1983 (7) TMI 292 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to imposition and realization of purchase tax on alcohol by District Excise Officer under U.P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939. Interpretation of provisions regarding liability for purchase tax on alcohol. Availability of alternative remedy by way of appeal.

Analysis:
The petitioner, a distillery, challenged the imposition and realization of purchase tax on alcohol by the District Excise Officer, contending that no amount was due as the petitioner was a seller, not a purchaser of alcohol. The tax pertained to alcohol purchased from 1st November, 1975, to 20th April, 1976. The respondents did not file a counter-affidavit, and the petitioner's facts remained uncontroverted. The Amending Act added alcohol as a taxable commodity under the U.P. Sales of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939. The Act imposed sales tax on the first sale of alcohol payable by selling dealers. However, a judgment had previously struck down provisions related to alcohol. The amended Act levied a tax on the first purchase of alcohol, payable by the purchaser and collected by the State Government.

The Court rejected the argument that the purchase tax was to be collected by the seller from the purchaser, emphasizing that the liability was on the purchaser, not the seller. The Act clearly placed the liability on the purchaser for paying the tax, with the seller empowered to deposit the tax on behalf of the purchaser. The rules mentioned did not transfer the liability to the seller. The Court clarified that imposition of tax and payment of tax were distinct, with the liability remaining on the purchaser. The rules were not retrospective, coming into effect after the relevant period.

Regarding the availability of an alternative remedy through appeal, the Court held that it was not a bar to relief under article 226. The lack of an effective remedy at the time of the impugned order supported the petitioner's right to seek relief under article 226. The Court allowed the writ petition, quashing the notice and order, and awarded costs to the petitioner.

In conclusion, the Court found the imposition and realization of purchase tax on the petitioner to be unlawful, emphasizing the purchaser's liability for the tax. The Court also dismissed the argument of an alternative remedy through appeal as inadequate at the time of the impugned order.