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2006 (8) TMI 541 - HC - VAT and Sales Tax
Issues involved:
Interpretation of section 8(1) of the U.P. Sales Tax Act, 1948 regarding the liability to pay interest on tax for which no exemption was allowed. Detailed Analysis: The case involves a revision under section 11(1) of the U.P. Sales Tax Act, 1948, challenging the judgment and order passed by the Sales Tax Tribunal. The main issue is whether the Tribunal erred in law by dismissing the appeal and holding that there was no liability on the dealer to pay interest under section 8(1) of the Act for tax for which no exemption was allowed. The dealer, engaged in the business of foodgrains and oil-seeds, claimed exemption on the purchase of rice polish, citing it was purchased for principal dealers with a recognition certificate under section 4B of the Act for the assessment year 1984-85. The assessing authority, however, assessed the dealer's turnover at a higher amount, imposed tax, and demanded interest under section 8(1) of the Act. Section 8(1) specifies the payment and recovery of tax, including the provision for interest on unpaid amounts. The dealer appealed the assessment, and the first appellate court confirmed the tax but waived the interest, stating that the liability to pay tax was not admitted by the dealer. The Tribunal upheld this decision. The High Court analyzed the case and noted that the dealer's claim for exemption based on the recognition certificate was not accepted as the dealer was required to have the certificate in his name for the purchases made. The court referred to a similar case where it was held that the mere refusal of exemption claimed by the dealer does not make the tax amount an admitted liability. Consequently, interest under section 8(1) cannot be imposed in such situations. Therefore, the High Court found no error in the Tribunal's decision that interest under section 8(1) of the U.P. Sales Tax Act was not payable on the tax imposed by the assessing authority since it was not an admitted liability. As a result, the revision was dismissed based on the interpretation of the relevant legal provisions and precedents.
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