2003 (3) TMI 681 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 3-AAAA of the U.P. Sales Tax Act, 1948 regarding liability to tax on purchase of goods in certain circumstances.
2. Application of exemption under section 3-AAAA in the case of export transactions.
3. Effect of retrospective amendment by U.P. Act No. 31 of 1995 on section 3-AAAA.

Analysis:

1. The case involved a dealer engaged in the business of footwears, where the issue was the liability to tax on the purchase of goods under section 3-AAAA of the U.P. Sales Tax Act, 1948. The dealer had purchased footwears against Form III-A and subsequently sold them in the course of inter-State sale to a party for export. The Deputy Commissioner initiated proceedings under section 10-B on the grounds that the purchase was liable to tax under section 3-AAAA. The Tribunal upheld the levy, stating that the exemption under section 3-AAAA applied only to sales within the state or inter-State sales, not exports.

2. The Tribunal's decision was challenged on the basis that the amended section 3-AAAA, introduced by U.P. Act No. 31 of 1995 with retrospective effect from April 1, 1974, provided exemption to exports. The amended section clarified that no tax would be levied if the goods were resold within the state, in inter-State trade, or exported in the same form and condition. In this case, the footwears sold for export were deemed to be in the same form and condition, thus qualifying for the exemption under the amended section.

3. The Court found that the amended section 3-AAAA, which allowed for exemption on exports, was applicable to the case despite the Tribunal's decision based on the old section. The Court noted that the old section had been substituted by the new section through the retrospective amendment, rendering the tax levied under the old section unjustified. Consequently, the Court allowed the revision, setting aside the Tribunal's order, and directed the Tribunal to pass a new order under section 11(8) of the Act in accordance with the amended provision.

In conclusion, the judgment clarified the application of section 3-AAAA in cases of export transactions, emphasizing the impact of retrospective amendments on statutory provisions and ensuring that the correct legal framework is applied to determine tax liabilities in such scenarios.