2007 (10) TMI 598 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case, the Trade Tax Tribunal is legally justified to hold that the exemption unit available up to turnover of ₹ 50,00,000 is applicable for the units of an institution separately under Notification No. 709 dated February 27, 1997? Whether on the facts and in the circumstances of the case, the Trade Tax Tribunal is legally justified to hold that the amount received for sale is not part of turnover? Held that - All the three revisions are allowed in part. Question No. 1 in all the three revisions are decided in favour of the Revenue and against the assessee and it is held that under the notification exemption of ₹ 50 lacs was available to the institution as a whole and not to the individual unit. So far as question No. 2 involved in the assessment year 1997-98 only is decided in favour of the assessee and the order of the Tribunal is upheld.

Summary

Issues:
1. Interpretation of Notification No. 709 dated February 27, 1997 regarding exemption unit for an institution.
2. Treatment of compensation received for non-lifting of goods as part of turnover.

Analysis:

Issue 1: Interpretation of Notification No. 709 dated February 27, 1997 regarding exemption unit for an institution:
- The case involved three revisions under section 11 of the U.P. Trade Tax Act, 1948, challenging the Tribunal's order relating to the assessment years 1996-97, 1997-98, and 1998-99.
- The primary question was whether the exemption unit of Rs. 50 lacs under Notification No. 709 applied to each unit of an institution separately or to the institution as a whole.
- The Tribunal held that each individual unit of the institution was entitled to the benefit of Rs. 50 lacs, contrary to the Revenue's argument that the exemption applied to the institution as a whole.
- The High Court analyzed the language of the notification and previous judgments to determine that the exemption was intended for the institution as a whole, not individual units.
- Consequently, the High Court decided in favor of the Revenue, holding that the exemption of Rs. 50 lacs was available to the institution as a whole and not to individual units.

Issue 2: Treatment of compensation received for non-lifting of goods as part of turnover:
- In the assessment year 1997-98, the dealer received compensation for non-lifting of goods, which the assessing authority initially treated as part of the turnover.
- The first appellate authority accepted the dealer's plea that the compensation was not part of the turnover, a decision upheld by the Tribunal.
- The High Court concurred with the Tribunal's finding, stating that the compensation received was not in the nature of sale consideration but was a form of compensation for non-lifting of goods, thus not falling within the turnover definition.
- As the amount did not qualify as sale consideration or under the turnover definition, the High Court upheld the Tribunal's decision in favor of the dealer on this issue.
- Consequently, the High Court allowed all three revisions in part, deciding question 1 in favor of the Revenue and question 2 in favor of the dealer for the assessment year 1997-98, directing the Tribunal to take appropriate action under section 11(8) of the Act.