found incorrect, presumption can be drawn that the goods had not reached to Nepal but in the proceedings under Section 21 tax cannot be levied on the basis of the presumption. It is not disputed that there was an order of the purchasing party and sales were made to the Nepal parties. The movement of the goods up to the Custom Frontier of India and the payment of Cess and issue of Form-B by the Custom Frontier of India are not in dispute. In the absence of the any specific material that the goods had been sold inside the State of U.P. and the goods had not gone to Nepal, only on the basis of presumption it cannot be treated as intra-State sales. There may be a possibility, that to avoid the Custom duty, goods may have been transported inside the Nepal through such route where there was no Custom Check Post. In the proceedings under Section 21 of the Act burden lies upon the revenue to prove that the goods had not gone to Nepal and have been sold inside the State of U.P. No such evidence had been produced. Therefore, mere on the ground that the Custom Certificates of Nepal, Custom Authority, was found wrong the presumption that the goods had not gone to Nepal and had been sold inside the State of U.P. could not be drawn and levy of tax is not justified. I do not find any error in the order of the Tribunal which is accordingly upheld.”
        The present case is squarely covered by the aforesaid decision in the case of Commissioner of Trade Tax vs. M/s Bansal Trading Company, Gorakhpur (supra). The case of Commissioner of Trade Tax, U.P., Lucknow vs. S/S Ishwari Prasad Moti Lal (supra), is not applicable to the present case. In the said case, it was found that the Nepali buyer had come to the shop of the dealer, purchased the goods, took the delivery and thereafter, claimed to have taken the goods to Nepal.

 
Allahabad High Court
   
 
Trade Tax Revision No. 1145 of 2005
S/S Maa Vaishno Agricultural Industries, Englishia Line, Varanasi
vs.
Commissioner, Trade Tax, U.P., Lucknow

  Date of Decision : 05th April, 2006
 
Service of Notice-The U.P. Trade Tax Rules, 1948-Rule -77-Mode of service- Alleged that one of the partners of the petitioner firm, after receiving the copy of the notice for assessment refused to accept the same -Endorsement made on the notice itself by the process server. Treating the service sufficient assessment made- Affidavit of said partner that he never refused-Statement about illness of the said partner made-First and second appeals dismissed on the ground that in support of illness no medical certificate filed-No material for rejection of affidavit-Rejection of affidavit not justified-Procedure laid down for service of notice not followed-Assessment without proper service of notice not sustainable.
 
Whether the appellate authorities were justified in rejecting the affidavit filed by the partner of the firm when there was no material on record to reject the same?
 

Held-No,

        There is no material on record on the basis whereof the said statement on oath made by the partner of the firm could have been disbelieved. In absence of any other material on record, the statement made on oath has necessarily to be accepted as correct. Accordingly, there was no justification for the First Appellate Authority to have rejected the objection raised by the petitioner qua non-service of notice.

 
Whether, in the facts and circumstances of the case, service of the notice on the assessee can be said to be proper and legally correct?
 

Held-No,

         That under the law the Assessing Authority was obliged to have sent a notice by registered post at the recorded address of the petitioner firm before proceeding ex parte. Such a procedure has not been followed for the reasons best known to the Assessing Authority. Reference in that regard may be had to the judgment of this Court reported in 2004 (1) UPTC 279 M/s Ram Prakash Naresh Kumar, Hathras vs. Commissioner of Trade Tax.

 
Allahabad High Court
   
 
Trade Tax Revision No. 191 of 2006
M/s Divisional Superintendent Engineering (C) Northern Central Railway, Allahabad
vs.
Commissioner, Trade Tax, U.P., Lucknow
  Date of Decision : 26th April, 2006
 
Business-The U.P. Trade Tax Act, 1948-Section 2(aa)-Business- Activity of railway of carriage of passengers and goods–An activity in the nature of trade or commerce- Section 2(c) Dealer- Sale of unserviceable materials and scraps by the railway liable to tax.
 
Whether the activity of Railway of carrying passengers and goods is the activity of commerce within the definition of ‘business’?
 
Held-Yes, in the case of the applicant itself, the Apex Court held that the activity of the railway is of the nature of trade or commerce.
(B)
Whether railway is liable to pay tax on its sales of unserviceable materials and scraps?
 
Held-Yes, the activity of the appellant in the selling of unserviceable material and scrap iron etc. would be “business” within Clause (i) of the definition of the word ‘business’ introduced by the Amending Act. The word ‘business’ according to Clause (i) of that definition would include any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not it is carried on with a motive to make gain or profit. So even if it be assumed that the activity involved in selling unserviceable material and scrap iron etc. would not amount to carrying on business in the normal connotation of that term, it would be ‘business’ within sub-clause (i) of that clause as introduced by the Amending Act.
The case of the applicant is squarely covered by the decision of the Apex Court in the case of The District Controller of Stores, Northern Railway, Jodhpur vs. Assistant Commercial Taxation Officer (supra), which is in the case of the applicant itself. After the decision of the Apex Court in the case of the applicant itself, there is no scope of any further argument.
        After the decision of the Apex Court in the case of The District Controller of Stores, Northern Railway, Jodhpur vs. Assistant Commercial Taxation Officer (Supra), the law relating to the liability of tax on the sale of iron scrap by the railway had been settled and there was no manner of doubt about the taxability of iron scrap.
 
Allahabad High Court
   
 

The Kisan Sahakari Chini Mills Ltd.

Vs.

Commissioner Trade Tax, U. P.

 

TTR No. 52 of 2006 Date of Judgment 6/2/2006

 

 

Appeal-The U.P. Trade Tax Act, 1948-Section 9(3)-In assessment reliance placed on ex-parte report of the Excise Department-No opportunity of cross examination with the Officers of the Excise Department provided-Assessment challenged in appeal-Case remanded by the First Appellate Authority for providing opportunity- Second appeal rejected by the Tribunal-Remand order justified.

 

Where the assessing authority had passed assessment order utilizing the ex parte report of the Excise Department and without affording opportunity of cross examination with Officers of the Excise Department, whether the Appellate Authority and the Tribunal were justified in remanding the case to the assessing authority in view of the Court's decisions to the effect that remand orders are not made by the authorities merely to get rid of the case so that the authority could avoid going into the matter deeply and deciding the issue once and for all?

 

Held-Yes, It is apparent that the contention raised on behalf of the revisionist, to the effect that documents relied upon by the Department for assessing the tax liability (the report of the Excise Department with regards to removal of molasses without gate passes) should have been disclosed to the petitioner and further an opportunity should have been afforded to cross examine the officers of the Excise Department, had found favour and therefore the order of the assessing authority has been set aside and the matter was remanded to afford such opportunity as has been asked by the revisionist and thereafter to re-assess the tax liability of the revisionist. The order passed by the First Appellate Authority cannot be said illegal in any manner nor can it be termed as an attempt to get rid of the case. Such an order passed by the First Appellate Authority is in conformity with the powers vested in him under section 9(3) of the U.P. Trade Tax Act and is supported by strong cotangent reasons.

 

Allahabad High Court

 

 

Lucent Technologies (P) Ltd, City Center , Meerut

Vs.

Commissioner Trade Tax, U. P.

 

TTR No. 61 of 2006 Date of Judgment 28/2/2006

(A)

Refund-The U.P. Trade Tax Act, 1948-Section 29(1) –Revisionist admitted no tax liability-Assessing Authority assessed tax-First Appellate authority set aside the assessment order and remanded the case to the assessing authority-Amount recovered during pendency of First Appeal-After refund denial of refund unjustified.

 

Where assessment order was set aside in appeal and case was remanded to the assessing authority, whether refusal of refund of the amount recovered from the dealer in excess of the amount of tax admitted by the dealer was justified?

 

Held-No, that in view of the decision of the Division Bench of the Allahabad High Court in case of M/s Hind Lamps Limited, Firozabad Vs. CST (supra) 2004 UPTC-80, revisionist was entitled for refund of the amount, recovered from him during the pendency of appeal, other than admitted tax, if any.

(B)
Assessment order set aside in appeal and case remanded-Refund of amount of tax recovered during pendency of appeal-Payability of interest by the Department.
 

Where assessment order has been set aside in appeal and case has been remanded back to the assessing authority, whether dealer is entitled for receiving interest on the amount recovered from him during pendency of appeal in excess of admitted tax?

 

Allowing the revision, the Honourable Court directed the assessing authority to pay interest in accordance to section 29 of the Act.

 

 

Allahabad High Court

 

 

Commissioner Trade Tax, U. P.

Vs.

The Cooperative Company Ltd., Saharanpur

 

TTR No. 39 of 1996 Date of Judgment 7/2/2006

 

 

Turnover-The U.P. Trade Tax Act, 1948-Section 2(i)-Bottling charges charged for filling of liquor in bottles, which included price of packing material-Definition of turnover in clause (i) of section 2 inclusive of any sums charged for any thing done by the dealer in respect of the goods sold, at the time of or before the delivery of the goods-Inclusion of bottling charges in the turnover justified.

 

Where liquor was sold in bottles and bottling charges, inclusive of price of packing material, were realized separately, whether the Tribunal was legally justified in holding that such bottling charges were not part of the turnover?

 

Held-No, The decisions of the Apex Court in the cases of TVL Ramco Cement Distribution Co. Pvt. Ltd. Vs. State of Tamilnadu, reported in AIR, 1993, 123 and Dyer Meakin Breweries Limited Vs. State of Kerala, reported in 36 STC 248 clearly held that in the case where the goods are sold in packed form, there is implied contract of sale of material even if the price is separately charged for. It has been further held that the packing charges are charged for the packing material and for labour charges etc. falls within the purview of “any sums charged for any thing done by the dealer in respect of the goods sold, at the time of or before the delivery thereof” and thus, it is the part of the turnover. Bottling of liquor is an integral part of the process of manufacturing. Liquor becomes marketable only after bottling. Liquor cannot be sold without packing. Thus, the packing charges are liable to be included in the turnover and liable to tax.

