Over 2 lakh Indian cases. Search powered by Google!

Case Details

THE COMMISSIONER, TRADE TAX, U.P. LUCKNOW versus S/S ANNAPURNA SUGAR KHANDSARI PROCESSING INDUSTRIES

High Court of Judicature at Allahabad

Case Law Search

Indian Supreme Court Cases / Judgements / Legislation

Judgement


The Commissioner, Trade Tax, U.P. Lucknow v. S/S Annapurna Sugar Khandsari Processing Industries - SALES/TRADE TAX REVISION DEFECTIVE No. 346 of 1999 [2005] RD-AH 7293 (9 December 2005)

 

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.(346) of 1999

AND

TRADE TAX REVISION NO.(350) of 1999

AND

TRADE TAX REVISION NO.(354) of 1999

AND

TRADE TAX REVISION NO.(355) of 1999

The Commissioner, Trade Tax, U.P., Lucknow.       Applicant

Versus

S/S Annapurna Sugar Kandsari Processing Industries, Muzaffarnagar             Opp.party

...............

Hon'ble Rajes Kumar, J.

Present four revisions under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") are directed against the order of Tribunal dated 26th October, 1998 relating to the assessment years, 1984-85, 1985-86, 1986-87 and 1987-88.

The only dispute involved in the present revisions is whether on the facts and circumstances of the case, interest is chargeable under section 8 (1) of the Act or under section 8 (1-B) of the Act.

Brief facts of the case giving rise to the present revisions are that the dealer/opposite party (hereinafter referred to as "dealer") was manufacturer of Batasha and Elichi dana, which were exempted from tax under notification issued under section 4 of the Act. Dealer purchased khandsari as raw material for the manufacturing of Batasha  and Elichi dana. Khandsari was liable to tax at the point of first purchase under section 3-D of the Act unless it is shown that the excise duty on such khandsari has been paid. It appears that the dealer had applied for recognition certificate under section 4-B of the Act on 4.6.1984. Said application was rejected on 25th June, 1987. Admittedly, dealer could not furnish any requisite form as required under section 3-D (7) of the Act for the claim of exemption on the purchases of khandsari. In some of the years, dealer had also issued Form 3-C (1) in respect of some of the purchases of khandsari admitting liability of tax. Assessing authority levied the tax on the purchases of khandsari in absence of any requisite form. Assessing authority also demanded interest under section 8 (1) of the Act at the rate of two percent. First appeals filed by the dealer were rejected. Dealer filed second appeals before the Tribunal. Tribunal by the impugned order allowed the appeals in part. Tribunal upheld the levy of tax on the purchases of khandsari, but further held that the dealer was not liable to interest under section 8 (1) of the Act inasmuch as the tax assessed could not be treated as admitted tax.

Heard learned counsel for the parties.

Learned Standing Counsel submitted that the levy of tax on the khandsari was in accordance to the law and no bonafide dispute had been raised with regard to the levy of tax on the khandsari.  He submitted that Batasha and Elichi dana both were exempted from tax, therefore, the application moved under section 4-B of the Act was misconceived and was rightly rejected on 25th June, 1987. He submitted that the dealer had not furnished any requisite form as required under section 3-D (7) of the Act for the claim of exemption on the purchases of khandsari and it was not the claim of the dealer that the requisite form could be furnished. He submitted that in some of the years in respect of some of the transactions even the dealer has issued form 3-C (1) but could not deposit the tax, therefore, in accordance to the provisions of the Act, tax was leviable  on the purchases and dealer ought to have deposited the tax along with the returns and since the tax was not deposited, there was a liability of interest under section 8 (1) of the Act. He submitted that the Tribunal has illegally held that the dealer proceeded under the bonafide believe on the ground that it had applied for the recognition certificate under section 4-B of the Act on 4.6.1984 which was rejected on 25th June, 1987, while the application under section 4-B of the Act was misconceived and non-maintainable.

