1968 (8) TMI 176 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Definition of "admitted tax".
2. Plea to vary admitted tax in grounds of appeal.
3. Examination of the plea's bona fides or frivolity.
4. Classification of an importer as a "successive dealer".
5. Raising frivolous pleas to avoid tax payment.
6. Objection to the entertainability of the appeal post-registration.

Detailed Analysis:

1. Definition of "admitted tax":
The court clarified that "admitted tax" is the tax found to be due on the net turnover declared by the dealer, calculated at the rate prescribed under the U.P. Sales Tax Act and the notification issued thereunder. The dealer argued that the "admitted tax" should be the amount the dealer acknowledges at the appeal stage, not the amount determined based on the turnover disclosed in the return. However, the court held that the admitted tax is the tax calculated based on the turnover declared in the return at the rate specified by the relevant law and notification.

2. Plea to vary admitted tax in grounds of appeal:
The dealer contended that it could argue for a lower tax rate in the appeal, suggesting that the goods were liable to tax at a lower rate than prescribed. The court, however, did not find it necessary to answer this question explicitly, as the first question's resolution rendered it moot.

3. Examination of the plea's bona fides or frivolity:
Again, the court did not address this issue directly, as it was unnecessary given the resolution of the first issue.

4. Classification of an importer as a "successive dealer":
The dealer argued that it, as an importer, was not a "successive dealer" under section 3-A of the U.P. Sales Tax Act and thus should not be taxed at the higher rate. The court found this plea to be essentially a challenge to the validity of the notification issued under section 3-A, which was beyond the jurisdiction of the statutory authorities to adjudicate. The court held that the appellate authority could not pronounce upon the vires of the notification, and thus, the dealer could not use this ground to derive any benefit.

5. Raising frivolous pleas to avoid tax payment:
The court implied that raising such pleas to avoid tax payment was not permissible, but did not explicitly address this issue, as it was rendered unnecessary by the resolution of the first issue.

6. Objection to the entertainability of the appeal post-registration:
This issue was also not directly addressed, as the court's resolution of the first issue made it unnecessary to consider.

Conclusion:

The court answered the first question in the affirmative, defining "admitted tax" as the tax found to be due on the net turnover declared by the dealer, calculated at the rate prescribed under the U.P. Sales Tax Act and the notification issued thereunder. The remaining questions were deemed unnecessary to answer. The special appeal was dismissed, affirming that the U.P. Sales Tax Act provided an adequate alternative remedy. The miscellaneous application was also dismissed, finding no error of jurisdiction or manifest injustice in the recovery proceedings initiated by the Sales Tax Officer.

Orders:

- Sales Tax Reference No. 574 of 1963: Question No. (1) answered in the affirmative; remaining questions need not be answered.
- Special Appeal No. 330 of 1963: Dismissed with costs.
- Miscellaneous Application No. 177 of 1963: Dismissed with costs.