 

Allahabad High Court

 

 

Radha Brick Field, Agra

Vs.

Commissioner Trade Tax, U. P.

 

TTR No. 1361 of 1997 Date of Judgment 7/2/2006

 

Period of limitation for making assessment-The U.P. Trade Tax Act, 1948-Section 21(2)-Second proviso-Section originally provided for making assessment within four years after expiry of the assessment year- After 31-3-1994, second proviso of section 21(2) providing for making assessment for 1989-90 upto 31-3-1995 added with effect from 14-5-1994-Retrospective effect of the amendment- Assessment/re-assessment made for 1989-90 within the time period provided in the second proviso but after the expiry of the period of four years not barred by time.

 

Whether the second proviso, of sub-section (2) of section 21 of the U.P. Trade Tax Act, 1948, which was added with effect from 14-5-1994, intended to extend the period of limitation for making assessment/re-assessment for the assessment year 1989-90, which had expired on 31-3-1994?

 

Held-Yes, The proviso added to sub-section (2) of section 21 of the Act does not put any embargo on the power of the Assessing Authority not to open the assessment if the period as prescribed earlier, had expired before the proviso came into operation. As held by the Apex Court , one has to see the language of the provision. If it is clear, it has to be given full effect.

        Full effect to the second proviso which has been added now, can be given only if the said proviso is read to have been applicable not only to assessments which were incomplete, but also to the assessments which had reached to finality by reason of earlier prescribed period of four years being expired.

        The second proviso added to section 21(2) extending the period of limitation for making assessment/re-assessment for the assessment year 1989-90 is applicable to those cases where the assessment has reached to finality by reason of earlier prescribed period of four years being expired.

 
Allahabad High Court
   
   
 

Commissioner Trade Tax, U. P.
Vs.
Glaxo Laboratories India , Aligarh

TTR 480 of 1999
 

Limitation – The U.P. Trade Tax Act, 1948 –Section 21(2)- Proviso empowering assessing authority to pass order within eight years after expiry of assessment year added on 19-2-1991-Assessment year 1985-86-Order under section 21 passed on 31-1-1994 -Assessment order not barred by limitation.

 

Whether the proviso of sub-section (2) of section 21 applies to assessment years for which limitation of four years for completing assessment had already expired before addition of the proviso?

 

Held-Yes, The issue involved in the present revision is squarely covered by the decision of the Apex Court in the case of Additional Commissioner (Legal) and Another Vs. M/s Jyoti Traders and another reported in UPTC 1999 page 45, in which Apex Court held that the proceedings initiated after the expiry of 31 st March 1990 but before 31 st of March 1994 was within time. In this view of the matter, decision in the case of M/s Chopra Diesel Spare and Another Vs. State of U.P. and Others (supra) stands overruled.

 
Allahabad High Court
 

 
Commissioner Trade Tax, U. P.
Vs.

Rubi Brick Field, Muzaffarnagar

TTR 457 of 1999

 

Payability of interest-The U.P. Trade Tax Act, 1948-Sections 2(n) & 7-D –Tax- Composition Money-Scheme providing for payment of tax-Dealer liable for payment of interest.

 

Whether in view of –
•  the definition of the word “tax” in clause (n) of section 2 of the Act provides for inclusion of Additional Tax and Composition Money accepted under section 7-D; and

•  the scheme of composition provides for payment of interest in cases of late payment of composition money,

the assessing authority was legally justified in demanding interest from a dealer who had accepted scheme of composition?

 

Held-Yes, Section 2(n) reads as follows: -

Section 2(n) “tax” includes an additional tax and the composition money accepted under section 7-D.

        In view of the aforesaid definition, composition money is included in the tax, thus all the provisions of the Act applicable to the tax is applicable to the composition money and in case of deposit of composition money beyond the specified time, interest is chargeable under section 8(1) of the Act or in case there is specific provision under the Composition Scheme for demand of interest, the same is payable.

 
Allahabad High Court
 

 

Vijay Lal Gupta, Garh Sirmaur, Rewa, U.P
Vs.
Commissioner Trade Tax, U. P.

TTR 416 of 1999

 

Penalty-The U. P. Trade Tax Act, 1948-Section 15-A(1)(q)- Transit Authorisation not surrendered at exit check-post- Presumption under section 28-B of the Act –A rebuttal presumption-Penalty, without considering other evidences led by the vehicle owner, not justified.

 

Where the driver of the vehicle had failed to surrender the copy of Transit Authorisation at the exit check-post but the vehicle owner had adduced other evidences to prove that goods had been taken outside the State, whether check-post officer was justified in levying penalty without considering such other evidences?

 

Held-No, Section 28-B of the Act came for consideration before the Apex Court in the case of M/s Sodhi Transport Co. Versus State of U.P. reported in 1986 UPTC 721 in which the Apex Court held that Section 28-B of the Act is a machinery provision and has been introduced to check the evasion of the tax. It has further been held that section 28-B of the Act raises a rebuttal presumption and in case, if by the evidences, it is proved that the goods had crossed State of U.P. , the presumption stands rebutted. Thus, necessary evidences, which have been adduced by the applicant, have to be examined by the Tribunal to decide whether the goods had crossed the State of U.P. or not. Perusal of the impugned order shows that necessary evidences have not been considered. Thus, the order of the Tribunal is vitiated and is liable to be set aside.

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
Daya Prakash Hari Kishan, Meerut

TTR 607 of 1999

 

Jurisdiction-The U.P. Trade Tax Act, 1948- Section 6- Jurisdiction for issuing notice under section 21 challenged before Tribunal for the first time-Assessee represented the case before assessing authority and First Appellate Authority-Challenge of jurisdiction before the Tribunal illegal.

 

Where the assessee represented his case before the assessing authority as well as before the First Appellate Authority but did not challenge the jurisdiction of assessing authority, whether the Tribunal was justified in entertaining the issue of jurisdiction and in quashing the assessment order on the basis of jurisdiction of the assessing authority?

 

Held-No, Section 6 of the Act says that that no objection as to the territorial jurisdiction or pecuniary jurisdiction shall be allowed by any Appellate or Revising Authority or the Tribunal unless such objection was taken before the assessing Authority at the earliest possible opportunity. Admittedly, objection of the jurisdiction had not been raised before the Assessing Authority, which could have been raised by the dealer. Thus, the Tribunal has erred in entertaining the objection with regard to the jurisdiction of the officer in issuing the notice.

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
R. K. Enterprises, Varanasi

TTR 1932 of 1998

 

Penalty-The U.P. Trade Tax Act, 1948 – Section 15-A(1)(o)- Challan, gate pass and obsolete Form 31 produced –Intention of evasion of tax not found- Imposition of penalty on the basis of obsolete Form 31-Not justified.

 

Where, in respect of goods intercepted by Mobile Squad, the dealer had produced challan, gate pass and obsolete Form 31, whether the assessing authority was justified in levying penalty on the ground that Form 31 was obsolete?

 

Held-No, Tribunal found that alongwith goods Form 31, challan and gate pass were available. Merely because Form-31 was declared obsolete, an inference cannot be drawn that any attempt was made to evade the tax. Presence of the challan, gate pass and Form-31 overrules the possibility of attempt to evade the tax.

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
Naranga Industries Limited

TTR No. 1556 of 1998

 

Penalty- The U.P. Trade Tax Act, 1948-Section 15-A (1) (o)-Penalty for late payment of tax admitted in return-Amount of tax deposited at the earlier opportunity alongwith interest-Penalty unjustified.

 

Whether the Tribunal was justified in deleting the penalty imposed for late deposit of tax admitted in return, where the assessee had deposited the tax alongwith interest at the earliest opportunity?

 

Held-Yes, Dismissing the revision filed by the Commissioner, the Hon'ble Court has expressed its views as follows: -

“The Tribunal has held that the dealer /opposite party has deposited the admitted tax at the earliest opportunity alongwith the interest. In view of the matter I find no illegality in the order of the Tribunal in setting aside the penalty order.”

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
A.V.M. Glass Industries

TTR No. 1431 of 1998

 

Penalty The U.P. Trade Tax Act, 1948 –Section 4-B (5) –Penalty for disposal of purchased goods otherwise by a recognition certificate holder- Goods, purchased on the strength of recognition certificate, sold after close of business finally-Penalty not attracted.

 

Where a dealer had purchased raw material on the strength of recognition certificate after availing exemption /concession in rate of tax and had sold such raw material after close of the firm, whether the Tribunal was justified in deleting the penalty imposed by the assessing authority for disposing of the said raw material by the dealer otherwise than in the prescribed manner?

 

Held-Yes, Dismissing the revision filed by the Commissioner, the Hon'ble Court has expressed its views as follows: -

“Under Section 4-B(5) of the Act a penalty can be levied under the following two circumstances (i) the dealer has used raw material after purchase for the purpose other than for which recognition certificate was granted or (ii) otherwise has disposed of the said raw material.

        In my view the phrase “otherwise disposed of” would not cover the case where the firm has been closed. The phrase ‘otherwise disposed of' contemplates a situation where a dealer disposed of the raw material in the capacity of holder of the recognition certificate. In the present case the firm was closed on 5-12-1982 and soda ash was sold in the assessment year 1987-88. The sale of soda ash was made not in the capacity of a recognition certificate holder. The Tribunal has rightly held that in the circumstances there is no violation of Section 4-B (5) of the Act. I find no illegality or infirmity in the order of the Tribunal.”

 
Allahabad High Court
 

 

Adhishasi Abhiyanta Electricity, Aligarh
Vs.
Commissioner Trade Tax, U. P.

TTR No. 255 of 1999 & 656 of 1999

 

Sale -The U.P. Trade Tax Act, 1948-Section 2(i)- Supply of material by contractee to contractor and price of material deducted from bills of contractor- Supply of material amounts to sale.