Learned counsel for the dealer submitted that the dealer had applied for recognition certificate under section 4-B of the Act under the bonafide believe that it was entitled for recognition certificate. Application was kept pending by the assessing authority for four years and rejected on 25th June, 1987. Thus, according to him, the dealer could not deposit the tax under the bonafide believe that it would get the recognition certificate under section 4-B of the Act during the period 4.6.1984 to 25.6.1987 and the Tribunal has rightly held that the interest under section 8 (1) of the Act not chargeable. In support of his contention he relied upon the decision of this Court in the case of Annapurna Biscuits Co. Versus State of U.P. reported in 1980 UPTC 1230, M/S Roozan Pipe Industries Versus CST reported in 2005 UPTC 921,  M/S B.D. Agarwal and Co. Versus CST reported in 2005 NTN (Vol.28) 265 and CST Versus Qureshi Crucible reported in 1993 UPTC, 901.

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

In my opinion, order of the Tribunal is not sustainable. Section 8 (1) and 8 (1-B) of the Act reads as follows.

"8. Payment and recovery of tax.- (1) The tax admittedly payment shall be deposited within the time prescribed or by thirty 1st days of August, 1975, whichever is later, failing which simple interest at the rate of 2 per mensem shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the date of payment of such amount whichever is later, and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.

Explanation- For the purpose of this sub-section, the tax admittedly payment means the tax which is payable under this Act on the turnover of sales or, as the case may be, turnover of purchases, or of both, as disclosed in the accounts mentioned by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts are maintained, then accordance to the estimate of the dealer and includes the amount payable under Section 3-B.

(1-B).If the tax other than the tax admittedly payment to which sub-section (1) applies) assessed, reassessed or enhanced by any authority or Court remains unpaid for three months after the expiration of the period specified in the notice of assessment and demand, simple interest at the rate of one and half percent per mensem on the unpaid amount calculated from the date of such expiration shall become due and be payable.

Provided that the amount of interest under this sub-section shall be recalculated if the amount of tax is varied on appeal or revision or by any order of a competent Court or authority."

Section 8 (1) of the Act says that if the tax admittedly payable is not deposited within the time specified, simple interest at the rate of two percent per mensem shall be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the date of payment of such amount, whichever is later. Explanation to Section 8 (1) of the Act says that the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, turnover of purchases. Under section 7 (1) of the Act every dealer who is liable to pay tax under this Act shall submit such return or returns of his turnover at such intervals, within such period as may be prescribed. Section 7 (1-A) of the Act says that before submitting the return under sub-section (1) or along with such return, the dealer shall deposit, in such manner as may be prescribed, the amount of tax due on the turnover shown in such return. Rule 41 (1) of the U.P. Trade Tax Rules, 1948 provides furnishing of monthly returns before the expiry of the next succeeding month. Thus, the turnover of sale or purchase, was liable to be disclosed in the return and the tax payable under the Act was liable to be paid along with the return and in case of non payment of tax payable under the Act within the specified period, the interest was payable under section 8 (1) of the Act.

In the present case, dealer had purchased khandsari, which was liable to tax at the point of purchase. Exemption on the purchases could be claimed only if the requisite form as required under section 3-D (7) of the Act could be furnished. Admittedly, no such requisite form was furnished and, therefore, the dealer was liable to tax under section 3-D of the Act on the purchases of khandsari. In respect of some of the transactions, dealer had issued Form 3C (1) and owned the liability of tax on such purchases. Even after the issue of Form 3-C (1), dealer could not pay the tax on the purchases. The claim of the dealer that he had applied for recognition certificate under section 4-B of the Act on 4.6.1984 and in case if the recognition certificate would have been issued, the dealer would not be liable to pay tax on the purchases and since said application was rejected on 25th June, 1987, the dealer during the pendency of the application was under the bonafide believe devoid of any merit and cannot be accepted. The claim of the dealer under section 4-B of the Act was misconceived. Under the Notification No. ST-II-2956/X-6 (17)-76, dated 20.5.1976 issued in exercise of powers under section 4-B of the Act benefit of concessional rate of tax was not admissible if the goods manufactured by the unit was not liable to tax at any stage under the Act. The goods manufactured by the dealer were Batasha and Elichi dana which were exempted from tax and therefore, the benefit of concessional rate of tax under section 4-B of the Act was not available to the dealer. Thus, the application moved under section 4-B of the Act was misconceived and on the basis of the said application, which was not at all sustainable, the claim of bonafide believe during the pendency of the application cannot be accepted. On the facts of the case, dealer was liable to tax on the khandsari at the time when the purchases were made and, thus being admitted tax it was liable to be paid along with the return and since it was not paid along with the return, interest is chargeable under section 8 (1) of the Act. The decisions cited by the learned counsel for the dealer are not applicable to the facts of the case. In the case of Annapurna Biscuits Co Versus State of U.P.(supra), the Division Bench held as follows.

