2002 (2) TMI 1310 - HC - VAT and Sales Tax

Issues Involved:

1. Legality of the Tribunal reviewing its earlier judgment under section 22 of the U.P. Trade Tax Act.
2. Taxability of burnt molasses.
3. Applicability of U.P. Trade Tax Act to molasses, bagassee, iron and steel scrap, and straw board.
4. Applicability of section 29-A of the U.P. Trade Tax Act.
5. Imposition of administrative charges under the U.P. Sheera Niyantran Adhiniyam, 1964.
6. Interest on the amount deposited pursuant to the stay order.

Issue-wise Detailed Analysis:

1. Legality of the Tribunal Reviewing its Earlier Judgment:

The primary question was whether the Tribunal could change its opinion or review its earlier judgment under section 22 of the U.P. Trade Tax Act. The Tribunal had revised its judgment/order dated October 28, 1998, and July 2, 1999, on October 23, 1999, imposing tax on burnt molasses. The revisionist argued that the Tribunal committed an illegality by reviewing its earlier orders, as the provisions of section 22 are not applicable for such a review. The court examined section 22, which allows rectification of mistakes apparent on the record within three years. The court found that the Tribunal had not correctly applied section 22 in its order dated October 23, 1999, and thus, the order was not proper in the eye of law and was liable to be set aside.

2. Taxability of Burnt Molasses:

The revisionist contended that the U.P. Trade Tax Act is not applicable to burnt molasses, as molasses is a residue of sugarcane, and the purchase tax is already paid on sugarcane under the U.P. Sugarcane (Purchase Tax) Act, 1961. The court referred to the decision in Commissioner of Sales Tax v. Prag Ice and Oil Mills, where it was held that residue is to be taxed at the rate applicable to the product. Thus, burnt molasses can only be taxed as sugarcane, and since purchase tax is paid on sugarcane, the U.P. Trade Tax Act cannot be applied to tax burnt molasses.

3. Applicability of U.P. Trade Tax Act to Molasses, Bagassee, Iron and Steel Scrap, and Straw Board:

The revisionist argued that molasses, bagassee, iron and steel scrap, and straw board are not taxable under the U.P. Trade Tax Act. The court found that molasses and burnt molasses are not taxable under the U.P. Trade Tax Act due to the special provisions of the U.P. Sugarcane (Purchase Tax) Act, 1961, and the U.P. Sheera Niyantran Adhiniyam, 1964. The straw board was taxable at the rate applicable to paper, and no tax was payable on iron scrap on which tax was paid at the time of purchase.

4. Applicability of Section 29-A of the U.P. Trade Tax Act:

The Tribunal had allowed the appeal of the Commissioner of Trade Tax, U.P., by not applying section 29-A of the Act. The revisionist contended that section 29-A was not applicable to the facts of the case. The court agreed with the revisionist, finding that the Tribunal had rightly dismissed the applications filed by the Commissioner under section 22 on the ground that the provisions under this section cannot be made applicable for changing the decision or judgment which needs long drawn argument and debate.

5. Imposition of Administrative Charges under the U.P. Sheera Niyantran Adhiniyam, 1964:

The revisionist argued that the administrative charges imposed under the U.P. Sheera Niyantran Adhiniyam, 1964, are in fact a tax as defined under article 366(28) of the Constitution. The court referred to the decision in Commissioner of Central Excise v. Kisan Sahakari Chinni Mills Ltd., where it was held that administrative charges are a tax. Therefore, the U.P. Trade Tax Act cannot be invoked for the levy of tax on the sale of molasses.

6. Interest on the Amount Deposited Pursuant to the Stay Order:

The revisionist requested interest at the rate of one percent on the amount deposited pursuant to the stay order. The court directed that interest at the rate of 15 percent per annum shall be paid to the revisionists from the date of deposit of the amount, following the decision in Anuj Bricks v. State of U.P.

Conclusion:

The revision was allowed, and the order dated October 23, 1999, passed by the Trade Tax Tribunal, Moradabad, was quashed. The court directed that interest at the rate of 15 percent per annum be paid to the revisionists from the date of deposit of the amount within two weeks from the date of production of a certified copy of the order. The petition was allowed.

← Previous Next →