 

Where the contractee had supplied material to the contractor for use in the works contract and had deducted value of materials from payments made to the contractor, whether the Assessing authority was justified in treating the supply of material as a sale by the contractee?

 

Held-Yes, that the argument of the learned counsel for the applicant that the supply of the materials to the contractors was not a sale within the purview of Section 2(i) was not correct. The Apex Court in the cases of N.M. Goel and Company Vs. CST (supra), Rashtriya Ispat Nigam Limited Vs. State of A.P. (supra) and Karya Palak Engineer Vs. Rajasthan Taxation Board, Ajmer and other (supra), held the supply of materials for the value to the contractors as a sale. The aforesaid decisions of the Apex Court had been followed by this Court in the case of Commissioner of Trade Tax, U.P., Lucknow Vs. M/s Executive Engineer, Rampur (supra).

 

Exemption –The U.P. Trade Tax Act, 1948-Section 3 read with Rule 44 (f) - Sale of goods purchased from within the State against Form 3-D- List of purchases filed before First Appellate Authority, verified by assessing authority in compliance of directions of First Appellate Authority- Benefit not allowed by the Appellate Authority and the Tribunal- Case remanded back to assessing authority for allowing necessary benefit in accordance with law.

 

Facts: The revisionist contended before the First Appellate Authority that goods supplied by it to contractors were purchased from within the State. He submitted the purchase list. The Appellate Authority directed the assessing authority to verify the purchase list. The assessing authority, after verification submitted its report to the First Appellate Authority. But the Appellate authority did not allow benefit. The assessee filed an application under section 22 of the Act for rectification of the apparent mistake on record. Appellate Authority rejected the application. Appeals before the Tribunal were dismissed.

 

On Revision, the Hon'ble Court expressed its views as under: -

“However, the matter is remanded back to the Assessing Authority to examine whether the materials which have been supplied to the contractors, were the U.P. purchased and in case if they were U.P. purchased necessary benefit should be allowed in accordance to law.”

 
Allahabad High Court
 

 

Ashraf Ali
Vs.
Commissioner Trade Tax, U. P. at Lucknow

TTR No. 874 of 1999

 

Deduction from turnover-The U.P. Trade Tax Act, 1948-Section 3-F- Determination of net turnover in cases of works contracts- Purchase of goods from unregistered dealers-No proof that tax had been levied- Denial of deduction of value of goods legally justified.

 

Where the contractor had claimed that goods used in the works contract were purchased by him from within the State from unregistered dealers but failed to prove that tax had been levied on such goods, whether the Tribunal was legally justified in not allowing deduction of value of such goods?

 

Held-Yes, Section 3-F of the Act starts with the words “notwithstanding anything contained in section 3-A or 3-AAA or 3-D” thus it has an overriding effect. Under section 3-F (2) of the Act turnover which falls under clause (b) is liable to be deducted from the gross turnover for the purpose of determination of the net turnover. Sub-clause (iii) says that the amount representing the value of the goods, on the sale or purchase whereof tax has been levied or is leviable under this Act at some earlier stage is liable to be deducted. Admittedly, bricks, bricks rori and sand bajri on which tax has been assessed have been purchased from unregistered dealer and applicant was not able to show that on these goods tax has also been levied or is leviable at any stage. In the circumstances, tax has been rightly levied by the Tribunal.

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
Kaushal Kumar Vinod Kumar, Bijnor

TTR No. 983 of 1999

 

Rectification of Mistake-The U.P. Trade Tax Act, 1948-Section 22- Rectification of mistake apparent on record-Section 3-AAAA of the Act-Earlier decision of Apex Court overruled in a subsequent judgment- New Section 3-AAAA also introduced with retrospective effect-Mistake in order can be rectified validly.

 

Where the Tribunal had, in view of the judgment of the Allahabad High Court in the case of M/s Pioneer Tanneries and Glue Works Vs. State of U.P. (supra), deleted levy of tax under Section 3-AAAA of the Act and the Department had presented application under section 22 of the Act for rectification in the order on the grounds that the said section was re-introduced with retrospective effect and the Apex Court had also overruled the earlier decision in the case of M/s Hotel Balaji and Others Vs. State of A.P. reported in 1993 UPTC 318, whether the Tribunal was justified in rejecting the application under section 22 of the Act?

 

Held-No, Once the section 3-AAAA of the Act has been introduced w.e.f. 1-4-1974 in the statue by U.P. Act No. 28 of 1991 and the decision of this Court in the case of Pioneer Tanneries and Glue Works Vs. State of U.P. (supra), has been overruled by the Apex Court in the case of Hotel Balaji and Others Vs. State of A.P. (supra), the order of the Tribunal deleting the tax under section 3-AAAA of the Act on the basis of decision of Pioneer Tanneries and Glue Works Vs. State of U.P. (supra), is rectifiable under section 22 of the Act.

 
Allahabad High Court
 

 

Commissioner Trade Tax, U. P.
Vs.
Sanjay Oil & Floor Mill Aligarh

TTR No. 1102 of 1999

 

•  Appeal before the Tribunal-The U.P. Trade Tax act, 1948-Sections 10-Reasons for rejection of account books given in the assessment order-Tribunal accepting explanation of assessee without considering the reasons given by the assessing authority-Order of the Tribunal not justified.

 

Where the assessing authority had given reasons in the assessment order for not accepting the explanation of the dealer, whether the Tribunal was justified in accepting the explanation of the dealer without considering the said reasons?

 

Held-No, Tribunal is the last court of fact, therefore, while accepting the explanation, it should consider the reasons given by the assessing authority and the explanation of the dealer and reasons for acceptance of the explanation. Assessment order shows that the details of Exbt. 2 & 4 are mentioned in the assessment order. Tribunal has not considered the entries of Exbt. 2 & 4 and have not considered the reasons given by the assessing authority for drawing adverse inference and explanation of the dealer and without giving any reason, accepted the explanation in the laconic manner. In the circumstances, order of the Tribunal is vitiated.

 

•  Additional evidence in appeal-The U.P. Trade Tax Act, 1948-Section 12-B-Order of First Appellate Authority silent on filing of application under section 12-B and Forms-Tribunal accepting Forms on the basis of photocopy of application-Decision of Tribunal not justified.

 

Where perusal of the order of the First Appellate Authority showed that there was no discussion about the filling of the application under section 12-B and Forms, whether the Tribunal was justified in accepting Forms on the basis of Photostat copy of application under section 12-B?

 

Held-No, Perusal of the order of the First Appellate Authority showed that there was no discussion about the filling of the application under section 12-B and Forms. However, in case if forms have been filed before the First Appellate Authority and the same has not been accepted, the Tribunal can only admit those Forms on the application under section 12-B. Admittedly, the application under section 12-B in original had not been filed and only Photostat copy of the application was produced before the Tribunal. On the basis of Photostat copy of the application under section 12-B, Tribunal could not admit Forms, which claimed to have been filed before the First Appellate Authority. In the circumstances, matter requires reconsideration by the Tribunal.

 
Allahabad High Court
   
 

TTR 470 of 1997
The Commissioner Trade Tax, U. P.
Vs.
Rajkumar Galla Bhandar


 
Liability to tax – The U.P. Trade Tax Act, 1948 –Section 4-B –Sale of oilcake against declaration in Form 3-B to a dealer holding recognition certificate.
 
Where the assessee had sold oilcake to a dealer holding recognition certificate and had furnished declaration in Form 3-B, obtained from the purchaser, whether the sale of oilcake by the assessee was exempt from payment of tax?
 
Held- No, In the case of TTR No. 312 of 1996 M/s Jai Maan Bhawani Anna Bhandar Vs. CST decided on 9th August, 2005, it had been held that oilcake being not a declared commodity, the dealer in such circumstances was liable to pay sales tax. The issuance of Form 3-B by the recognition certificate holder to the dealer was of no consequence.
 

Allahabad High Court

 

 

The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S Bisheshwar Nath Mool Chand, Kanpur


 
Penalty – The Central Sales Tax Act, 1956 – Section 10-A –Penalty for false representation -Dealer registered for purchase of plywood, laminated decorative sheets and glue- Purchase of particles board, hard board, nova pan and hardner against Form C –Bonafide belief-Penalty not leviavle.
 
Where the Tribunal had found that hard board and particles board were kind of a plywood and fell under “laminated and decorative sheets” and hardner was an adhesive and a kind of glue and the assessee had issued Form C under bonafied belief, whether assessing authority was justified in imposing penalty under section 10-A of the Act?
 
Held-No, The finding of the Tribunal that Form “C” were issued under the bonafide belief that the alleged items purchased from outside the State of U.P. and in respect of which Form “C” were issued were covered under the registration certificate, is finding of fact. The assessing authority had also not made out any case that Form “C” were issued knowingly that the goods were not covered and made false representation. For the levy of penalty under section 10-A of the Act for the alleged default of section 10(b) of the Act no case of false representation is made out.
 

Allahabad High Court

 

 
TTR 1374 of 1998
The Commissioner of Trade Tax, U.P. lucknow
Vs.
Shine Steels, Station Road, Moradabad

 
Penalty –The U.P. Trade Tax Act, 1948 –Section 13-A (4) –Penalty where goods not accounted for properly in the books of account- Business of brass wares and brass art wares- Bill issued for brass wares- During transit goods intercepted –On physical verification Agardan and Chiragdan, brass art wares found-Tax charged @4% on sale against Form “C” Date on G.R. not mentioned- Penalty not justified.
 
