2007 (3) TMI 367 - SC - VAT and Sales Tax

Whether any firm in the name of M/s. National Generator is in existence and is registered with the department or not? Held that - Set aside the impugned order of the High Court and remit the matter to the High Court so that question of law, if any, which arises in the facts of the case can be formulated. We make it clear that we have not expressed any opinion as to whether any question of law arises or not. Only if question of law arises, then only the revisional jurisdiction can be exercised.

Summary

Issues Involved:
1. Entitlement to tax exemption under Notification No. 7037/X-71231 dated January 31, 1985.
2. Use of power in black-smithy work.
3. Validity of the Tribunal's decision to interfere with the first appellate authority's order.
4. Proper consideration of seized documents and entries in the assessment.
5. Jurisdiction and power of the High Court under Section 11 of the U.P. Trade Tax Act.

Issue-wise Detailed Analysis:

1. Entitlement to Tax Exemption:
The dealer-opposite party claimed exemption from tax liability under Notification No. 7037/X-71231 dated January 31, 1985, which conditionally exempted the turnover of persons holding a certificate under the Khadi and Village Industries Board. The condition for exemption was that black-smithy work should be done without involving the use of power. The assessing authority denied the exemption on the grounds that the dealer used power in black-smithy work, as evidenced by the presence of power-operated machinery during surveys.

2. Use of Power in Black-smithy Work:
The dealer-opposite party argued that no electric power connection was found during the survey, and the generator and other machinery found were not in use. However, the first appellate authority noted that the presence of machinery that could only operate with power, including a generator, suggested the use of power in black-smithy work. The Tribunal, however, concluded that the machinery was not in use at the time of the survey and relied on a certificate from the Executive Engineer, U.P. State Electricity Board, indicating no electric connection during the relevant assessment year.

3. Validity of the Tribunal's Decision:
The Tribunal's decision to set aside the first appellate authority's remand order was challenged by the department. The first appellate authority had directed a reconsideration of the assessment, particularly regarding the seized diary and the use of power. The High Court found that the Tribunal ignored relevant material and based its judgment on irrelevant considerations, thus vitiating the Tribunal's findings.

4. Consideration of Seized Documents:
The first appellate authority noted that the assessing officer failed to properly investigate the entries in the seized diary, which could have implications for the assessment. The Tribunal overlooked this aspect, failing to consider whether the dealer-opposite party satisfactorily explained the incriminating material found during the survey. The High Court emphasized the necessity of investigating the seized diary and the existence of another firm, M/s. National Generator, to which the entries might relate.

5. Jurisdiction and Power of the High Court:
The High Court's power under Section 11 of the U.P. Trade Tax Act was scrutinized. The Supreme Court highlighted that the High Court can only exercise revisional jurisdiction if a question of law is precisely stated and formulated. The High Court's re-appreciation of evidence without identifying a specific question of law was deemed improper. The Supreme Court set aside the High Court's order and remitted the matter for proper formulation of any question of law that might arise from the facts of the case.

Conclusion:
The Supreme Court concluded that the Tribunal's order was arbitrary and based on irrelevant considerations, failing to address the critical aspects highlighted by the first appellate authority. The High Court's jurisdiction under Section 11 of the Act requires precise formulation of questions of law, which was not done in this case. The matter was remitted to the High Court for reconsideration, emphasizing that only if a question of law arises can the High Court exercise its revisional jurisdiction. The appeals were disposed of without any order as to costs.