1970 (9) TMI 94 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of rule 20-B of the U.P. Sales Tax Rules for exemption application.
2. Validity and binding nature of circular issued by Commissioner of Sales Tax regarding extension of time for depositing exemption fee.

Analysis:
The judgment by the High Court of Allahabad involved two main issues. Firstly, the interpretation of rule 20-B of the U.P. Sales Tax Rules for exemption applications was questioned. The assessee, a foodgrains dealer, applied for tax exemption for the year 1957-58 under rule 20-B(a) but failed to deposit the required amount within the specified time frame. The Sales Tax Officer rejected the application based on this non-compliance. The court determined that the deposit made by the assessee was insufficient, as rule 20-B required a specific amount to be deposited within a set timeframe, which was not met by the dealer.

Secondly, the validity and binding nature of a circular issued by the Commissioner of Sales Tax regarding the extension of time for depositing the exemption fee was examined. The circular directed Sales Tax Officers to grant an extension of time for dealers to fulfill the exemption fee requirements. However, the court held that the Commissioner did not have the authority to extend the period specified in rule 20-B(a. The court emphasized that instructions issued by the Commissioner must be consistent with the Act and Rules, and in this case, the circular was not in line with rule 20-B. Therefore, the circular was deemed without legal sanction and not binding on Sales Tax Officers.

The judgment highlighted the importance of adherence to statutory provisions and rules governing tax exemptions. It clarified that instructions issued by authorities must align with existing laws and cannot override statutory requirements. The court's decision emphasized the mandatory nature of rule 20-B and the limitations on the Commissioner's power to alter the prescribed procedures. Ultimately, the court answered both questions in the negative, stating that the first question did not arise, and the circular was not binding. The Commissioner of Sales Tax was awarded costs, and the reference was answered accordingly.