Dismissing the appeal filed by the Commissioner, the Tribunal had recorded the following finding: -
“On physical verification, 13 cartoons, Agardan and Chiragdan made of brass were found. In the bills, these goods were mentioned as brasswares. The objection of the Department was that these goods were brass art wares. Before the learned First Appellate Court, the assessee submitted Form “C” regarding these sales. It is also observed from the bills that in all these bills, tax @4% was charged meaning thereby that the sale was made against Form “C”. Hence it becomes immaterial whether the goods was mentioned as brassware or brass art wares. Admittedly, bills were issued from the regular bill book. As regards non-mentioning of date in the G.R. this was a mistake committed by the transporter for which, assessee cannot be penalized. The learned First Appellate Court after considering all these facts and also considering this fact that the goods was duly accounted for in the account books, the consignor and consignee were bonafide dealers, knocked of the penalty, which in my opinion is just and proper.”
On revision, the Hon’ble Court confirmed the order passed by the Tribunal and held that in view of it’s finding, the Tribunal rightly set aside the penalty order.
 

Allahabad High Court

 

 
TTR No 222 of 1998
The Commissioner of Trade Tax, U.P. Lucknow
Vs.
S/S Katyal Metal, Moradabad

 
Rectification –The U.P. Trade Tax Act, 1948 –Section 22-Rectification of apparent mistake in an order- Import of Aluminium scrap against Form –31 mentioned in the assessment order–Turnover assessed as metal scrap attracting tax liability at a lower rate of tax of 2.5% - As per notification, sale of Aluminium scrap liable to tax @4% -Subsequent rectification in assessment order under section 22- Legal validity of rectification.
  Where-
(i)
the assessee had disclosed import of Aluminum scrap against use of Form-31;
(ii)
the assessee had disclosed sales of metal scrap attracting tax liability @ 2.5 % whereas sale of Aluminium scrap attracted tax liability of 4%; and
(iii)
the assessing authority had mentioned in the assessment order that the assessee had imported Aluminum Scrap against Form –31,
whether the assessing authority was legally justified in rectifying the assessment order under section 22 of the Act by levying tax on sale of Aluminium Scrap @4% ?
 
Held-Yes, In the case of Jai Shakti Traders, Kanpur Vs. Commissioner of Sales Tax reported in 1982 UPTC page 926, the learned Single Judge of the Court held that where relevant statutory provision having the force of law, is omitted from consideration while making the assessment order, there is apparent mistake on the face of record which could be rectified under section 22.
In the present case, dealer had imported Aluminium Scrap, the turnover of which was inadvertently assessed to tax @2.5% under the entry “All other ores, Metals, Scraps and Alloys ….” while it was liable to tax under the entry “Aluminium Ore, Metal and Scraps” @4%. This inadvertent mistake was a patent mistake and has been rightly rectified under section 22 of the Act by the assessing Authority. In the present case, no debate or any investigation of fact or adjudication was involved and mistake was apparent mistake. Thus, the order of Tribunal being erroneous is liable to be set aside.
 

Allahabad High Court

 

 
TTR 125 of 1999
The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S Ram Safe Industries, Meerut
 
Penalty- The Central Sales Tax Act, 1956 Section 10-A-Form “C” issued in respect of purchase of goods not covered by registration certificate-No proof given before assessing authority regarding presentation of application for addition of goods in the registration certificate -Tribunal accepting plea of assessee without giving opportunity for rebuttal and challenge- Order of Tribunal not sustainable.
 
Where the assessee has contended that it had presented application for addition of goods in the registration certificate-
(i) but neither there was such application on the office record of the assessing authority nor the assessee produced any evidence in support of its claim; and
(ii)
where the First appeal was dismissed on the ground that receipt produced before the first appellate authority did not have mention of application for addition of goods,
whether the Tribunal was justified in allowing the appeal of the dealer on the basis of office receipt produced before it without affording opportunity to the assessing authority of rebuttal and challenge?
 
Held-No, Admittedly, the copy of receipt and the application, by which the dealer had sought amendment and addition in the registration certificate had not been produced before the assessing authority. Thus, before accepting the claim of the dealer on the basis of the receipt, opportunity should be given to the assessing authority. Under Section 12-B of the Act after admitting the additional evidence, it is necessary to provide opportunity to the assessing authority to rebut the same but the perusal of the order of the Tribunal shows that no such opportunity was given by the Tribunal to the assessing authority. In these circumstances, order of the Tribunal is vitiated and liable to be set aside. On the facts and circumstances, it would be appropriate that the matter may go back to the assessing authority, where the dealer may produce the copy of the receipt, by which amendment and the addition in the registration certificate was sought. Assessing Authority may verify the contents of the receipt from the record and decide the issue involved afresh.
 

Allahabad High Court

 

 
TTR 990 of 1999
M/s Arun Chemicals, Saharanpur
Vs.
The Commissioner, Trade Tax U.P., Lucknow
 
Condonation of delay- The Indian Limitation Act –Section 5- Medical certificate produced in support of illness- No mention of bed rest in the certificate-Rejection of application for condonation of delay not justified.
 
Where appeal was filed alongwith application for condonation of delay duly supported by Medical Certificate of illness, whether the Tribunal was justified in rejecting the application on the ground that in the medical certificate bed rest was not advised?
 
Held-No, While considering the application of the dealer for condonation of delay, the Tribunal as well as the First Appellate Authority have taken a pedantic view. This Court as well as the Apex Court have consistently held that in the matter of condonation of delay, a liberal and pragmatic view should be taken. In the present case, in support of illness, a medical certificate was filed. The illness has not been disputed by any of the authorities. In these circumstances, there was a sufficient cause in filling the appeal beyond time. The delay in filling appeal is accordingly condoned.
 

Allahabad High Court

 

 
TTR 59 of 2006
M/s Narmada Auto Care, Shahjajanpur
Vs.
The Commissioner, Trade Tax, U.P. Lucknow

 
Exemption against declaration form- The U.P. Trade Tax Act, 1948 Section 3-A read with section 3-AAA-Exemption on sale of goods liable to tax on the point of sale by the consumer against furnishing of Declaration in Form 3-A-Furnishing of Photostat copy of exemption Forms -Exemption disallowed by Authorities below-Validity of decision upheld.
 
Where the dealer has claimed exemption on sale of goods on the basis of Photostat copy of declaration Form, whether the authorities below were legally justified in rejecting the claim for exemption?
 
Held-Yes, In the case of Commissioner of Sales Tax Versus Prabhu Dayal Prem Narain, reported in 1988 UPTC 1204, the Apex Court held that filling of the Form for the claim of the exemption is mandatory. In the case of Delhi Automobiles (P) Ltd., Delhi Versus Commissioner of Sales Tax reported in 1997 UPTC 225, The Apex Court held that the benefit of concessional rate cannot be allowed on the basis of Photostat copy and in the recent judgment in the case of M/s India Agencies (Regd.) Banglore Versus Additional Commissioner of Commercial Taxes, Banglore, reported in JT 2005 (1) SC, 16, Apex Court denied the benefit of concessional rate of tax on the basis of copy of Form marked as Duplicate in the absence of original copy. Thus, the view taken by the Tribunal disallowing the claim of exemption on the basis of Photostat copy of the Forms and in absence of the original Forms stands justified.
 

Allahabad High Court

 

 
TTR 620 of 1999
M/s Sunder Lal Mittal
Vs.
The Commissioner of Trade Tax, U.P. Lucknow

 
Rectification of mistakes-The U.P. Trade Tax Act, 1948-Section 22-Business of refining of used oil-Assessment of tax on purchase of used oil from unregistered dealers under the entry “Old, discarded and obsolete ..”-Levy held valid by the Tribunal in view of decision of High Court in other case-Application for rectification in order, sought by assessee on the basis that used oil is oil, rejected by the Tribunal-Order of rejection upheld.
 
Where the Tribunal, after considering the argument that in the earlier year it had deleted the levy, has, in view of the order of the High Court in another case, upheld the levy of tax on purchase of used oil under section 3-AAAA of the Act, whether the Tribunal was legally justified in rejecting the application of the assessee for rectification of order under section 22 of the Act?
 
Held-Yes, Under section 22 of the Act mistake apparent on the face of record can only be rectified. The issue, which requires investigation, argument, investigation of fact and is debatable, is outside the purview of the Act.

Allahabad High Court

 

 
TTR No 559 of 1999
The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S Ram Kishore Galla Vyapari, Hamirpur
 
Exemption on the basis of declaration- The U.P. Trade Tax Act, 1948-Section 3-D-Assessee furnishing declaration in Forms 3C(2) and 3C(5) obtained from selling dealer-Denial of exemption on the ground that tax was not paid by selling dealer-Goods found entered in the account books-Denial of exemption not justified.
(A)
Where declaration Forms were found genuine and goods were found recorded in the books of account of the purchasing dealer, whether the Tribunal was legally justified in allowing exemption from tax even after receipt of information that selling dealer has not paid tax?
 
Held-Yes, perusal of the order passed under section 21 of the Act shows that in respect of four transactions the only objection is that it is not established that the purchase tax had been paid. No defect had been pointed out in Form 3-C (2) and 3-C (5). It has not been disputed that the Form 3-C (2) and 3-C (5) had not been issued by the selling parties and they were found forged or non-genuine in any way. Dealer cannot be held responsible if tax had not been paid by the selling dealers, who had issued Forms. In the circumstances, rejection of claim of exemption on the basis of Form 3-C (2) and 3-C (5) of four transactions is unjustified.
(B)
Whether Tribunal was justified in allowing exemption without recording any finding where the assessing authority had found that Form furnished was related to other assessment year?
 
Held-No, that the objection of the assessing authority was that the said Form was issued for the assessment year 1989-90 and not for the assessment year 1988-89.With regard to this objection, the Tribunal had not recorded any finding and had not adjudicated the issue. Thus, the order of the Tribunal was vitiated.
 