"The learned Counsel mentioned that as the sale was made to registered dealers such sales being exempt under section 3-D (1) the petitioner did not commit any error in determining the tax payable by nil under section 8 (1), therefore, its failure to file Form C could result in the enhancement of tax in excess but the Assessing Authority could not while assessing tax create any demand for interest. Reliance was placed on Commissioner of Sales Tax Versus M/S Vinus Auto Traders, 1980 UPTC 273. None of the submissions for have any merit on it. We have already indicated above that liability to pay interest under sub-section (1) of Section 8 is not affected by deposit of tax assessed within the time specified. The only question, therefore, is whether calculation of tax payable was in accordance with the Act. It is not disputed that if petitioner affected sale to person other than a registered dealer then it was liable to pay tax under sub-section (2) of Section 3-D. The liability to pay tax, therefore, depends on this crucial fact, which is required to be proved by filing Form IIIC-1 under sub-rules 9 (6) and (7) of Rule 12-B. It is admitted that these forms were not filed. In absence of these forms it cannot be said that calculation of tax payable was in accordance with the Act."

In the case of M/S Roozan Pipe Industries Versus CST reported in 2005 UPTC 921 the alleged purchases against Form 3-B have not been admitted at any  stage rather it has been disputed on the ground that such purchases were never made and the bills relating to such purchases were not issued by Steel Authority of India. It has also been alleged that Form 3-B were issued blank to the Steel Authority of India in which the sale to other party had also been included. On these facts, this Court held that the dealer was disputing the liability of tax bonafidely and interest demanded under section 8 (1) of the Act was deleted.

In the case of M/S Indian Oil Corporation Ltd Versus Commissioner of Sales Tax reported in 2005 UPTC 160, demand of interest under section 8 (1) of the Act was held to be unjustified as the assessee was contesting the claim of export sales bonafide.

In the case of CST Versus S/S Chandpur Sugar Company Ltd reported in 1993 UPTC 300, full exemption on the purchases of raw material was claimed on the basis of letter issued by the assessing authority on the enquiry being made by the dealer. Subsequently, it was found that the dealer was only entitled for partial exemption, Demand of interest under section 8 (1) of the Act has been held unjustified on the ground that full exemption had been claimed on the basis of the letter issued by the assessing authority.

In the case of M/S B.D. Agarwal and Co. Versus CST reported in 2005 NTN (Vol.28) 265 the tax was levied on the purchases of Rata and Bajri by way of best judgment assessment under section 3-AAAA of the Act treating them to have been purchased from unregistered dealer. The levy of tax has been upheld, but interest under section 8 (1) of the Act has been deleted on the ground that at no stage, the dealer has admitted the turnover and tax.

As stated above, in the present case, the dealer had admitted the purchases but has not shown the tax in the return, which was payable under the Act for no valid reason and the claim of non deposit of tax on the ground that an application under section 4-B of the Act was pending cannot be accepted inasmuch as the application under section 4-B of the Act was misconceived and was subsequently rejected. Thus, the interest under section 8 (1) of the Act was rightly demanded by the assessing authority.

In the result, revision is allowed. Order of the Tribunal is set aside in so far as deletion of interest under section 8 (1) of the Act is concerned, Tribunal is directed to pass appropriate orders in accordance to the law.

Dated.09.12.2005.

VS.


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

Advertisement

dwi Attorney | dui attorney | dwi | dui | austin attorney | san diego attorney | houston attorney | california attorney | washington attorney | minnesota attorney | dallas attorney | alaska attorney | los angeles attorney | dwi | dui | colorado attorney | new york attorney | new jersey attorney | san francisco attorney | seattle attorney | florida attorney | attorney | london lawyer | lawyer michigan | law firm |

Tip:
Double Click on any word for its dictionary meaning or to get reference material on it.