1973 (1) TMI 93 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of borax as a chemical or unclassified item under the U.P. Sales Tax Act.

Detailed Analysis:
The judgment delivered by the Allahabad High Court addressed the issue of whether borax sold by the assessee should be taxed as a chemical or as an unclassified item under the U.P. Sales Tax Act. The assessee was involved in the sale of kotu, herbs, and borax during the relevant assessment years. The Sales Tax Officer taxed herb and certain articles at 2%, considering them unclassified, and borax at 7% as a chemical. The assessee argued that the borax sold was essentially chaukia sohaga, a raw form of borax obtained from rocks, and should not be classified as a chemical. The Assistant Commissioner and the Additional Judge (Revisions) upheld the view that borax was not a chemical and should be taxed at 2% as an unclassified article. Consequently, the Commissioner sought a reference to the High Court.

The controversy arose due to notifications issued under the U.P. Sales Tax Act, particularly Notification No. ST-1365/X-990-1956 dated April 1, 1960, and Notification No. ST-3391/X-1012-1962 dated July 1, 1962. These notifications pertained to the taxation of chemicals and specified the circumstances and rates of tax applicable. The notification of 1962 amended the one from 1960, focusing on the taxation of chemicals. However, the notifications did not cover raw borax sold by the assessee, as it was neither imported nor manufactured in Uttar Pradesh. As a result, the notifications did not apply to the sale of raw borax, and the article could not be taxed at 7% as a chemical.

Therefore, the High Court concluded that the borax sold by the assessee should be taxed as an unclassified article and not as a chemical. The court ruled in favor of the assessee, granting costs amounting to Rs. 100. The reference was answered accordingly, settling the taxability issue of borax under the U.P. Sales Tax Act.