1982 (7) TMI 258 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notice dated 21st July, 1977, issued under section 15-A(1)(a) of the U.P. Sales Tax Act.
2. Exemption status of cotton seed under the U.P. Sales Tax Act.
3. Legality of issuing a single notice for multiple assessment years (1973-74 to 1977-78).

Issue-wise Detailed Analysis:

1. Validity of the Notice under Section 15-A(1)(a):
The petitioners challenged the notice dated 21st July, 1977, issued by the Sales Tax Officer, Budaun, for initiating penalty proceedings under section 15-A(1)(a) of the U.P. Sales Tax Act for the assessment years 1973-74 to 1977-78. The petitioners argued that since the turnover of cotton seed was exempt under section 4 of the Act, they were not required to deposit any tax, and hence, the Sales Tax Officer had no jurisdiction to initiate penalty proceedings. The respondents contended that the turnover of sales of cotton seed was exempt up to 30th April, 1973, but from 1st May, 1973, to 4th April, 1975, first purchases were taxable at 3 percent, and from 2nd October, 1975, to 31st January, 1978, the turnover of sales of cotton seeds was taxable at 4 percent. The court held that for the assessment years 1975-76, 1976-77, and 1977-78, the initiation of proceedings under section 15-A(1)(a) was valid, but for the assessment years 1973-74 and 1974-75, the petitioners were entitled to succeed as the exemption for cotton seed had not been withdrawn during those years.

2. Exemption Status of Cotton Seed:
The court examined the historical context of the exemption status of cotton seed. Originally, under section 4 of the Act, cattle fodder including cotton seed was exempt from tax. However, by Notification No. ST-II-2526/X-6(8)-1973 dated 1st May, 1973, oil-seeds, including cotton seed, were made liable to purchase tax at 3 percent. This notification was rescinded on 2nd October, 1975, and oil-seeds were made taxable at the point of sale at 4 percent. Subsequently, by Notification No. ST-II-8715 dated 31st January, 1978, oil-seeds were again made taxable at the point of first purchase at 4 percent. The court concluded that with effect from 5th April, 1975, cotton seed was excluded from the definition of cattle fodder and thus no longer enjoyed tax exemption. Therefore, the exemption granted to cotton seed was effectively withdrawn from 5th April, 1975.

3. Legality of Issuing a Single Notice for Multiple Assessment Years:
The petitioners contended that issuing a single notice for the assessment years 1973-74 to 1977-78 was illegal and bad. The court found no merit in this contention, stating that the facts and circumstances relating to these years were common, and the issuance of one notice for initiating penalty proceedings did not suffer from any legal infirmity. The court noted that it could not be shown which specific provision of the Act was violated by issuing a single notice for multiple years.

Conclusion:
The petitions were allowed in part. The impugned notices issued under section 15-A(1)(a) of the U.P. Sales Tax Act for the assessment years 1973-74 and 1974-75 were quashed. However, for the assessment years 1975-76, 1976-77, and 1977-78, the initiation of proceedings was deemed valid, and the petitions for these years were dismissed. Each party was directed to bear their own costs.