2004 (3) TMI 721 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to circular and notices regarding deletion of diesel oil from recognition certificate under U.P. Trade Tax Act.

Analysis:
The petitioner, a limited company manufacturing craft paper, filed a writ petition challenging a circular and notices issued by the respondents regarding the deletion of diesel oil from its recognition certificate under the U.P. Trade Tax Act. The petitioner sought a writ of certiorari quashing the circular and notices, as well as a mandamus restraining the respondents from taking any action based on the said circular and notices. The petitioner also requested a writ of mandamus directing the respondents to issue form III-B regularly for the purchase of diesel oil for its factory.

The petitioner had been purchasing diesel oil against form III-B from Indian Oil Corporation Limited, paying a 2.5% tax. However, following a circular issued by the Commissioner, Trade Tax, U.P., Lucknow, the respondents insisted on a 20% tax for the purchase of diesel oil. The petitioner's counsel highlighted that a similar issue was adjudicated by the Allahabad High Court, and the division bench had quashed the circular issued by the Commissioner of Trade Tax, U.P., which was the same circular challenged in this writ petition.

The Allahabad High Court held that the recognition certificate could not be amended through a circular, emphasizing the importance of diesel oil for operating machinery in continuous industrial processes. The court referred to various legal precedents to support its interpretation, concluding that diesel oil fell under the goods required for use in manufacturing, as specified in the U.P. Trade Tax Act. Consequently, the High Court allowed the writ petition, quashing the impugned circular and notices, and directing the respondents to treat diesel oil as goods required for use in the petitioner's manufacturing process.

In light of the detailed discussions and legal analysis, the High Court granted the writ petition, emphasizing that the deletion of diesel oil from the recognition certificate was contrary to the statutory provisions of section 4-B(2) of the U.P. Trade Tax Act. The respondents were instructed to issue form III-B regularly for the purchase of diesel oil to be used in the petitioner's factory. The court concluded by allowing the petition without any order as to costs.

In summary, the judgment addressed the challenge to the circular and notices regarding the deletion of diesel oil from the recognition certificate under the U.P. Trade Tax Act, emphasizing the importance of diesel oil in the manufacturing process and directing the respondents to issue the necessary forms for its purchase.