2006 (4) TMI 475 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Rate of tax applicable on the turnover of Rs. 1,45,000 for the assessment year 1994-95.
2. Applicability of Notification No. TT-II-3407/XI-9(116)-94-Act-74/56-Order-94, dated October 1, 1994.
3. Interpretation of "rate of tax" under sections 3A, 3D, and 3E of the U.P. Trade Tax Act, 1948.

Issue-wise Detailed Analysis:

1. Rate of Tax Applicable on the Turnover of Rs. 1,45,000 for the Assessment Year 1994-95:
The applicant disclosed taxable inter-State sales at Rs. 15,01,974 and admitted liability of tax at four percent under Notification No. TT-II-3407/XI-9(116)-94-Act-74/56-Order-94, dated October 1, 1994. However, the assessing authority assessed the turnover of Rs. 1,45,000 at ten percent due to the absence of form "C". The applicant contended that even without form "C", the sales should be taxed at four percent as per the notification.

2. Applicability of Notification No. TT-II-3407/XI-9(116)-94-Act-74/56-Order-94, Dated October 1, 1994:
The assessing authority argued that the notification was applicable to goods liable to tax at four percent under the U.P. Trade Tax Act, 1948, while electronic goods were taxed at five percent (four percent plus one percent surcharge). This view was upheld in first and second appeals. The applicant argued that the additional tax under section 3E should not be considered for the purpose of the notification, which should apply to goods taxed at four percent under section 3A.

3. Interpretation of "Rate of Tax" Under Sections 3A, 3D, and 3E of the U.P. Trade Tax Act, 1948:
The court examined sections 3A, 3D, and 3E of the Act. Section 3A provides the rate of tax on various goods, while section 3E imposes an additional tax over and above the tax payable under section 3A. The applicant argued that the additional tax under section 3E should not be included in the "rate of tax" for the notification's purposes. The court noted that section 3E does not provide a rate of tax on goods but mandates additional tax payment over the tax payable under section 3A notifications.

The court also referred to the subsequent Notification No. TT-2-147/XI-9(116)-94-Act-74/56-Order-95, dated January 31, 1995, which clarified that the rate of tax at four percent excludes the additional tax. This subsequent notification was considered clarificatory and indicative of the Legislature's intent.

Judgment:
The court held that for the purposes of Notification No. TT-II-3407/XI-9(116)-94-Act-74/56-Order-94, dated October 1, 1994, the rate of tax on electronic goods should be considered as four percent under section 3A, excluding the additional tax under section 3E. Therefore, the turnover of Rs. 1,45,000 was liable to tax at four percent. The court set aside the Tribunal's order and allowed the revision, concluding that the disputed turnover should be taxed at four percent as per the notification dated October 1, 1994.

Conclusion:
The revision was allowed, and the turnover of Rs. 1,45,000 was held liable to tax at four percent under the notification dated October 1, 1994, issued under section 8(5) of the Central Sales Tax Act.