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THE COMMISSIONER TRADE TAX , U.P. LUCKNOW versus LAXMI NARAIN RAM GOPAL NAI KA NAGLA HATHRAS

High Court of Judicature at Allahabad

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The Commissioner Trade Tax , U.P. Lucknow v. Laxmi Narain Ram Gopal Nai Ka Nagla Hathras - SALES/TRADE TAX REVISION No. 558 of 1996 [2004] RD-AH 1443 (18 November 2004)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

Court no. 55

Trade Tax Revision no. 558 of 1996.

AND

Trade Tax Revision no. 559 of 1996.

AND

Sales Tax Revision no. 560 of 1996.

Commissioner of Sales Tax, U. P. Lucknow.........................Revisionist.

VS

S/S Laxmi Narain Ram Gopal, Hathras. ...       Respondent.

Hon'ble Rajes Kumar, J.

These are three revisions under Section 11 of U. P. Sales Tax Act (hereinafter referred to as ''Act') is directed against the order of Tribunal dated 08.8.1995 relating to the assessment years 1984-85, 1987-88, 1988-89 respectively.  

The brief facts of the case are that the dealer opp. party established a new Unit for manufacturing of Dal and was holding a Eligibility Certificate under Section 4-A of the Act.  In view of eligibility certificate, Dal manufactured by the dealer was exempted from tax.   Dealer however, issued Form 3-C (2) and Form 3-C (5) to the purchasers of Dal.  Assessing Authority initiated proceeding under Section 3-B on the ground that Form 3-C (2) and Form 3-C (5) were wrongly issued and on account of issuance of such Forms, tax ceases to be leviable in the hands of purchasers and accordingly passed an order under Section 3-B and demanded tax which ceases to be leviable on account of issuance of Forms 3-C (2) and Form 3-C (5).  First appeals filed by the dealer were rejected.  Dealer filed second appeals before the Tribunal which have been allowed and the order passed under Section 3-B have been set aside.

Heard Counsel for the parties.

Learned Standing Counsel submitted that the order of Tribunal is erroneous, inasmuch as, dealer sales of Dal was exempted and declaration Forms 3-C (2) and 3-C (5) were issued, in which, it was admitted that the tax had been paid and therefore, wrong declaration was furnished.  He submitted that on account of issuance of Form 3-C (2) and 3-C (5), tax ceases to be leviable in the hands of the purchasers and therefore, tax had rightly been levied under Section 3-B.  He submitted that the decisions on which, Tribunal placed reliance is not applicable to the present case and they are the cases of purchase made for and on behalf of Ex- U. P. Principal as Purchasing Commission Agency.  In support of his contention, he relied upon the decision of this Court in the case of Shyam Industries Vs. CST reported in 1999 U. P. T. C. page 1173.  

Sri V. K. Agarwal, learned Counsel for the opp. party submitted that the dealer the Form 3-C (2) and Form 3-C (5) were issued by the Assessing Authority and there was no bar that the dealer holding eligibility certificate under Section 4-A could not issue Form 3-C (2) and Form 3-C (5).  He further submitted that in the Form 3-C (2) and 3-C (5), dealer had declared that the turnover was exempted under Section 4-A, therefore, on the part of the dealer, declaration was neither falls nor wrong and hence the proviso of Section 3-C does not apply.  Forms have been issued by the Assessing Authority and necessary informations about the issuance of Forms were also given to the Assessing Authority time to time.

Having heard learned Counsel for the parties.

I have perused the order of Tribunal and the authorities below.

Section 3-B reads as follows:-

"Section 3-B Liability on issuing false certificates, etc.   Notwithstanding anything to the contrary contained elsewhere in this Act and without prejudice to the provisions of Sections 14 and 15-A, a (person) who issue a false or wrong certificate or declaration, prescribed under any provision of this Act or the Rules framed thereunder, to another (person) by reason of which a tax leviable under this Act on the transaction of purchase or sale (made with or by) such other (person) ceases to be leviable or becomes leviable at a concessional rate shall be liable to pay on such transaction an amount which would have been payable as tax on such transaction had such certificate or declaration not been issued.

Provided that before taking any action under this section, the (person) concerned shall be given an opportunity of being heard.

Explanation- Where a (person) issuing a certificate or declaration discloses therein his intention to use goods purchased by him for such purpose as will make the tax not leviable or leviable at a concessional rate but uses the same for a purpose other than such purpose, the certificate or declaration shall, for the purpose of this section, be deemed to be wrong.

Corresponding Rule 12-B reads as follows:-

(1) The certificates or declarations referred to in sub section (7) of section 3-D shall be in Forms III-(1), III-C (2), III-C(3), III-C(4) and III-C (5).

(7)     In respect of the goods notified under clause (b) of subsection (1) of section 3-D, the certificate in-

(a) Form III-C (1) shall be issued by the dealer who makes the first purchase of the goods to the dealer selling such goods.