Allahabad High Court

 

 
TTR No 777 of 1997
Commissioner of Trade Tax, U.P. Lucknow
Vs.
S/s Shakti Pharma, Railway Road, Kasganj

 
Payability of interest –The Central Sales Tax Act, 1956- Section 9, The U.P. Trade Tax Act, 1948 –Section 8(1) –Turnover of sales disclosed in the return taxable @4% against Form “C”-Turnover of sales not covered by Form “C” assessed to tax at full rate-Tax Admittedly payable-Justification of demand of interest treating the balance amount of tax admittedly payable upheld.
 
Where the assessee in the return had disclosed inter-state sales taxable @4% against Form “C” but could not furnish Form C and paid tax at full rate of tax, whether assessing authority was legally justified in demanding interest treating the balance amount of tax as admittedly payable tax of the assessee?
 
Held –Yes, In the case of Commissioner of Trade Tax Vs. Maheshwari Trading Company, 1984 ATJ 163, it has been held by the Court that Section 8(1) read with its Explanation makes it clear that it refers to admission in regard to the turnover and not in regard to the tax payable by it. The amount of tax is one which is payable under the Act, on the admitted turnover which, inter-alia, means turnover disclosed in the return filed by the assessee.
 

Allahabad High Court

 

   
   
State of Karnataka
vs.
Azad Coach Builders Pvt. Ltd., etc.
Civil Appeal Nos. 5616-5617 of 2000
Export-The Central Sales Tax Act, 1956-Section 5(3)- Manufacturers of bus chassis entering into contract with foreign buyers for export of buses-Bus chassis provided to body-builders - Sale of bus body by body builders- Export of Buses to foreign buyers by manufacturers of bus chassis-Complete buses exported by chassis manufacturers to foreign buyers-Sale of bus bodies by body-builders to manufacturers of chassis-Exemption on inter-state sales of bus bodies.
(A)
Where the exporter, manufacturer of bus chassis enters into contract of supply of complete buses with the foreign buyer and for completion of the contract provides bus chassis to body-builder for construction of bus bodies and subsequently exports such complete buses to foreign buyers, whether, in view of the provisions of section 5(3) of the Central Sales Tax Act, 1956, sale of bus bodies by body-builder to manufacturers of chassis is a sale in the course of export?
 
Held- In the case of K. Gopinathan Nair & Others vs. State of Kerala reported in (1997) 10 SCC 1, it has been held that Section 5(3) will apply to penultimate sales if such sales satisfy two conditions, namely, (a) that such penultimate sale must take place after the agreement or order under which the goods are to be exported: and (b) it must be for the purposes of complying with such agreement or export order.
        The aforesaid two tests are the only two requirements, which every penultimate sale must satisfy in order to attract the benefit of exemption under Section 5(3). The judgment of the Apex Court in the case of K. Gopinathan Nair (supra) is correct.
(B)
Whether exemption under Section 5(3) is admissible only when the commodity exported is the same as the commodity purchased?
 
Held-No, The tests propounded in the judgments in the cases of Sterling Foods vs. State of Karnataka reported in (1986) 3 SCC 469 and Vljaylakshmi Cashew Company & Others vs. Dy. Commercial Tax Office reported in (1996) 1 SCC 468 need reconsideration by a larger bench.
 
Supreme Court of India
   
Gammon India Ltd.
vs.
SPL. Chife Secretary And Others
Civil Appeal No. 1148 and 2006 with Civil Appeal No. 1149 of 2006.

 
Penalty- Andhra Pradesh General Sales Tax Act, 1957-Sections 5B & 7A(2)(ii)- Andhra Pradesh Value Added Tax Act, 1005- Section 80- The A.P. General Clauses Act, 1891-Section 8 - Repeal and the re-enactment- Jurisdiction of Assistant commissioner to levy penalty under the repealed Act.
 
Whether, in view of the provisions of Section 80 of the Andhra Pradesh Value Added Tax Act with effect from April 1, 2005 and Section 8 of the Andhra Pradesh General Clauses Act, 1891, the Assistant Commissioner of Commercial Taxes, Warangal Division had jurisdiction to initiate and complete penalty proceedings under section 7A(2)(ii) of the Andhra Pradesh General Sales Tax Act, 1957 after its repeal?
 
Held-Yes, Since the effect of a repeal is to obliterate the statute and to destroy its effective operation in future, or to suspend the operation of the common law, when it is a common law principle which is abrogated, any proceedings which have not culminated in a final judgment prior to the repeal are abated at the consummation of the repeal. When, however, the repeal does not contemplate either a substantive common law or statutory right, but merely the procedure prescribed to secure the enforcement of the right, the right itself is not annulled but remains in existence enforced by applying the new procedure.
        In the instant cases, there is a simultaneous repeal and the re-enactment and the A.P.V.A. Tax Act clearly saves the earlier provisions in toto. Consequently, rights and liabilities accrued or incurred under the A.P.G.S. Tax Act shall continue even after it is repealed.
        On critical analysis and scrutiny of all relevant cases and opinions of the learned authors, the conclusion becomes inescapable that whenever there is a repeal of an enactment and simultaneous re-enactment, the re-enactment is to be considered as reaffirmation of the old law and the - provisions of the repealed Act which are thus re-enacted continue in “force uninterruptedly unless, the re-enacted enactment manifests an intention incompatible with or contrary to the provisions of the repealed Act. Such incompatibility will have to be ascertained from a consideration of the relevant provisions of the re-enacted enactment and the mere absence of saving clause is, by itself, not material for consideration of all the relevant provisions of the new enactment. In other words, a clear legislative intention of the re-enacted enactment has to be inferred and gathered whether it is intended to preserve all the rights and liabilities of a repealed statute intact or modify or to obliterate them altogether.
        On the touchstone of the principles of law culled out from the judgments of various courts applied to the facts of these cases lead to a definite conclusion that the Assistant Commissioner (Commercial Taxes), Warangal Division, was fully justified in initiating and completing the proceedings under the A.P.G.S. Tax Act even after it is repealed. (Paras 71, 72, 73 and 74)
 
Supreme Court Of India
 
M/s Verma Roadways Co.
Vs.
Commissioner Trade Tax, U.P. Lucknow

TTR Nos. 56 & 57 of 1998
(A)
Appeal- U.P. Trade Tax Act, 1948 –Section 12-B- Additional evidence taken on record in appeal -Reasonable opportunity of challenge or rebuttal to Commissioner-a legal requirement.
 
        An explanation which was not furnished before the assessing authority in the penalty proceedings, can be taken into consideration only in exceptional cases by the Appellate Authority. A dealer has to establish as to why the said explanation could not be furnished during the penalty proceedings. An explanation furnished for the first time before the Appellate Authority needs very careful scrutiny before its acceptance. Such an explanation cannot be accepted in a routine manner.
        Section 12-B of the Act permits filling of additional evidence by the assessee, whether oral or documentary before the Appellate Authority or the Tribunal under certain specified circumstances mentioned therein. It further provides that whenever an additional evidence is taken on record in appeal, reasonable opportunity for challenge or rebuttal shall be given to the Commissioner of Sales Tax.
(B)
Penalty- U.P. Trade Tax Act, 1948 –Section 15 A (1)(o)- Goods not covered by Form 31 or 32-Seizure of goods under section 28-A –Neither any explanation furnished before check-post authority at the time of seizure of goods nor before the assessing authority in response to show cause notice- Explanation that, due to mistake of loading labour, goods bound for a destination outside U.P. were loaded on the vehicle carrying other goods for U.P. destinations, was furnished for the first time before the Appellate Authority- Subsequent rebooking of goods outside U.P. - Intention to evade payment of tax.
 
        The Tribunal has found that undoubtedly the goods in question were being brought in the State of U.P. in absence of relevant document. A definite attempt was made to import the goods in the State of U.P. without form 31 or 32 and the Tribunal has rejected the explanation that 25 bags of sopari were mistakably loaded in the truck in question. The reasons given by the Tribunal are valid and cogent for not accepting the explanation as furnished by the dealer applicant. It has found that the transporter has noted the entire goods in the trip sheet. This itself goes a long way to disbelieve the explanation coupled with the fact that no explanation was furnished at the time of seizure or in the course of penalty proceedings.
 
Allahabad High Court
   
 
M/s I.P. Rings Limited
Vs.
The State of Tamil Nadu Taxation Special Tribunal, Chennai and another

   
 
Rate of tax- The TNGST Act, 1959 –Entry 4 of the Second Schedule-Steel rings finely made of various sizes having a small cut in both the ends of the rings- Piston rings-automobile component –Entry 4 (viii) of the Second Schedule of the Act, read as “discs, rings, forgings and steel castings” –Declared goods -Section 14 of the Central Sales Tax Act, 1956- Purchase order having mention of Double taper rings, compressor rings, oil rings for use in manufacturing of automobiles and oil engines.
 
        The fact that the goods are polished and buyer has used the steel rings supplied by the petitioner as piston ring or oil engine ring does not in any way alter the basic fact that what is supplied is in fact a steel ring. As held by the Apex Court the State Legislature has no authority to prescribe a higher rate of tax on declared goods by changing the description of those goods. Article 286(3) of the Constitution obligates the States to be bound by the declaration made by Parliament regarding the goods which are of special importance in inter-state trade or commerce, as also the restrictions and conditions including the ceiling of rates, to which States may levy tax on such declared goods.
        The product manufactured by the petitioner would come within the meaning of Entry 4 of the Second Schedule to the TNGST Act.
 
High Court of Tamil Nadu
   
 
The Commissioner of Trade Tax, U.P. lucknow
Vs.
S/S Mohmmad Ikram Khan & Sons, Varanasi
 
TTR No. 119 of 1999
 
Penalty –U.P. Trade Tax Act, 1948 –Section 15 A (1)(o)-Car being imported on 20-9-1991 inside the State without purchase Bill and Form 31 or 32-Driver stating that car had to go to respondent dealer-Seizure of car by check-post authority-Before the Assessing Authority dealer disclosing purchase of car by T.C.I. Limited Bombay, from its branch at Chandigarh – Bill dated 19-9-1991, showing purchase of two cars, produced –Out of these cars one car purchased for use by Varanasi depot of T.C.I. -Delivery of the vehicle was to be given to purchaser after Post Delivery Inspection-After delivery vehicle registered in the name of T.C.I. Car also insured in the name of T.C.I.
 
