1982 (1) TMI 175 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of glass syringes as "glassware" or "hospital equipment."
2. Competency and maintainability of the rectification application.
3. Doctrine of merger and its applicability.
4. Jurisdiction of the High Court and Tribunal under the U.P. Sales Tax Act.

Issue-wise Detailed Analysis:

1. Taxability of Glass Syringes:
The primary issue was whether glass syringes were taxable as "glassware" at 7% or as "hospital equipment" at 4%. Initially, the dealer's turnover was taxed as unclassified goods. The Additional Judge (Revisions) upheld this. However, a Division Bench of the High Court, in a previous case (Sales Tax Reference No. 101 of 1972), held that glass syringes were taxable as glassware at 7%. Following this, the High Court in the dealer's case also held that syringes were taxable as glassware. Subsequently, the Supreme Court reversed this view in Indo International Industries v. Commissioner of Sales Tax, holding that glass syringes were taxable as "hospital equipment" at 4% up to 30th November 1973.

2. Competency and Maintainability of the Rectification Application:
The dealer applied for rectification under Section 22 of the Act to reduce the tax rate from 7% to 4%, based on the Supreme Court's judgment. The Tribunal rejected this application, stating that the dealer should have approached the High Court since the order of the Additional Judge (Revisions) had merged with the High Court's order. The Tribunal viewed the rectification application as incompetent and not maintainable.

3. Doctrine of Merger and Its Applicability:
The Tribunal's decision was based on the doctrine of merger, asserting that the High Court's order dated 19th October 1979 had absorbed the Additional Judge (Revisions)'s order dated 7th December 1978. However, the High Court clarified that its jurisdiction under Section 11 is to decide questions of law, and the effective order disposing of the case is the one passed by the Tribunal. The High Court does not dispose of the case but revises the Tribunal's order by deciding the questions of law. Therefore, the earlier order of the revising authority did not merge with the High Court's order.

4. Jurisdiction of the High Court and Tribunal:
The High Court's jurisdiction under Section 11 is to decide questions of law, while the Tribunal has the authority to pass the final order disposing of the case. The Tribunal's view that the rectification application was incompetent was erroneous. The High Court cited precedents, including State of Uttar Pradesh v. Modi Industries Ltd. and Commissioner of Sales Tax v. Jamuna Prasad Guy Prasad, to emphasize that the revising authority's order did not merge with the High Court's order. The High Court also referred to the amendments made by U.P. Acts Nos. 11 of 1978 and 12 of 1979, which streamlined the process for dealers or the Commissioner to approach the High Court directly for legal questions.

Conclusion:
The High Court concluded that the Tribunal's view on the competency of the rectification application was incorrect. The Tribunal was directed to reconsider the dealer's application on its merits. The revision was allowed, the Tribunal's impugned order was set aside, and the matter was remanded for fresh hearing and decision in accordance with the law. The dealer was awarded costs of Rs. 300.

Judgment:
The petition was allowed, and the Tribunal was instructed to hear and decide the matter afresh on its merits.