2007 (9) TMI 556 - HC - VAT and Sales Tax

Summary

Issues:
Assessment based on hire charges under U.P. Trade Tax Act, 1948 for the year 1990-91 without proper opportunity of hearing.

Analysis:
The revision was filed against the Tribunal's order for the assessment year 1990-91. The assessing authority initiated proceedings based on information that the applicant provided a bus on hire to IFFCO Phulpur and received hire charges. An ex parte order was passed, levying tax on the hire charges under section 3F of the U.P. Trade Tax Act, 1948. The first and second appeals were rejected by the Tribunal.

Arguments and Decision:
The applicant's counsel argued that the ex parte order was passed without proper hearing and that the agreement showed the vehicle was provided for employee transportation with control remaining with the applicant, indicating no transfer of right to use the vehicle to IFFCO. Referring to a Supreme Court case, it was emphasized that for a transfer of right to use goods, the goods must be deliverable and delivered. The High Court found merit in the arguments, noting that the agreement was not considered by any authority. It directed the assessing authority to reconsider the matter based on the agreement to determine if tax under section 3F was applicable.

Conclusion:
The High Court allowed the revision, setting aside the Tribunal's order and remanding the matter to the assessing authority for a fresh assessment considering the terms of the agreement. The applicant was instructed to provide a copy of the order to the assessing authority within fifteen days for further proceedings without the need for a fresh notice. This decision highlighted the importance of proper consideration of agreements in tax assessments involving the transfer of right to use goods.