        First Appellate Authority found that car was purchased by T.C.I. for use at Varanasi and deleted the penalty imposed by the assessing authority. Order of first Appellate Authority confirmed by the Tribunal. On revision held-
        Plying of the vehicle on the road is governed under the Motor Vehicles Act. No vehicle can be plied without the registration under the Motor Vehicles Act. Registration under the Motor Vehicle Act is done on the basis of sale note. Unless the sale note is issued vehicle cannot be registered under the Motor Vehicles Act. Each vehicle bears engine no. and chassis no. Vehicle is excisable commodity under the Central Excise Act. In the circumstances, there is least scope of non-disclosure of turnover and evasion of tax in case of motor vehicles. When the document established that the alleged vehicle was sold by the dealer Chandigarh branch against invoice no. 10 dated 19-9-1992 and the vehicle was coming for delivery to T.C.I. Private Limited Varanasi branch, subsequently it was permanently registered with registration no. UP-65/C-3670 and was also insured by National Insurance Company Limited in the name of T.C.I. Private Limited, there was no reason to infer that the dealer was importer. Vehicle was directly sold by Chandigarh office of the dealer to T.C.I. Private Limited, Bombay and T.C.I. Private Limited, Bombay was the real purchaser and owner of the vehicle.
 
Allahabad High Court
   
 
The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S D.K. Steels, Atiya Talab, District Jhansi
 
TTR Nos. 1089 & 1155 of 1999
 
Penalty-The U.P. Trade Tax Act, 1948-Section 15 –A (1)(o)- Import of iron scrap without Form 31-Goods being transported through a route, which was not normal route for Jhansi-Goods seized by Mobile Squad and released after realizing security- Subsequently, entry of goods made by dealer in his account books-Attempt to evade payment of tax.
 
        First Appellate Authority reduced the amount of penalty imposed by the Assessing Authority. The Tribunal deleted the penalty on the ground that along with goods bill and builty were available and the dealer had made entry of goods in its books of account. On revision-
Held- that the view of the Tribunal is wholly erroneous. Subsequent, entry of goods in the books of account is wholly irrelevant. What has to be seen whether at the time of import of the goods, declaration form was not available and the driver of the vehicle tried to import goods from the route which was not normal route to Jhansi, in which there was no check-post with the view to avoid the check-post and checking of the goods at the check-post. On the facts and circumstances of the case there was an attempt to evade the tax and the dealer was thus, liable for penalty under section 15-A (1)(o).
 
Allahabad High Court
   
 
Executive Engineer, Electricity Civil, Maintenance Division-1
Vs.
The Commissioner of Trade Tax, U.P. Lucknow
 
TTR Nos. 1034, 1038 & 1044 of 1999
(A)
Sale-The U.P. Trade Tax Act, 1948-Section 2(h)-Supply of material by contractee to contractor for use in the works contract against deduction of price of goods from the amount of contract.
 
        It is made clear that the supply of materials to the contractor for value deducted while making the payment to the contractors has been held sale by the Apex Court in the cases of M/s N.M. Goel & Company Vs. Sales Tax Officer, Rajnandgaon and another, reported in 1990 UPTC, 865, Karya Palak Engineer C.P.W.D., Bikaner Vs. Rajasthan Taxation Board, Ajmer and others, reported in JT 2004 (6) SC, 384. Thus, the order of the Tribunal treating the supply of the material to the contractors as sale, is upheld.
(B)
Exemption from tax-The U.P. Trade Tax Act, 1948-Section 3-A-Goods procured by Division-3 from within the State and from outside the State-Division-1, the revisionist supplied such goods to contractors after obtaining from Division-3-Details of purchase of goods not furnished before the Assessing Authority-Details furnished before Tribunal-Exemption on sale of goods which have been purchased from within the State after payment of tax.
 
        It has not been disputed that the applicant had received the goods from Division-3. Perusal of assessment order in case of Division-3 shows that the goods had been procured both from outside the State of U.P. and within the State of U.P. Thus, the goods which have been supplied to the contractors, if procured within the State of U.P. after paying the tax, further tax is not leviable.
        In the circumstances, in the interest of justice, the Hon’ble Court remanded back the matter to the Assessing Authority to examine the claim of the exemption on the material, which was claimed to have been purchased within the State of U.P.
 
Allahabad High Court
   
 
S/S Trambkam Flower Mills Private Limited, Durga Kund, Varanasi
Vs.
The Commissioner of Trade Tax, U.P. Lucknow

 
TTR Nos. 1142, 1143, 1144 & 1145 of 2003
 
Exemption from tax-The U.P. Trade Tax Act, 1948-Sections 3-A & 4-B-Notifications providing exemption from payment of tax on sale of Atta, Maida and Suji manufactured from the wheat on purchase of which tax has been paid under the State Act-Manufacturer, holding recognition certificate under section 4-B, liable for payment of tax on purchase of wheat at concessional rate of tax-Liability of payment of tax of the manufacturer on sale of Atta, Maida and Suji.
 
Where the notification provides for exemption on sale of Atta, Maida and Suji, manufactured from the wheat on which tax has been paid under the Act, whether sale of Atta, Maida and Suji, manufactured out of the wheat on purchase of which tax has been paid by the manufacturer holding a recognition certificate at the concessional rate of tax under a notification issued under section 4-B, will be eligible for exemption from tax?
 
Held-Yes, Section 4-B starts with notwithstanding anything contained in sections 3-A, 3-AAAA and 3-D of the Act. Thus, it has overriding effect over the aforesaid sections. Tax paid under the notification issued in exercise of powers under section 4-B of the Act is a tax paid under the U.P. Trade Tax Act. Perusal of the notifications shows that they only provided that the tax under the U.P. Trade Tax Act should be paid. Both the notifications have not said that the tax at full rate should be paid. Tax paid under the notification under section 4-B is tax paid under the U.P. Trade Tax Act.
 
Allahabad High Court
   
 
The Commissioner, Sales Tax U.P. Lucknow
Vs.
S/S Bhawani Paper Mills Ltd. Dayanand Marg, Allahabad

 
STR No. 500 of 1992
 
Penalty-The Central Sales Tax Act, 1956-Section 10-A-Chemicals included in goods mentioned in the registration certificate of paper manufacturer-Manufacturer making purchases of starch, colour, soap stone, caustic dye, caustic soda, cotton linter and some other items-Intention of manufacturer not malafide-Penalty unjustified.
 
Where purchase of starch, colour, soap stone, caustic dye, caustic soda and cotton linter by a manufacturer of paper was made under bonafide belief that the said items were covered by the registration certificate, whether assessing authority was legally justified in levying penalty under section 10-A of the Central Sales Tax Act, 1956?
 
Held-No, Section 10(b) is attracted only when registered dealer falsely represents when purchasing any class of goods that such class of goods are covered by his certificate of registration. The words which are relevant in this sub-section are “falsely represents”. False representation indicates representation which is known to be false. The element of knowledge of falsehood is inherent in the concept.
        The Apex Court in K.C. Builders v. Assistant Commissioner of Income Tax; (2004) ITR 562 while considering the word “concealment” held that word “concealment” inherently carried with it the element of mens rea. The words “false representation” used in section 10(b) is more strong word which requires an overt act with an element of mens rea.
        There being finding of both the authorities that action of purchase of the aforesaid goods was bonafide act of assessee under bonafide belief that said goods are covered by registration certificate, the provision of penalty under section 10(b) of the Act is not attracted.
Allahabad High Court
   
 
V.K. Enterprises, Telierganj, Allahabad
Vs.
Commissioner, Trade Tax, U.P. Lucknow

 
TTR No. 2132 of 2005
 
Reassessment-The Central Sales Tax Act, 1956-Section 9(2) read with Section 7 of the U.P. Trade Tax Act, 1948- -Assessment after remand-Earlier assessment order partially set aside in appeal -Case remanded for examination of 2 form C-No appeal against the remand order-Assessee contending rejection of account books and determination of turnover in remand proceedings before the assessing authority-Jurisdiction of assessing authority.
 
Where in appeal, part of assessment order was confirmed and with regard to a particular issue case was remanded to the assessing authority with direction to decide it fresh, whether the assessing authority was competent to entertain other issues, already decided in appeal?
 
Held-No, The decision in the case of CST Versus Babulal Permanand (Supra) squarely covers the issue involved in the present case. The decision of Full Bench in the case of Ram Dayal Har Bilas Versus CST (Supra) has been considered at length and thereafter it has been held that in a case where part of the assessment has been confirmed and with regard to the particular issue, the case was remanded for direction to decide afresh, after the remand jurisdiction of assessing authority was confined only to the subject matter which was remanded to it and has no jurisdiction to open the issue which had become final.
 
Allahabad High Court
   
 
The Commissioner, Sales Tax, U.P. Lucknow
Vs.
S/S Laxmi Leather Cloth Industries Pvt. Ltd., Noida
 
STR No. 1533 of 1992
 
Classification of goods-The U.P. Trade Tax Act, 1948-Section 4-Leather Cloth-Exemption on sale of textile-Tax liability on sale of Leather Cloth.
Whether “Leather Cloth” being textile is exempt from tax under the notification No. ST-2-8058/X-11(V)-78-U.P. –XV-48-Order-80 dated 29-11-1980, issued under section 4 of the U.P. Sales Tax Act, 1948?
 
