2004 (4) TMI 556 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the dealer to pay interest on the turnover of Rs. 1,54,790 alleged to have been made in the course of export.
2. Determination of whether the sale was made in the course of export.
3. Applicability of interest under section 8(1) of the Uttar Pradesh Trade Tax Act, 1948.

Issue-wise Detailed Analysis:

1. Liability of the dealer to pay interest on the turnover of Rs. 1,54,790:
The dealer-opposite party, engaged in the manufacture and sale of nuts and bolts, was assessed for the year 1988-89. The assessing authority found that the turnover of Rs. 1,54,790 could not be proven as an export sale due to discrepancies in the shipping bill and the absence of form H. Consequently, the turnover was treated as Central sales, and interest was levied under section 8(1) of the Uttar Pradesh Sales Tax Act. The first appellate authority upheld the rejection of the export sale claim but deleted the interest levy, a decision confirmed by the Tribunal. The revision was filed against this deletion of interest.

2. Determination of whether the sale was made in the course of export:
The court examined the criteria under section 5 of the Central Sales Tax Act, which defines when a sale is considered in the course of export. The Supreme Court's principles in Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer were referenced, emphasizing the need for an intention to export, an obligation to export, and actual export. The dealer's claim that the goods were supplied to a hundred percent export-oriented unit was found insufficient. The court cited A.R. Associates v. Commissioner of Commercial Taxes, stating that merely producing form H and the bill of lading is inadequate without an export agreement establishing a link between the goods and the export.

3. Applicability of interest under section 8(1) of the Uttar Pradesh Trade Tax Act, 1948:
Section 7 of the Act mandates dealers to submit returns and deposit tax due. Section 8(1) imposes interest on unpaid tax from a specified date. The court noted that the dealer accepted the first appellate authority's order rejecting the export sale claim, thus admitting the turnover as Central sales. The court referenced the Division Bench judgment in Annapurna Biscuit Manufacturing Co. v. State of Uttar Pradesh, which held that a dealer failing to establish a claim for tax exemption incurs liability for interest. The court distinguished the present case from J.K. Synthetics Ltd. v. Commercial Taxes Officer, where the Supreme Court dealt with retrospective tax liability due to judicial pronouncements. Here, the dealer failed to substantiate the export sale claim, making the tax on the disclosed turnover admittedly payable.

Conclusion:
The court found that the dealer-opposite party's turnover of Rs. 1,54,790 was Central sales, not export sales, and thus liable for interest under section 8(1) of the Act. The revision was allowed, and the orders of the Tribunal and the first appellate authority deleting the interest were set aside.