1996 (5) TMI 399 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the impugned order dated October 4, 1994, and the condition imposed on October 6, 1994, regarding the use of imported coal on job work.
2. Whether the petitioner is entitled to use Form 31 for importing coal for job work.
3. Interpretation of the term "business" under the U.P. Sales Tax Act, 1948, and its applicability to job work.
4. Validity of the condition imposed by the authorities restricting the use of coal imported on Form 31 for job work.
5. Authority of the Sales Tax Officer to issue Form 31 under Rule 85 of the U.P. Trade Tax Rules.

Detailed Analysis:

1. Legality of the Impugned Orders:
The petitioner challenged the orders dated October 4, 1994, and October 6, 1994, passed by the Assistant Commissioner (Assessment) I, Trade Tax, Varanasi, which directed the assessee not to use the coal imported on Form 31 for job work. The petitioner argued that these orders were illegal and without jurisdiction.

2. Entitlement to Use Form 31 for Job Work:
The main contention of the petitioner was that as a registered dealer under the U.P. Sales Tax Act, 1948, and the Central Sales Tax Act, 1956, they were entitled to import coal on Form 31 for job work. The petitioner required steam coal in large quantities for manufacturing refined oil and argued that job work was an activity in the nature of processing, thus falling under the ambit of business activities.

3. Interpretation of "Business" under the Act:
The Court examined whether job work fell under the definition of "business" as provided in Section 2(aa) of the Act. The Act defines "business" to include any trade, commerce, or manufacture, whether or not carried on with a profit motive, but explicitly excludes activities in the nature of mere service or profession that do not involve the purchase or sale of goods.

The Court concluded that job work, being an activity in the nature of mere service that does not involve the purchase or sale of goods, does not fall under the definition of "business." Consequently, coal imported for job work is not considered to be in connection with business, and therefore, Form 31 cannot be issued for such purposes.

4. Validity of the Condition Imposed:
The authorities had imposed a condition that the coal imported on Form 31 should not be used for job work. The Court supported this condition, stating that the entitlement to Form 31 is based on the importer's intention to use the goods in connection with business. Since the petitioner used the coal for both business and job work purposes, the authorities rightly imposed the condition to ensure compliance with the Act and Rules.

5. Authority of the Sales Tax Officer under Rule 85:
The petitioner argued that under Rule 85(1) of the U.P. Trade Tax Rules, being a registered dealer, they were entitled to be issued Form 31. However, the Court clarified that Rule 85(1) only prescribes the manner of submission of declaration forms and does not mandate the issuance of Form 31 for purposes other than business. Rule 85(4) requires the Sales Tax Officer to be satisfied about the genuineness and reasonableness of the demand for Form 31, ensuring it is used in connection with business.

Conclusion:
The Court concluded that under the provisions of the Act and Rules, Form 31 cannot be issued for importing coal for job work, as job work is not included in the term "business." The condition imposed by the authorities was deemed valid and in accordance with the scheme of the Act and Rules. The writ petition was dismissed, and the authorities were affirmed in their decision to restrict the use of coal imported on Form 31 for job work.

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