2008 (2) TMI 821 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of tax exemption under U.P. Trade Tax Act, 1948 for the sale of cotton fabric.
2. Classification of products manufactured by the dealer as either "cotton niwar" or "cotton tapes" for tax purposes.
3. Dispute regarding the tax liability on the products manufactured by the dealer.

Analysis:
1. The Commissioner of Trade Tax filed a revision challenging the Trade Tax Tribunal's decision exempting the dealer from tax for the assessment year 1998-99. The key issue was whether the dealer was exempt from tax despite manufacturing products like "cotton tapes" and "cotton niwar."

2. The assessing authority initially considered the dealer's product as "feeta" and taxable under Notification No. 1551. The Deputy Commissioner (Appeal) differentiated between products more than 30 mm in width as "cotton niwar" (exempted) and those 18 mm or less as "cotton tapes" (taxable). This decision reduced the tax liability from Rs. 65,000 to Rs. 5,692.

3. The Tribunal upheld the dealer's appeal, citing past practices where "cotton tapes" were treated as "cotton fabric" and exempt from tax. The major turnover was found to be "cotton niwar" exempt from tax, leaving a nominal disputed tax amount of Rs. 5,692. Considering the minimal tax amount and past interpretations, the High Court dismissed the revision, affirming the Tribunal's decision.

In conclusion, the High Court dismissed the revision, maintaining the exemption for the dealer based on past interpretations and the nominal disputed tax amount.