2004 (1) TMI 656 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of imposing tax under Section 3-B of the U.P. Trade Tax Act, 1948.
2. Validity of the recognition certificate under Section 4-B of the U.P. Trade Tax Act, 1948.
3. Applicability of alternative remedy under Section 9 of the U.P. Trade Tax Act, 1948.

Issue-wise Detailed Analysis:

1. Legality of imposing tax under Section 3-B of the U.P. Trade Tax Act, 1948:

The petitioner, a public limited company, challenged the imposition of tax under Section 3-B for the assessment year 2000-01. The petitioner argued that the RFO and furnace oil purchased against form III-B were used as "fuel" in the manufacture of camphor and allied products, and thus no action under Section 3-B was warranted. Section 3-B states that a person issuing a false or wrong certificate making the tax non-leviable or leviable at a concessional rate shall be liable to pay the tax that would have been payable had the certificate not been issued. The court found that the petitioner had not issued any false or wrong certificate as the RFO and furnace oil were used for the intended purpose of manufacturing camphor. The court relied on previous judgments, including Commissioner of Trade Tax v. Spox India and Allied Industries and Arora Steel Udyog (P) Ltd. v. Commissioner of Trade Tax, U.P., which held that no action under Section 3-B could be taken if the goods purchased were used for manufacturing the notified goods.

2. Validity of the recognition certificate under Section 4-B of the U.P. Trade Tax Act, 1948:

The petitioner was granted a recognition certificate under Section 4-B, allowing the purchase of diesel, RFO, and furnace oil at a concessional rate for manufacturing camphor. Section 4-B(2) provides special relief to manufacturers for purchasing goods at a concessional rate if the goods are used in manufacturing notified goods intended for sale within the state, inter-state trade, or export. The court noted that the petitioner had used the RFO and furnace oil for manufacturing camphor, as specified in the recognition certificate. Thus, the petitioner did not issue any false or wrong certificate, and no differential tax could be legally charged under Section 3-B. The court distinguished this case from Mahabir Wire Netting Industries and Vijendra Industry, where the dealers misrepresented their entitlement to total exemption rather than a concessional rate.

3. Applicability of alternative remedy under Section 9 of the U.P. Trade Tax Act, 1948:

The respondent argued that the writ petition was not maintainable as an appeal under Section 9 was available. However, the court noted the conflicting decisions of single judges in similar cases, which made it difficult for appellate authorities or the Sales Tax Tribunal to take a contrary view. The court cited the Full Bench decision in Engineering Traders v. State of Uttar Pradesh, which held that the alternative remedy is not efficacious if the matter involves recurring issues and significant legal questions. The court also referred to Cannon India Pvt. Ltd. v. State of U.P., which allowed the High Court to decide recurring legal issues without relegating the petitioner to alternative remedies. Thus, the court decided to entertain the writ petition to resolve the conflict and provide clarity on the issue.

Conclusion:

The court concluded that the petitioner had used the RFO and furnace oil for the intended purpose of manufacturing camphor, as specified in the recognition certificate under Section 4-B. Therefore, no false or wrong certificate was issued, and the imposition of tax under Section 3-B was not justified. The orders dated January 24, 2003, and March 31, 2003, were quashed, and the writ petition was allowed with no order as to costs.