1990 (11) TMI 378 - HC - VAT and Sales Tax

Summary

Issues:
- Assessment of turnover of sales of khandsari sugar for the assessment year 1976-77 under the U.P. Sales Tax Act, 1948.
- Exemption of khandsari sugar from tax under section 4 of the Act based on excise duty payment.
- Validity of assessment order passed against the second petitioner for the disputed turnover of khandsari sugar sold as a selling agent.
- Compliance with prescribed form requirements for exemption and assessment under section 3-D of the Act.

Analysis:
The judgment of the High Court of Allahabad addressed a writ petition concerning the assessment of turnover of sales of khandsari sugar for the year 1976-77 under the U.P. Sales Tax Act, 1948. The petitioners, two entities engaged in the sugar business, challenged the assessment order passed against the second petitioner for the turnover of khandsari sugar sold as a selling agent. The dispute centered around the exemption of khandsari sugar from tax under section 4 of the Act, contingent upon the payment of excise duty. The petitioners argued that the excise duty had already been paid, supported by a certificate, but the assessing authority rejected the claim due to non-compliance with the prescribed form requirements. The court analyzed the provisions of section 4 of the Act, which exempted certain commodities from tax subject to conditions set by notifications. Additionally, it considered notifications issued under section 3-D of the Act, imposing tax on specific goods. The court examined the provisions of sub-section (2) of section 3-D, which outlined conditions for levying tax on sales to unregistered dealers. It noted that the assessment order lacked findings on crucial aspects, such as sales to unregistered dealers, and the assessing authority's failure to consider evidence beyond the prescribed form. The court emphasized the importance of meeting statutory requirements for a valid assessment under section 3-D. Consequently, the court quashed the assessment order to tax the turnover of sales where the second petitioner acted as a selling agent. Despite typically directing a fresh assessment, given the extended period since the original assessment and the minimal tax amount in question, the court deemed it unnecessary in this case. The writ petition was allowed, with no costs imposed.