1991 (10) TMI 298 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Exemption from Sales Tax on Tyres and Tubes
2. Classification of Cycle Rims as Iron and Steel
3. Validity and Retrospective Effect of Notification No. 4841

Issue-wise Detailed Analysis:

1. Exemption from Sales Tax on Tyres and Tubes:
The respondent-assessee, a registered dealer under the U.P. Sales Tax Act and the Central Sales Tax Act, contended that tyres and tubes sold to dealers holding recognition certificates were exempt from sales tax for the assessment years 1975-76 and 1976-77. The assessing authority disagreed, leading to an enhancement of the taxable turnover. The Tribunal accepted the assessee's contention regarding the exemption, which is the focal point of these revisions. Section 4-B of the U.P. Sales Tax Act provides relief to certain manufacturers, allowing them to purchase raw materials at a concessional rate or without paying sales tax if they hold a recognition certificate. The Tribunal's acceptance of the assessee's claim was based on the interpretation of these provisions.

2. Classification of Cycle Rims as Iron and Steel:
The assessing authority did not accept the assessee's plea that cycle rims should be classified as iron and steel under Section 14 of the Central Sales Tax Act, which would subject them to a ceiling on tax. The Tribunal agreed with the assessing authority, rejecting the contention that cycle rims were iron and steel. This issue was not the primary focus of the revisions but was addressed in the proceedings.

3. Validity and Retrospective Effect of Notification No. 4841:
The core issue revolved around Notification No. 4841 dated June 25, 1986, which corrected a printing error in Notification No. 3867 dated June 11, 1974. The Tribunal had accepted the respondent-assessee's argument that the corrigendum should be related to Section 25 of the U.P. Sales Tax Act, limiting its retrospective effect to six months. The Tribunal thus deemed that Notification No. 4748 dated October 10, 1968, continued to be in force during the assessment years in question. The High Court disagreed, stating that Notification No. 4841 did not cite any provision of law under which it was issued and was merely a corrigendum. The Court emphasized that a correction dates back to the original notification, making the effective date of Notification No. 3867 as June 11, 1974. The Court highlighted that the power to issue such notifications derives from Section 4-B and the relevant rules, not from Section 25. The Court rejected the argument that the assessee should benefit from the error, emphasizing that even taxation laws must be reasonably interpreted to avoid defeating their purpose.

Conclusion:
The High Court allowed both revisions, setting aside the Tribunal's order and restoring the Deputy Commissioner (Appeals)' order. The Court clarified that Notification No. 4841 was a correction, effective from the date of the original notification (June 11, 1974), and not an amendment. The Court also noted that the Tribunal should decide the matter expeditiously if it had not already done so following the remand order in a related case.