(b) Form III-C (2) shall be issued by the dealer who was the first purchaser of such goods to his selling agent at the time of sending such goods to him for sale or to the subsequent purchaser at the time of making sale to him of such goods;

[C)] Form-III -C (3) shall be issued by the dealer who purchases the goods in the capacity of a purchasing agent to the dealer on whose behalf the said goods were purchased;

(d) Form III-C (4) shall be issued by the dealer who sells the goods in the capacity of a selling agent to the dealer on whose behalf the said goods are sold;

(e) Form III-C (5) shall be issued-

(i) by the dealer who had purchased the goods as a purchaser other than the first purchaser, to his selling agent or to the dealer to whom such goods are sent for sale or, as the case may be, are sold; or

(ii) by the manufacturer of goods on which Central Excise duty, both basic and additional, was leviable and has been paid to his selling agent or the dealer to whom such goods are sent for sale or, as the case may be, are sold, or

(iii) by the purchaser within Uttar Pradesh of goods referred to in sub clause (ii) above to his selling agent or to the dealer to whom such goods are sent for sale or, as the case may be, are sold

In Form 3-C (2) and 3-C (5) following declarations are being given by the party who issued Forms:-

Form III-C (2) Form-III-C (5)

U.P.No...........Relating to the year.............            Form III-C (2)(See sub rules (6) (b) and 7 (b) of Rule 12-B  (Certificate in respect of goods notified under Section 3-D to be issued by the purchaser/first purchaser thereof to his selling agent or to the  subsequent purchaser, as the case may be).Signature of the Issuing Officer.......Seal of the issuing office...........Date of issue.................Name and address of the dealer to whom issued..................Number of Registration Certificate....Date from which it is effective.........          I......................Proprietor/Partner/Karta of Hindu undivided family/Director/person duly authorised under Rule 77-A by M/S............(name and full address) do hereby certify that our said firm is registered under Section 8-A of the U. P. Sales Tax Act and its Registration no. is...............which is effective from..........    2.  I further certify that our said firm has sold/sent for sale to M/S..........(name and full address)........(commodity)  (weight) for Rs.......(value) against Bill/Cash memo/Chalan No.......... In respect of these goods, our said firm is/has been the purchaser/first purchaser and accepts/has accepted liability to pay purchase tax.Place......Date........                                   Signature.         Proprietor/Partner/Karta/Director/                   Person duly authorised under                             Rule 77-A U.P.No...........Relating to the year.............            Form III-C (2)(See sub rules (6) (b) and 7 (b) of Rule 12-B  (Certificate in respect of goods notified under Section 3-D to be issued by the purchaser/first purchaser thereof to his selling agent or to the  subsequent purchaser, as the case may be).Signature of the Issuing Officer.......Seal of the issuing office...........Date of issue.................Name and address of the dealer to whom issued..................Number of Registration Certificate....Date from which it is effective.........          I......................Proprietor/Partner/Karta of Hindu undivided family/Director/person duly authorised under Rule 77-A by M/S............(name and full address) do hereby certify that our said firm is registered under Section 8-A of the U. P. Sales Tax Act and its Registration no. is...............which is effective from..........    2.  I further certify that our said firm has sold/sent for sale to M/S..........(name and full address)........(commodity).. . .(weight) for Rs.......    3. I also certify that the aforesaid goods were-     (i) manufactured by us and have borne Central Excise Duty, both basic and additional ; or      (ii) received by us from our principals who have issued to us Form III-C (2)/III-C(5) No.......dated.......in respect thereof; or(value) against Bill/Cash memo/Chalan No.......... In respect of these goods, our said firm is/has been the purchaser/first purchaser and accepts/has accepted liability to pay purchase tax.Place......Date........                                   Signature.         Proprietor/Partner/Karta/Director/                   Person duly authorised under                             Rule 77-A

In Form 3-C (2) party who issues such Form gives declaration that it's Firm is the first purchaser and accepts liability to pay purchase tax.   In Form 3-C (5).  Declaration is made that he has received Form 3-C (2)/3-C (5) from its Principal or received Form 3-C (2) and 3-C (5) from whom he has made purchases.  

In the present case being eligibility certificate holder under Section 4-A, Dal was exempted from tax and therefore, there was no liability of tax on Dal and hence, declaration made in the Form 3-C (2) that it was liable for purchase tax or admits liability of purchase tax was wrong.  Further since dealer had not acted as Agent for sale of Dal and had not purchased Dal declaration in Form 3-C (5) was also wrong.  In fact, Form 3-C (5) should not have been issued in respect of manufactured Dal.  In the circumstances, stated above, declaration made in Form 3-C(2) and Form 3-C (5) both are false and wrong.  On the basis of Form 3-C (2) and 3-C (5) tax ceases to be leviable on the purchases, therefore, both the conditions of Section 3-B were available in the present case and therefore, order passed under Section 3-B was justified.  Similar question came up for consideration before this Court in the case of Shyam Industries, Gorakhpur Vs. CST, this Court held as follows:-

"4- Learned Counsel for the revisionist contended that by issue of the declaration in Form-III-C, no liability of the revisionist had ceased because there was no liability at all as it was holding an eligibility certificate.  Learned Counsel for the revisionist, however, conceded that by the issue of such declarations the liability of the dealer, who purchased the oil cake from the revisionist, to pay purchase tax under Section 3-D had ceased. The liability arises if by reason of declaration tax liability under the Act on the transaction of purchase of sale made with or by such other person ceases to levy or becomes leviable at a concessional rate.  Therefore, the seizure of liability is not contemplated with reference to the buyer or the dealer but is with reference to the transaction.  The transaction in question were of a sale and purchase.  A sale by the revisionist is purchase by the other side and, therefore, there was a transaction of sale on the one side and purchase on the other the purchase was liable to tax and because of the declaration the purchase seized to be taxable in the hands of the purchaser.  The declarations were patently wrong because the dealer revisionist was a manufacturer and not a purchaser, therefore, the dealer to whom the goods were sold could not be a subsequent purchaser and Form -III-C (2) could not be issued in terms of Rule 12-B (7) (b) of the U. P. Sales Tax Act."

For the reasons stated above, the order of Tribunal is liable to be set aside.

In the result,  all the revisions are allowed.  Order of Tribunal dated 08.8.1995 is set aside.

Dt:18.11.2004.


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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