1997 (5) TMI 416 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the order of the Sales Tax Tribunal regarding the liability of sales tax on the turnover of tendu leaves.
2. Interpretation of the term "manufacturer" under the U.P. Sales Tax Act, 1948.
3. Determination of whether the dealer collecting tendu leaves is a manufacturer based on statutory provisions and agreements with the Forest department.

Detailed Analysis:
The judgment in question deals with a revision petition challenging the Sales Tax Tribunal's order regarding the liability of sales tax on the turnover of tendu leaves. The revisionist, a dealer, was deemed a manufacturer by the Sales Tax Department due to the collection of tendu leaves from the Forest department. The key issue revolved around the interpretation of the term "manufacturer" under the U.P. Sales Tax Act, 1948. The Act defines "manufacturer" as the dealer who makes the first sale of goods in the State after their manufacture. The dealer contended that the collection of tendu leaves did not make them a manufacturer as per the statutory provisions.

In a previous judgment by the same judge, it was held that the dealer was a manufacturer since tendu leaves were collected by them. However, a later judgment by another single judge emphasized that the act of collecting tendu leaves was done as an agent for the State, making the State the manufacturer. The statutory provisions of the U.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1972 and related rules established that the State retained ownership of the goods until delivery to the buyer. The State's role as a manufacturer was further supported by the agreement terms between the State Government and the purchaser, which included the liability to pay sales tax as per the U.P. Sales Tax Act.

The Court analyzed the provisions of the Act and the agreements with the Forest department, concluding that the dealer collecting tendu leaves was not a manufacturer. The judgment aligned with the view taken in a previous case and held that no tax was leviable on the dealer's turnover from the sale of tendu leaves. Consequently, the revision petition was allowed, and the Tribunal's order was set aside, directing the Tribunal to decide the appeal in line with the judgment. The decision was based on a thorough examination of the statutory framework and agreements governing the collection and sale of tendu leaves, establishing the State as the manufacturer in this context.