1999 (7) TMI 651 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption from tax on sugar purchases and sales made by a dealer acting as a commission agent.
2. Taxability of purchases of sugar under section 3-D of the Act.

Analysis:
1. The revision petition under the U.P. Sales Tax Act, 1948 challenged the Sales Tax Tribunal's order allowing the dealer's appeal for the assessment year 1984-85. The dealer, a sugar merchant, purchased khandsari sugar from manufacturers with eligibility certificates under section 4-A, claiming exemption from tax on purchases and sales made as a commission agent. The assessing officer and first appellate authority denied these claims, leading to the appeal. The Tribunal relied on a circular stating exemption for sales made through commission agents, which was held valid based on Supreme Court precedents. The Tribunal's decision on this point was deemed legal.

2. Regarding the taxability of purchases amounting to Rs. 4,14,251, the Revenue argued for purchase tax under section 3-D, contending that the purchases were liable as the benefit of section 4-A was not available. The Tribunal, however, ruled in favor of the dealer, stating no purchase tax was leviable due to the exemption under section 4-A for the manufacturing units. The debate centered on the interpretation of section 3-D(1) and (2), with the respondent failing to furnish necessary declarations to the manufacturing sellers. The dealer argued that as an unregistered dealer, only tax on sales could be levied, not purchase tax. The absence of required declarations led to the sales being taxable in the hands of the selling dealers, not as purchases by the respondent. The Tribunal's decision was upheld, and the revision petition was dismissed.