1971 (1) TMI 99 - SC - VAT and Sales Tax

Validity of two notifications No. ST-909/X dated March 31 1956 and No. ST-6069/X-1097-56 dated September 30 1956 issued by the Government of U.P challenged Held that - Appeal dismissed. It may be noted that the appellant has been assessed on the basis of Notification No. ST-6069/X-1097-56 dated September 30 1956. In other words sales tax has been levied on him at 3 pies per rupee and not 6 pies per rupee as prescribed in Notification No. 909/X dated March 31 1956. In the circum- stances of the case the counsel for the Government has agreed that the Government will not proceed to reopen the assessment and assess on the basis of Notification No. 909/X dated March 31 1956.

Summary

Issues:
1. Challenge to the validity of two notifications issued by the Government of U.P.
2. Validity of Notification No. ST-909/X dated March 31, 1956.
3. Validity of Notification No. ST-6068/X-1097-56 dated September 30, 1956.
4. Levying of sales tax on permit sales.

Detailed Analysis:
1. The appellant, a partnership firm engaged in the business of manufacturing flour, challenged the validity of two notifications issued by the Government of U.P. The first notification, ST-909/X dated March 31, 1956, imposed a sales tax on certain goods. The second notification, ST-6069/X-1097-56 dated September 30, 1956, imposed a single-point tax on specific items. The High Court upheld the revalidation of the first notification through the U.P. Sales Tax (Validation) Act, 1958, but deemed the second notification invalid. Consequently, the appellant's writ petition was dismissed.

2. The validity of Notification No. ST-909/X dated March 31, 1956, was challenged in court. The notification imposed a tax rate on specified goods. Section 3(1) of the U.P. Act No. 15 of 1958 validated this notification, deeming it to have been issued under the relevant provisions of the U.P. Sales Tax Act, 1948. Despite an inconsistency in the language of the Act regarding supersession, the court held that the notification was revived with retrospective effect. The court also noted that the second notification, ST-6069/X-1097-56, had been invalidated and not revived by the Validation Act.

3. The appellant contended that Notification No. ST-6068/X-1097-56 dated September 30, 1956, imposed excise duty rather than sales tax. However, this argument was not extensively argued before the High Court. The court refrained from delving into this issue, although it found no merit in the claim that the levy constituted excise duty. The court did not find grounds to challenge the imposition of sales tax under this notification.

4. The appellant raised concerns about sales tax being levied on permit sales, citing a previous court decision. The appellant argued that certain transactions should not be considered as sales. Despite allowing the appellant to present material supporting this claim, the court found the evidence insufficient to demonstrate that the transactions in question did not qualify as sales. The court concluded that the appellant had been correctly assessed based on the applicable notification.

In conclusion, the Supreme Court dismissed the appeal, directing each party to bear its own costs. The court confirmed the validity of Notification No. ST-909/X dated March 31, 1956, and declined to revisit the issue of sales tax imposition under Notification No. ST-6068/X-1097-56. Additionally, the court rejected the appellant's argument regarding sales tax on permit sales, finding no basis to dispute the assessment based on the notifications in question.