1972 (10) TMI 106 - HC - VAT and Sales Tax

Summary

Issues:
Challenge of levy of additional tax on turnover of oil-seeds under U.P. Sales Tax Act.
Interpretation of section 14 and section 15 of the Central Sales Tax Act, 1956 regarding tax on oil-seeds.
Applicability of additional tax under section 3-F in cases covered by section 4-B of the U.P. Sales Tax Act.
Constitutional validity of imposition of additional tax under section 3-F.

Analysis:
The petitioner, a partnership firm engaged in the business of manufacturing and selling edible oil, challenged the assessment of additional tax under section 3-F of the U.P. Sales Tax Act for the assessment year 1970-71. The petitioner contended that oilseeds are goods of special importance in inter-State trade or commerce, limiting the tax rate to 3% under section 15 of the Central Sales Tax Act, 1956. However, the petitioner was assessed at a concessional rate of 2% under a notification issued under section 4-B of the U.P. Sales Tax Act. The main argument was that no additional tax should be imposed on the turnover of oil-seeds due to the existing concessional rate (2%).

The Court acknowledged that oil-seeds are subject to restrictions under section 15 of the Central Sales Tax Act, capping the tax rate at 3%. The petitioner, holding a recognition certificate under section 4-B(2), was liable for tax at a concessional rate of 2% on first purchases of oil-seeds. The Court analyzed the provisions of section 3-F, which imposes additional tax on dealers with turnover exceeding Rs. 2 lakhs, and concluded that the petitioner, with a total tax rate of 3% (2% under section 3-D and 1% additional tax), did not exceed the permissible limit under the Central Sales Tax Act.

Regarding the contention that no additional tax should apply in cases covered by section 4-B, the Court held that section 4-B does not grant authority to provide concessions under section 3-F. As the legislation does not include section 3-F under the purview of concessions, the State Government cannot grant any relief. The Court dismissed the alternative contention, emphasizing the independent nature of section 3-F as a charging section.

Lastly, the petitioner argued that the imposition of additional tax under section 3-F violated article 14 of the Constitution by discriminating against dealers holding recognition certificates. The Court rejected this argument, highlighting that the total tax rate for dealers with recognition certificates remained below 3%, ensuring no discrimination. The Court dismissed the petition, finding no merit in the challenges raised by the petitioner.

In conclusion, the Court upheld the levy of additional tax on the petitioner and dismissed the petition without costs, ruling in favor of the tax authorities.