2008 (7) TMI 927 - HC - VAT and Sales Tax

Summary

Issues:
Exemption claimed on Central sales turnover by a dealer certified by U.P. Khadi and Village Industries Board under Notification No. 7073 dated January 31, 1985. Legal validity of exemption granted by Trade Tax Tribunal for goods not generally exempt under U.P. Trade Tax Act, 1948. Interpretation of section 8(2A) of the Central Sales Tax Act, 1956. Consideration of circulars providing exemption from Central sales tax for institutions under the Khadi and Village Industries Board, U.P.

Analysis:

The judgment pertains to four revisions concerning assessment years 1990-91 (U.P. and Central), 1991-92 (Central), and 1992-93 (Central). The dealer involved in the case is engaged in the manufacture and sale of shampoo and claimed exemption on its Central sales turnover under Notification No. 7073 dated January 31, 1985, as a certified institution by the U.P. Khadi and Village Industries Board. However, the assessing officer denied the claim, stating that the goods in question were not generally exempt under the Trade Tax Act and are taxable, making the dealer liable for tax on Central sales.

The Tribunal, in its impugned orders, ruled in favor of the dealer, stating that since the turnover was exempt from tax generally under the U.P. Trade Tax Act, the tax on Central sales should be nil. The Tribunal relied on circulars issued by the Commissioner granting exemption to such dealers under the Central Sales Tax Act, 1956. The legality and validity of this order were challenged through the filed revisions.

The primary legal questions raised in the leading case relevant to the assessment year 1991-92 (Central) were whether the Trade Tax Tribunal was justified in declaring the goods exempted under Notification No. 7037 dated January 31, 1985, despite not being generally exempt from tax under the Central Sales Tax Act, 1956, and whether the Tribunal was correct in granting exemption contrary to legal precedents.

The court considered the arguments presented and acknowledged that the goods in question were not generally exempt under the U.P. Trade Tax Act, 1948. However, it also noted the existence of circulars providing exemption from Central sales tax for institutions certified by the U.P. Khadi and Village Industries Board. Referring to a previous judgment, the court held that as long as the circulars were in force and not withdrawn, the Revenue authorities were bound by them and could not take a different stance.

Consequently, the court found no illegality in the Tribunal's orders and dismissed all the revisions, upholding the exemption on Central sales for the dealer based on the circulars mentioned. No costs were awarded in the judgment.