2005 (1) TMI 641 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the exemption notification regarding arkil seeds and born villa vegetable seeds under the U.P. Trade Tax Act and Central Sales Tax Act.

Detailed Analysis:
The judgment involves four revisions under section 11 of the U.P. Trade Tax Act challenging the Tribunal's order for the assessment years 1985-86, 1986-87 under both the U.P. Trade Tax Act and Central Sales Tax Act. The primary issue raised in these revisions is whether the Trade Tax Tribunal was justified in exempting arkil seeds and born villa vegetable seeds under Notification No. 7038 dated January 31, 1985, despite their classification as 'matar' and their liability to taxation as such.

The arguments presented by the parties revolve around the classification of arkil seeds and born villa seeds as vegetable seeds exempt from tax. The Standing Counsel contended that these seeds, known as pichka matar, should be taxed as matar and not as vegetable seeds. However, the dealer's counsel supported their classification as vegetable seeds based on certifications from authorities such as the Director of Horticulture and an Associate Professor from a recognized university. The certificates submitted confirmed that arkil seeds and born villa seeds are indeed vegetable seeds, which was considered by the first appellate authority in detail.

The first appellate authority, after reviewing the certificates and other evidence, concluded that arkil seeds and born villa seeds qualify as vegetable seeds and are exempt from tax. This decision was upheld by the Tribunal, emphasizing the distinction between these seeds and matar. The Tribunal found no merit in the argument that these seeds are not used for growing plants to produce matar ki phali, a vegetable. The evidence presented, including the certificates and the entries in the dealer's books of account, supported the classification of arkil and born villa seeds as vegetable seeds distinct from matar.

The judgment delves into the legal interpretation of Notification No. 7038 dated January 31, 1985, which exempts flowers, flower seeds, seedlings, plants, and vegetable seeds from tax. The key question addressed is whether arkil and born villa seeds fall under the category of vegetable seeds as per the notification. The first appellate authority's reasoning, supported by expert certifications and practical usage of these seeds, led to the conclusion that arkil and born villa seeds are indeed vegetable seeds exempt from taxation. The Standing Counsel failed to provide any substantial evidence to challenge this classification, resulting in the dismissal of all four revisions.