1979 (7) TMI 238 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of exemption notification for turnover of kulfi and lassi.
2. Conflict between notification exempting goods and subsequent notification imposing tax.
3. Authority of State Government to modify or rescind notifications.
4. Distinction between sections 3-A and 4 of the U.P. Sales Tax Act.

Analysis:

The High Court of Allahabad dealt with a revision petition by the Commissioner, Sales Tax, challenging an order exempting the turnover of kulfi and lassi based on a notification issued by the State Government. The Court noted that the exemption under the notification dated 31st March, 1956, covered milk products, including kulfi and lassi, as they are milk-based products, falling within the exemption criteria specified by the State Government.

Subsequently, on 1st December, 1973, the State Government issued a notification under section 3-A of the U.P. Sales Tax Act, making the turnover of goods like kulfi and lassi taxable when served to customers. The department argued that this new notification rendered the turnover of the assessee liable for tax post-December 1, 1973. However, the assessee contended that the exemption under the 1956 notification remained valid until modified or rescinded by the State Government.

The Court emphasized the need for strict interpretation of fiscal statutes and highlighted that tax liability must be express and absolute. It clarified the distinction between sections 3-A and 4 of the Act, stating that while section 3-A specifies taxable goods, the power to exempt them lies with the State Government under section 4. The Court concluded that as long as the exemption notification of 1956 was in force, the turnover of kulfi and lassi remained exempt from tax, despite the subsequent notification of 1973 imposing tax on such goods.

Ultimately, the Court upheld the decision of the judge (Revisions), dismissing the revision petitions and ordering the department to pay costs to the assessee. The judgment underscored the importance of honoring existing exemptions unless expressly revoked by the appropriate authority, in this case, the State Government.