1981 (9) TMI 252 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of iron shafts as iron and steel under the Central Sales Tax Act.
2. Liability for sales tax when a kiln is under attachment.

Issue 1: Taxability of iron shafts as iron and steel under the Central Sales Tax Act:
The revising authority referred the question of whether iron shafts sold by the assessee were taxable as iron and steel under section 14(iv) of the Central Sales Tax Act. The Sales Tax Officer initially held that the iron bars (shafts) did not fall under the category of iron and steel, leading to taxation on the turnover. The revising authority, however, determined that the iron bars (shafts) were indeed classified as iron and steel, as per section 14(iv)(c), and thus excluded the turnover from tax liability. The judgment emphasized that since the tax had already been paid at the time of purchase, the turnover of sales of these items could not be taxed. Therefore, the revising authority's decision was upheld, and the reference treated as a revision was dismissed with costs to the assessee.

Issue 2: Liability for sales tax when a kiln is under attachment:
In this case, the Commissioner of Sales Tax challenged the view that the assessee was not taxable due to the kiln being under attachment. The controversy arose because the kiln was found to be running despite being under attachment. The revising authority concluded that the liability to pay tax, even if the kiln was operated during the attachment period, rested on the person in custody of the property, as per section 20 of the U.P. Sales Tax Act. The judgment highlighted that the attachment of the property did not affect the right to carry on business but shifted the tax liability to the person managing the business on behalf of the dealer. Therefore, the revisions challenging the view taken by the Additional judge (Revisions), Sales Tax, were dismissed, with costs assessed to the assessee.

In conclusion, both issues were addressed in the judgment, clarifying the taxability of iron shafts as iron and steel under the Central Sales Tax Act and determining the liability for sales tax when a kiln is under attachment. The legal principles and provisions of the Central Sales Tax Act and the U.P. Sales Tax Act were analyzed to arrive at the decisions in both instances.