Held-Yes, In the present case it is found as a fact that the leather cloth is a cotton coated fabric. It is one of the varieties of cotton fabric and falls under the textile. It is now seen that the leather cloth are commonly used as a textile. It is used for making coat, jackets, table sheets etc. and is used and known a textile. Perusal of the notification also shows that the textile includes water proof cloth. Leather cloth being water proof may also fall under “water proof cloth”.
Allahabad High Court
   
 
M/s Sapna Papers Product (Pvt) Limited
Vs.
Commissioner of Trade Tax, U.P. Lucknow
 
TTR No. 90 of 1999
 
Manufacture-The U.P. Trade Tax Act, 1948-Section 4-A-Manufacture for the purpose of section 4-A of the Act-Cutting of paper into desired size of paper-No manufacture.
 
Whether cutting of paper into desired size of paper which is normally sold in the market in the name of type paper, duplicate paper etc. amounts to manufacturing process and applicant is entitled for exemption under section 4-A of the U. P. Trade Tax Act, 1948 on such cut size of paper which is claimed to be manufactured product?
 
Held-No, Perusal of definition of section 2(e-1) of the Act shows that the process of cutting is not being included within the definition of manufacture. Thus the process of cutting cannot be said to be a process of manufacturing. By the process of cutting from big size and converting big size paper into small size of paper no new commodity comes into being. Paper remains paper. After cutting paper does not loose its identity of paper, it does not undergo any physical, chemical or any kind of change. The constituents and identity remains the same. Thus process of cutting and conversion of big size of paper into small size of paper dos not come under any of the process mentioned in the definition of manufacture under section 2(e-1) of the Act.
Allahabad High Court
   
 
The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/s Amul Handloom

 
TTR No. 126 of 1997
(A)
Review by the Commissioner-The Central Sales Tax Act, 1956 –Section 5(3) -The U.P. Trade Tax Act, 1948-Sections 10-B & 21- Benefit of exemption treating the sale in the course of export allowed by the assessing authority in the assessment order on the basis of incomplete Form H filed by the assessee-Review of assessment order by the Deputy Commissioner (Executive)-Jurisdiction of Deputy Commissioner (Executive) under section 10-B of the U.P. Trade Tax Act, 1948.
Whether assessment order can be reviewed under section 10-B of the Act where the assessing authority has allowed benefit of sale in the course of export on the basis of incomplete form H filed by the assessee?
 
Held-Yes, Section 10-B of the U.P. Trade Tax Act empowers the Deputy Commissioner (Executive) to revise the assessment order, if there is any illegality and impropriety. The words “legality” and “impropriety” used in section 10-B of the Act are of wide import. It empowers the Deputy Commissioner (Executive) to revise an assessment order if it is factually improper and incorrect, meaning thereby if any exemption or concession has been granted on the basis of certain form, which is incomplete or the form is not in prescribed form, the Deputy Commissioner (Executive) can revise the assessment order in exercise of powers under section 10-B of the Act.
(B)
Proper opportunity of hearing-Notices validly served-No appearance of assessee-No sufficient cause for preventing the assessee from appearance-Principles of natural justice.
 
Where notice for hearing was served on the assessee but the assessee neither appeared nor stated any sufficient cause preventing it from appearance, whether order can be set aside on the ground that the assessee was not afforded reasonable opportunity of hearing?
 
Held-No, The Apex Court in the case of N.K. Prasad Vs. Government of India (2004) 6 SCC 299 has held that the principles of natural justice cannot be put into a straitjacket formula. There application will depend upon the facts and circumstances of the case. If a party after having proper notice chose not to appear, he at a later stage can not be permitted to say that he had not been given a fair opportunity of hearing. The principles of natural justice must not be stretched too far. Therefore, the order of the Tribunal setting aside the order passed by the Deputy Commissioner (Executive) and restoring the assessment order cannot be sustained.
 
Allahabad High Court
   
 
The Commissioner Sales Tax
Vs.
S/s Karuna Trading Co.
 
TTR Nos. 782 & 783 of 1997
 
Assessment-Rejection of books of account –The U.P. Trade Tax Act, 1948-Section 7-Seizure of goods on the allegation that it belonged to other dealer-In civil suit goods held by the Court to belong to the assessee-Some transactions in bank account unverified-No inference could be drawn that unverified transactions found in bank account related to purchase and sale of goods-Account books accepted by the Income Tax Department-Rejection of account books unwarranted.
 
        In the case before the Hon’ble Court, 130 tins of refined oil, being carried by a truck, was seized on the ground that it belonged to a dealer other than the applicant. The goods were covered by the documents issued by the applicant. In Civil Suit, the Court had held that goods belonged to the applicant. Assessing authority made one of the grounds for rejecting the account books of the applicant. The Court passed a decree for recovery of Rs. 74860/- alongwith interest. Second ground of rejection of books of account was some unverified transactions found in the bank account of the applicant. The Income Tax Department had accepted account books. The Tribunal had recorded a finding that inference could not be drawn that unverified transactions related to purchase and sale of goods. On revision:-
(1) “The Tribunal on the basis of the decree of the Civil Court, and in my view rightly so, came to the conclusion that seized oil belonged to the dealer/ opposite party. Therefore, the ground taken by the assessing authority for rejection of the account books being illegal was rightly set aside by the Tribunal.”
(2) “I agree with the order of the Tribunal that mere unexplained entries of the bank account is not sufficient by itself to reject the account books of the dealer.”
 
Allahabad High Court
   
 
Bharat Sanchar Nigam Ltd. & Anr.
Versus
Union of India & Ors.

(A)
Taxing Statutes-Applicability of principle of res judicata
Whether principle of res judicata applies in matters pertaining to tax for different assessment years where the cause of action for each assessment year is different?

 
Held-No, that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar Courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The Courts would generally adopt an earlier pronouncement of the law or a conclusion of a fact unless there is a good ground urged for or a material change in the factual position. The reason why the Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of those gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction.
(B)
Constitution- 46th Constitutional Amendment- Clause (29A) of Article 366- Gannon Dunkerley’s Case.
Whether law laid down by the Apex Court in Gannon Dunkerley’s case survived the 46th Constitutional Amendment?
 
Held- that Gannon Dunkerley survived the 46th Constitutional Amendment in two respects. First with regard to the definition of ‘sale’ for the purposes of the Constitution in general and for the purposes of Entry 54 of List II in particular except to the extent that the clauses in Art.366 (29A) operate. By introducing separate categories of ‘deemed sales’, the meaning of the word ‘goods’ was not altered. Thus the definitions of the composite elements of a sale such as intention of parties, goods, delivery etc. would continue to be defined according to known legal cannotations. This does not mean that the content of the concepts remain static. Courts must move with the times. But the 46th Amendment does not give a licence for example to assume that a transaction is a sale and then to look around for what could be the goods. The word “goods” has not been altered by the 46th amendment. That ingredient of a sale continues to have the same definition. The second respect in which Gannon Dunkerley has survived is with reference to the dominant nature test to be applied to a composite transaction not covered by Article 366(29A). The transactions which are mutant sales are limited to the clauses or Article 366(29A). All other transactions would have to qualify as sales within the meaning of Sales of Goods Act, 1930 for the purpose of levy of sales tax.
(C)
Goods - Electromagnetic waves or radio frequencies -Telephone communication and other accessories giving access to telephone exchange with or without instruments.
What are “goods” in telecommunication for the purposes of Article 366(29A)(d)?
 
Goods do not include electromagnetic waves or radio frequencies for the purpose of Article 366(29A)(d). The goods in telecommunication are limited to the handsets supplied by the service provider.
(D)
Transfer of right to use goods-Telephone communication and other accessories giving access to telephone exchange with or without instruments.
Is there any transfer of any right to use any goods by providing access or telephone connection by the telephone service provider to a subscriber?
  There may be transfer of right to use goods as defined in answer to the previous question by giving a telephone connection.
(E)
Nature of transaction - Providing of telephone connection
Is the nature of the transaction involved in providing telephone connection a composite contract of service and sale? If so, is it possible for the States to tax the sale element?
 
The nature of the transaction involved in providing the telephone connection may be a composite contract of service and sale. It is possible for the State to tax the sale element provided there is a discernible sale and only to the extent relatable to such sale.
(F)
Applicability of aspect theory- Providing of telephone connection- A composite contract of sale and service.
Would the “aspect theory” be applicable to the transaction enabling the States to levy sales tax on the same transaction in respect of which the Union Government levies service tax?
 
The aspect theory would not apply to enable the value of the services to be included in the sale of the goods or the price of goods in the value of the service.
(G)
Goods -SIM Cards- Sale or service
Whether SIM cards are goods for the purpose of levy of sales tax?
 

What a SIM card represents is ultimately a question of fact as has been correctly submitted by the States. In determining the issue, however the Assessing Authorities will keep in mind the following principles: If the SIM card is not sold by the assessee to the subscribers but is merely part of the services rendered by the service providers, then a SIM card cannot be charged separately to sales tax. It would depend ultimately upon the intention of the parties. If the parties intended that the SIM card would be a separate object of sale, it would be open to the Sales Tax Authorities to levy sales tax thereon.
       If sale of a SIM card is merely incidental to the service being provided and only facilitates the identification of subscribers, their credit and other details, it would not be assessable to sales tax.

 
Supreme Court of India
 

 

The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S Anjum Hide Co., Hapur


 
Levy of tax –The U.P. Trade Tax Act, 1948-Section 3-AAAA-Purchase of goods from unregistered dealer -Resale of goods in the course of inter-state trade or commerce- Tax liability on purchase of goods.
Whether levy of tax on purchase of goods from unregistered dealer is legally justified under section 3-AAAA of the U.P. Trade Tax Act, 1948, where such goods have been sold in the course of inter-state trade or commerce in the same form and condition in which such goods were purchased?

