1974 (1) TMI 90 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of assessment orders dated 16th March 1973 under section 21 of the U.P. Sales Tax Act for the assessment years 1967-68 and 1968-69.
2. Whether the sale of molasses was exempt from sales tax under section 3-A of the U.P. Sales Tax Act.
3. Retrospective application of the U.P. Taxation Laws (Amendment) Act, 1972.
4. Jurisdiction of the Sales Tax Officer to reassess the turnover of molasses after the High Court's previous decision.

Issue-wise Detailed Analysis:

1. Validity of Assessment Orders:
The petitioner challenged the assessment orders dated 16th March 1973, which reassessed the turnover of molasses for the years 1967-68 and 1968-69 under section 21 of the U.P. Sales Tax Act. The original assessment orders had been quashed by the High Court on 11th March 1970, which held that molasses and gur-lauta were the same commodity and thus exempt from sales tax under section 3-A of the U.P. Sales Tax Act.

2. Exemption of Molasses from Sales Tax:
The petitioner contended that molasses should be exempt from sales tax as it was the same commodity as gur-lauta. The High Court had earlier ruled in favor of this interpretation, leading to the quashing of the original assessment orders. However, the U.P. Taxation Laws (Amendment) Act, 1972, clarified that molasses and gur-lauta were distinct commodities, thus nullifying the previous exemption.

3. Retrospective Application of the Amendment Act:
The U.P. Taxation Laws (Amendment) Act, 1972, amended section 3-D of the U.P. Sales Tax Act to clarify that molasses and gur-lauta are different commodities. This amendment was made retrospective by clause (e) of section 6, which stated that the explanation shall be deemed always to have been inserted. The court held that the retrospective amendment nullified the previous High Court decision, which had exempted molasses from sales tax.

4. Jurisdiction of the Sales Tax Officer:
The petitioner argued that the Sales Tax Officer had no jurisdiction to reassess the turnover of molasses because the original assessment order had been quashed by the High Court, and this decision had become final inter-parties. However, the court held that the retrospective amendment changed the legal landscape, allowing the Sales Tax Officer to reassess the turnover under section 21. The court explained that the previous quashing of the assessment order was tantamount to quashing the assessment proceedings themselves in regard to the turnover of molasses.

Conclusion:
The court dismissed the petitions, upholding the reassessment orders under section 21 of the U.P. Sales Tax Act. The retrospective amendment by the U.P. Taxation Laws (Amendment) Act, 1972, clarified that molasses and gur-lauta were distinct commodities, thus subjecting molasses to sales tax. The court ruled that the Sales Tax Officer had jurisdiction to reassess the turnover of molasses, as the previous High Court decision had been nullified by the retrospective legislative change. The petitions were dismissed with costs.