1999 (11) TMI 857 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the rejection of the assessee's claim for tax exemption on purchases made on behalf of ex-U.P. principals.
2. Applicability of Section 12-A of the U.P. Sales Tax Act, introduced by Ordinance No. 10 of 1990.
3. Examination of evidence and documents submitted by the assessee.
4. Interpretation of inter-State trade and commerce under the Central Sales Tax Act.

Issue-Wise Detailed Analysis:

1. Validity of the rejection of the assessee's claim for tax exemption on purchases made on behalf of ex-U.P. principals:
The assessee's claim for exemption from tax on purchases made on behalf of ex-U.P. principals was rejected by the authorities on the grounds that the assessee had submitted forms III-C(1) admitting the purchases on his own behalf. Additionally, the assessee had realized tax from the ex-U.P. principals and prepared 9-R forms in his own name. The authorities concluded that these actions indicated that the purchases were made independently for the assessee and not on behalf of ex-U.P. principals.

2. Applicability of Section 12-A of the U.P. Sales Tax Act, introduced by Ordinance No. 10 of 1990:
The introduction of Section 12-A by Ordinance No. 10 of 1990 was argued to be retrospective, making any declaration admitting to be the first purchaser conclusive evidence of liability to pay trade tax. However, the assessee contended that the amendment could not impose liability for the assessment years under consideration, as the amendment was introduced in 1990, and the relevant assessment years were prior to that.

3. Examination of evidence and documents submitted by the assessee:
The Tribunal did not thoroughly examine the documents submitted by the assessee, such as the year-wise list of purchases for ex-U.P. principals, account books, and 6-R and 9-R forms issued by the Mandi Samiti. The Tribunal failed to record specific findings on whether these documents could substantiate the claim that the purchases were made on behalf of ex-U.P. principals. The Tribunal also did not consider the material facts observed by the first appellate authority, which indicated that the dealer had prepared bills in the name of ex-U.P. principals, adding the amount of purchase tax and realizing it from them.

4. Interpretation of inter-State trade and commerce under the Central Sales Tax Act:
The judgment referenced the Supreme Court's decision in Commissioner of Sales Tax v. Bakhtawar Lal Kailash Chand Arhti, which clarified that an inter-State sale or purchase is one that occasions the movement of goods from one State to another. The movement of goods must be a necessary incident of the sale or purchase. The Tribunal was required to examine whether the purchases made by the assessee were pursuant to an existing agreement for sale with the ex-U.P. purchaser, thus qualifying as inter-State purchases exempt from tax under the Central Sales Tax Act.

Conclusion:
The Tribunal's orders were set aside, and the cases were remanded for fresh decision-making. The Tribunal was directed to re-examine the material placed before it and specifically record findings in light of the observations made. Each transaction was to be examined to determine if the purchases were made pursuant to existing agreements for ex-U.P. principals. The revisions were allowed, and the petitions were granted.