2007 (5) TMI 576 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of penalty under section 4B(5) of the U.P. Trade Tax Act, 1948 against a rice miller for not utilizing purchased paddy in the manufacture of rice.

Analysis:
The applicant, a rice miller, was penalized under section 4B(5) of the U.P. Trade Tax Act, 1948 for selling purchased paddy to other millers instead of using it for rice production. The penalty was initially set at Rs. 1 lac but was later reduced to Rs. 20,000 after rectification under section 22 of the Act. The applicant's appeals against the penalty were unsuccessful, leading to the current revision challenging the Tribunal's order dated June 29, 2001.

The applicant argued that the penalty was unjust, citing Notification No. 2604 dated March 19, 1979, and Notification No. 2601 dated February 28, 1994. However, the Tribunal ruled that the applicant did not qualify for the benefits of the latter notification as it pertained to dealers without recognition certificates. The Tribunal's decision was deemed valid as per the law.

The counsel for the applicant contended that since the applicant was not a rice miller, the penalty for not utilizing the purchased paddy was unwarranted. However, the court held that as a recognition certificate holder purchasing paddy at concessional rates, the applicant was obligated to use the paddy for rice production as per the Act.

Citing legal precedents like Commissioner of Sales Tax v. B.S. Industries and Commissioner, Sales Tax U.P. v. Jaiswal Rice Mill, the court emphasized that raw materials purchased for notified goods must be used for the specific purpose for which the recognition certificate was granted. The court concluded that the penalty was justified, and the revision was dismissed without costs.