2008 (8) TMI 835 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of exemption under section 4A of U.P. Trade Tax Act, 1948 for goods manufactured during exemption period but sold after its expiry.

Analysis:
The judgment of the High Court of Allahabad pertains to a case involving the interpretation of exemption under section 4A of the U.P. Trade Tax Act, 1948. The dealer in question was engaged in manufacturing and selling electrical goods and was classified as a "new unit" eligible for exemption on turnover of sale up to March 31, 1990, as per Notification No. 7558 dated December 26, 1985. In the assessment for the year 1990-91, the dealer claimed exemption for goods manufactured before March 31, 1990, but sold after that date, which was disputed by the tax authorities. The Tribunal, however, ruled in favor of the dealer, allowing exemption on goods sold after the expiry of the exemption period.

The primary issue raised in the revision before the High Court was whether goods manufactured during the exemption period but sold after its expiry are still eligible for exemption from tax. Section 4A of the Act provides for exemption on turnover of sales during a specified period, indicating that the exemption applies to goods manufactured and sold within that period. The notification relevant to the case specified a period of exemption based on the turnover of sales, reflecting the legislative intent to grant exemption only to goods manufactured and sold during the exemption period.

The High Court, after considering the arguments presented, held that the Tribunal's decision was legally incorrect. It emphasized that the exemption under section 4A is applicable to goods manufactured and sold within the exemption period, not to those sold after the period's expiry. Consequently, the High Court allowed the revision, set aside the Tribunal's order, and dismissed the Second Appeal filed by the dealer. The judgment concluded with no order as to costs, affirming that goods sold after the exemption period are not entitled to tax exemption, in line with the legislative provisions and the intent behind the exemption notification.