 
Held –No, Proviso (iii) to section 3-AAAA of the Act says that no tax shall be leviable on the purchase price of such goods, if the purchasing dealer resells such goods within the State or in the course of inter-state trade or commerce or exports out of India, in the same form and condition in which he had purchased them. In the present case, purchased raw hide treated to have been sold in the course of inter-State sales, therefore, in view of proviso (iii) to section 3-AAAA of the Act tax is not leviable under section 3-AAAA of the Act.
 
Allahabad High Court
 

 

The Commissioner of Trade Tax, U.P. Lucknow
Vs.
S/s Shakti Farma Railway Road, Kasganj

 
Interest- Payability –The Central Sales Tax Act, 1956 -The U.P. Trade Tax Act, 1948 –Section 8(1) –Partial turnover not covered by Form C- Admitted tax-Liability of interest regarding the turnover in respect of which Form C not produced-Dealer liable to pay interest under section 8(1) of the State Act.
Whether a dealer is liable to pay interest under section 8(1) of the U.P. Trade Tax Act on the difference of amount of tax deposited subsequently, where the dealer has claimed liability of tax at concessional rate of tax on the condition of furnishing of Form C but has failed to produce Form C?
 
Held- Yes, In the case of Commissioner of Trade Tax Vs. Maheshwari Trading Company, 1984 A.T.J. 163, it has been held by the Court that section 8(1) of U.P. Trade Tax Act read with its Explanation makes it clear that it refers to admission in regard to the turnover and not in regard to the tax payable by it. The amount of tax is one which is payable under this Act, on the admitted turnover which, inter-alia, means turnover as disclosed in the return filed by the assessee.
       Allowing the revision filed by the Commissioner, the Hon’ble Court held that the dealer opposite party is liable to pay interest under section 8(1) of the U.P. Trade Tax Act on the difference of amount of tax deposited subsequently for the period and at the rate indicated in the assessment order.
 
Allahabad High Court
 

 

Commissioner of Trade Tax
Vs.
Rajkumar Galla Bhandar


 
Exemption from tax- The U.P. Trade Tax Act, 1948 –Sections 3-D & 4-B – First purchase of Oilcake liable to tax-Claim of exemption on sale of oilcake against Form 3-B to a dealer holding recognition certificate.
Whether the Tribunal was legally justified in allowing exemption on sale of oilcake by a trader to a dealer holding recognition certificate, where the selling dealer has furnished Form 3-B obtained from the purchasing dealer?
 
Held-No, The Tribunal in its order has placed reliance upon a judgment of the Court in the case of S/S Hari Om Gupta Vs. State of U.P. 1995 UPTC 368. The said judgment is distinguishable and has no application to the fact of the case. In that case the dealer was commission agent. In the present case the dealer the opposite party is a trader. The Court in the case of TTR No. 312 of 1996 M/s Jai Maan Bhawani Anna Bhandar Vs. CST decided on 9th of August, 2005 has held that the oilcake being not a declared commodity, the dealer in such circumstances would be liable to pay the sales tax. The issuance of form 3 B by the recognition certificate holder to the dealer is of no consequence.
In view of the above, the order of the Tribunal cannot be sustained.
 
Allahabad High Court
 

 

The Commissioner of Sales Tax, U.P. Lucknow
Vs.
Trutuf Safety Glass Industries.


 
Classification of goods- The U.P. Trade Tax act, 1948- Section 4-B- Recognition Certificate for “Automobile Safety Toughened Glass”-Dealer manufacturing automobile toughened safety glass parts including wind screen, doors screen, side screen and back screen etc. - “Glass and glasswares including optical glass in all its forms” declared notified goods for the purpose of exemption on purchase of raw material and packing material.
(A)
Whether, for the purpose of section 4-B of the U.P. Trade Tax Act, 1948, manufacture of automobile toughened safety glass parts including wind screen, doors screen, side screen and back screen etc. amounts to manufacture of “Glass and glasswares including optical glass in all its forms”?
 
Held-No, In Para 13 of its judgment in the case of Atul Glass Industries (p) Ltd. (Supra), the Supreme Court has noted that wind screens, rear screens, and door screens of motor vehicles are manufactured according to specific shape and measurement indicated in the orders, for different vehicles require screens of different shapes and measurement and held that the screens are manufactured from sheet glass. It is first given shape and size according to the specification contained in the order and thereafter subjected to the process of toughening. It is a fabricated article.
        In view of the well known principles relating to the interpretation of entries, the words “glass and glasswares” should be interpreted as it is understood by the persons who deal with them. It cannot be described as “glass or glasswares”.
        In popular sense a general merchant dealing in glasswares, automobile toughened safety glass parts including wind screen, door screen, side screens and back screens, does not ordinarily deal in the articles like automobile toughened safety glass parts including wind screen, door screen, side screens and back screens. It is equally unlikely that the consumer would ask for the said article from a glassware shop. It may be noted that in the case of Atul Glass Industries (Supra) the question as to whether automobiles screens (front, rear and side screens) cannot be described as “glass or glasswares” has been answered by the Supreme Court in the following words:-
“ ………………….. We have no hesitation in holding that the screens cannot be described as “glass or glasswares” …………”
        The Supreme Court has also noted that the automobile screens can be considered as motor vehicle parts.
        Indisputably the dealer opposite party is manufacturer of automobile toughened safety glass. It requires glass sheets of various sizes and thickness, tinted and plane, as raw material. Therefore, the automobile toughened safety glass is fabricated or manufactured goods out of glass sheets. Meaning thereby the toughened safety glass is different from glass sheets and it would not be “glass or glasswares”. Applying the test of common parlance as laid down by the Supreme Court in the case of M/s Indo International Industries (Supra) and Atul Glass Industries Pvt. Ltd. (Supra), no one dealing in or using the screens, would consider them as “glass or glasswares”.
(B)
Interpretation- Same phrase used in two different notifications issued for two different purposes.
Where a particular phrase has been interpreted in a particular notification issued for the purpose of prescribing rate of taxes for different commodities, whether it will be irrelevant to assign same interpretation to the same phrase used in a different notification issued for a different purpose?
 
Held- “It is one thing to say that the ambit and scope of a notification issued under section 4-B of the Act cannot be enlarged or interpreted in a particular notification issued under other sections, prescribing the different rate of taxes for different commodities. But it is different thing to say that even if a particular phrase has been interpreted in a particular notification, it is irrelevant to interpret similar or same kind of entry mentioned in a notification issued under section 4-B of the Act. To my mind if a particular meaning has been assigned to a particular item and the said item finds place in a notification issued under section 4-B as well, in a notification issued under section 3-A or the like other sections, I see no difficulty in assigning the same meaning to both the notifications”.
 
Allahabad High Court
 

 

The Commissioner, Trade Tax, U.P. Lucknow
Vs.
S/S Samar Singh Contractor, Dhampur


 
Liability of Tax – Section 3-F – U.P. Trade Tax Act, 1948-Deduction of turnover of goods where tax has been paid on purchases – Account books not maintained-No evidence adduced that the goods have been subjected to tax-Tax assessed on value of goods shown to have been purchased from U.P.- Appellate Authority and Tribunal allowing deduction of turnover of goods on the basis that the dealer was neither manufacturer nor importer of goods.
Where, for the purpose of computing turnover liable to tax, Section 3-F of the Act provides for deduction of value of goods where of tax has been levied or leviable under the Act at any earlier Stage, whether the Tribunal was legally justified in allowing deduction of value of goods, on the ground that the dealer was not manufacturer or importer of such goods?
 
Held-No, Sub-clause (iii) of clause (b) of Section 3-F (2) provides that the amount representing the value of the goods where of tax has been levied or is leviable under this Act at some earlier stage is only liable to be deducted. Thus, dealer has to establish that on the value of the goods tax has been levied or is leviable under this Act. In the present case, the dealer has failed to prove that the tax on the value of the cement, sariya and bricks have been levied. Thus, the deduction allowed by the Appellate Authority and Tribunal on the turnover of cement, sariya and bricks on the ground that in respect of these items the dealer was not manufacturer or importer, is erroneous.
 
Allahabad High Court
 

 

Commissioner of Sales Tax, U.P. Lucknow
Vs.
M/s Manohar Lal Heera Lal Pvt. Limited.


 
Penalty-The U.P. Trade Tax Act, 1948 –Section 4-B (6)-Stock transfer of notified manufactured goods outside the State- Earlier provision using the expression “has dispatched such goods to a place outside the State’ except as a direct result of export out of India – Amended provision using the expression “otherwise disposed off”- Stock transfer whether included in the amended provision.
Whether, in view of provision under sub-section (6) of section 4-B as amended with effect from November 01, 1978, stock transfer of notified manufactured goods outside the State is covered under the expression “otherwise disposed off”?
 
Held- Yes, “Such manufacturer who fulfills the conditions mentioned in Section 4-B are entitled for grant of recognition certificate. They are as follows:-
(1) The manufactured goods are required to be sold in the State of U.P.; or in
(2) Inter-state sales; or
(3) In the course of export sales outside India.
Sub-section (6) of Section 4-B is to be read alongwith sub-section (2) of Section 4-B to find out the meaning of words “otherwise disposed off”. From a conjoint reading of the aforesaid two sub-sections of section 4-B it is clear that only such manufacturers ho dispose off the manufactured goods in the three prescribed manners are entitled to avail the benefit of concessional rate or without payment of tax on the purchase of raw material. A manufacturer who does not dispose of the manufactured goods in the prescribed manner, indicated above is liable to penalty under sub-section (6) of Section 4-B. The interpretation as suggested by the learned counsel for the dealer on the words “otherwise disposed off” is totally out of context. If such an interpretation is given to these words, sub-section (2) of section 4-B, would become redundant, which cannot be the intention of the legislature. In my view the words “otherwise disposed off” means the disposal of manufactured goods contrary to the provisions of Section 4-B(2) of the Act. Therefore, a recognition certificate holder is nor entitled to dispose of the goods by way of stock transfer outside the State of U.P.”
 
Allahabad High Court