1997 (8) TMI 498 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption from payment of trade tax on sales to Canteen Stores Department.
2. Compliance with conditions for exemption under the U.P. Sales Tax Act, 1948.
3. Dispute regarding stock transfer and sale to a marketing agency.

Detailed Analysis:
1. The judgment revolves around the issue of exemption from trade tax on sales made to the Canteen Stores Department. The applicant, a public limited company manufacturing Indian-made foreign liquor, received a purchase order from the Canteen Stores Department, Government of India. The applicant invoiced the goods to the Canteen Stores Department, Lucknow, and all relevant documents, including permit, challan, and G.R., were in the name of the Canteen Stores Department. The court noted that the sales were clearly between the applicant and the Canteen Stores Department, making them eligible for exemption from trade tax as per a notification dated January 31, 1985, under the U.P. Sales Tax Act.

2. The judgment addresses the issue of compliance with the conditions for exemption under the U.P. Sales Tax Act, 1948. The applicant claimed exemption under the notification by fulfilling the three essential requirements: selling goods to the Canteen Stores Department, certification by a Commanding Officer, and the goods being meant for sale to the Armed Forces. The court observed that the applicant had provided a certificate confirming compliance with these conditions, thus entitling them to the exemption under the notification.

3. A dispute arose regarding stock transfer and the nature of the sale to a marketing agency, as mentioned in the Tribunal's order. The Standing Counsel for tax authorities argued that there was a stock transfer and the sale was to a marketing agency, leading the Tribunal to remand the matter for reconsideration. However, the applicant's representative contended that the stock transfer issue pertained to Central assessment and the objections raised had no relevance to the present case. The court sided with the applicant, emphasizing that the sales to the Canteen Stores Department were indeed exempt from trade tax, as per the relevant notification.

In conclusion, the court allowed the revision, quashed previous orders related to trade tax imposition on sales to the Canteen Stores Department, and directed the refund of any tax paid by the applicant-company. The judgment reaffirmed the exemption status of the sales made to the Canteen Stores Department, highlighting the fulfillment of conditions for tax exemption under the U.P. Sales Tax Act, 1948.