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Majhola Distillery & Chemical Works Majhola v. Commissioner Of Trade Tax - SALES/TRADE TAX REVISION No. 281 of 2000 [2007] RD-AH 573 (10 January 2007)


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Majhola Distillery & Chemical Works,

Majhola, district Pilibhit.       ....Applicant


Commissioner of Trade Tax U.P., Lucknow.        ....Opp.party


Hon'ble Rajes Kumar, J.

Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 8th March, 2000 for the assessment year 1989-90 under U.P. Trade Tax Act.

Applicant is a Co-operative Society, registered both under the U.P. Trade Tax and Central Sales Tax Act. Applicant is a unit owned by U.P. Co-operative Sugar Factories Limited, Lucknow and is registered under the Co-operative Societies Act. It has a distillery named as Majohla Distillery and Chemical Works at Majhola, district Pilibhit. On 13.07.1986 applicant entered into a contract with M/s Chemical Consultants and Engineers, Maharashtra for the establishment of effluent treatment plant on turn key basis at its unit. The copy of the contract is annexure-1 to the revision petition. This contract was executed during the year under consideration and the last payment upto 31.03.1990 was to be made at Rs.132 crores. Against the payment made to the contractor for the assessment year 1987-88,  a sum of Rs.94,054/- was deposited towards the tax deduction at source. Further a sum of Rs.1,30,114.83p. and Rs.3,03,831.17p. were deposited by challan nos.271 and 272 dated 28.03.1994. Since the tax was not deposited within the stipulated time in accordance to section 8-D (1) of the Act and sub-section (3), a notice under section 8-D (6) of the Act was issued. Assessing authority levied the penalty at Rs.4,33,946/- under section 8-D (6) of the Act. Assessing authority was of the view that as against the total payment of Rs.1.32 crore, a sum of Rs.5.28 lacs should be deposited  under section 8-D (1) of the Act, while the applicant could deposit only a sum of Rs.94,054/- and the balance amount of Rs.4,33,946/- could not be deposited by 30.04.1990, thus, the penalty was levied. Order passed by the assessing authority has been confirmed in appeal and by the Tribunal also.

Heard Sri Bharat Ji Agrawal, learned Senior Advocate appearing on behalf of the applicant and Sri B.K. Pandey, learned Standing Counsel.

Learned counsel for the applicant submitted that in the contract one of the item provided was bio-gas plant. He submitted that bio-gas plant was exempted from tax under the Act vide notification no.ST-II-7038/X-7(23)/83-U.P. Act-XV/48-Order-85, dated 31.01.1985 and, therefore, on the value of bio-gas plant, applicant was not liable to deposit any tax and to that extent penalty should be deleted. Learned Standing Counsel submitted that the contract was for the "designing, preparing engineering layout, manufacturing procuring supplying, erecting and commissioning and to do all the connected civil works for the distillery effluent treatment plant on turn key basis". The whole of the contract was to be executed in two phases. The contract price for the first phase was stipulated at Rs.1 crore and for second phase at Rs.32 lacs. The entire work was to be executed namely, fabrication and commissioning etc. at the site.  He submitted that for the commissioning and erection of the entire effluent treatment plant, one of the plant, to be commissioned and erected was the bio-gas plant and as per the agreement certain specified parts were required to be used in such bio-gas plant. He submitted that bio-gas plant as such was not supplied by the contractor but in the process of the construction of effluent treatment plant, bio-gas plant was to be fabricated and commissioned as the part of the effluent treatment plant. He submitted that in the whole contract, various items, which were used in the execution of the works contract were liable to tax under section 3-F of the Act and not the bio-gas plant.

Having heard learned counsel for the parties, I have perused the order of the Tribunal and the authorities below.

Perusal of the contract reveals that the contract was for the establishment of effluent treatment plant on turn key basis under which the contractor was to design, fabricate, commission and erect the effluent treatment plant at site. One of the item, which was to be commissioned was bio-gas plant. Thus, it was not the bio-gas plant  as an independent unit was to be supplied in the execution of the works contract but by using the various items bio-gas plant was to be fabricated, commissioned and erected at site. Thus, it was not the bio-gas plant, which was subject matter of tax but it was the various parts and components used in the execution of the works contract were subject matter of tax.  In the circumstances, no benefit could be allowed for the alleged claim of bio-gas plant. If it would be a case that the bio-gas plant as a goods would be used in the construction of the effluent treatment plant then while determining the turn over, the value of bio-gas plant being a goods itself could be considered but in the present case, bio-gas plant was to be commissioned at site, out of the various parts, as a part of the effluent treatment plant and thus, the claim of the applicant that to the extent of value of bio-gas plant, the penalty should be reduced is misplaced.

In the result, revision fails and is accordingly, dismissed.




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