2004 (3) TMI 724 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to circulars deleting diesel oil from recognition certificate under U.P. Trade Tax Act, 1948.

Analysis:
1. The petitioner, a public limited company, filed a writ petition seeking to quash circulars dated August 5, 2000, and August 19, 2000, issued by respondent No. 3, which deleted diesel oil from the recognition certificate. The petitioner also requested a mandamus to restrain respondents from acting on these circulars and to direct the issuance of form III-B for purchasing diesel oil for its factory's diesel generator set.

2. The petitioner had a recognition certificate under section 4-B(2) of the U.P. Trade Tax Act, 1948, allowing the purchase of goods for manufacturing craft paper and duplex. Diesel oil was added to the certificate on May 25, 2000, enabling the petitioner to purchase it against form III-B from Indian Oil Corporation Limited.

3. The circular dated August 5, 2000, required a 20% tax on diesel oil purchases, contrary to the 2.5% tax previously paid. The petitioner challenged this circular based on a similar judgment by the Allahabad High Court, which allowed a writ petition against a circular issued by the Commissioner of Trade Tax, U.P., holding that diesel oil is covered under the U.P. Trade Tax Act and now in the Uttaranchal Trade Tax Act.

4. The Allahabad High Court's division bench held that the recognition certificate cannot be amended through a circular, emphasizing that diesel oil is essential for operating machinery in continuous process industries. Various legal precedents were cited to support the inclusion of diesel oil as a necessary fuel for manufacturing activities.

5. The court concluded that the controversy in the present writ petition aligns with the Allahabad High Court's decision in Vam Organic Chemicals Ltd. v. State of Uttar Pradesh. Therefore, the writ petition was allowed, quashing the impugned circulars and directing the respondents to treat diesel oil as a notified good required for manufacturing by the petitioner, issuing form III-B regularly for diesel oil purchases.

6. The judgment granted the petitioner's requests, emphasizing the statutory provision of section 4-B(2) and the necessity of diesel oil for the petitioner's manufacturing processes. The petition was allowed without any costs imposed.

In summary, the judgment resolved the challenge against circulars deleting diesel oil from the recognition certificate, affirming the inclusion of diesel oil as a necessary component for manufacturing activities under the U.P. Trade Tax Act, 1948.