2010 (1) TMI 1120 - HC - VAT and Sales Tax

Summary

Issues:
1. Denial of deduction under section 3F(2)(b)(i) of the U.P. Trade Tax Act due to non-payment of Central sales tax.
2. Taxability of inter-State sale of bitumen and rori under the U.P. Trade Tax Act.
3. Denial of deduction under section 3F(2)(b)(i) of the U.P. Trade Tax Act based on previous court judgments.
4. Misconstruing the judgment of PNC construction regarding the sale of bitumen and rori.

Analysis:

1. The revisionist assessee challenged the Tribunal's order denying deduction under section 3F(2)(b)(i) of the U.P. Trade Tax Act for the assessment year 1991-92. The contention was that the deduction should not be denied solely because Central sales tax had not been paid on the imported goods. The assessee argued that the requirement was to establish the goods were brought from outside U.P. and were to be taxed under the Central Sales Tax Act, not necessarily that Central sales tax had been paid. The State admitted that the rori was purchased from outside U.P., making it excisable to tax under the Central Sales Tax Act. The Tribunal's order was modified to charge the tax rate prevalent under the Central Sales Tax Act for the rori at that time, which was four percent according to the assessee.

2. The Tribunal's decision to treat the inter-State sale of bitumen and rori as taxable under the U.P. Trade Tax Act was challenged based on a certificate from the project manager NOIDA confirming the goods movement was pursuant to a prior sale contract. The assessee argued that the goods had already been appropriated before the movement, supporting the contention that it was an inter-State sale. The court modified the order only regarding the tax rate applicable to the rori, leaving the rest of the decision unchanged.

3. The denial of deduction under section 3F(2)(b)(i) of the U.P. Trade Tax Act was also challenged based on previous court judgments involving M/s. Santosh and company and M/s. IRCON Ltd. The assessee argued that these judgments supported their entitlement to the deduction. However, the court primarily focused on the requirement to establish the origin of the goods for taxation under the Central Sales Tax Act, leading to the modification of the tax rate for rori.

4. The Tribunal's interpretation of the judgment of PNC construction regarding the sale of bitumen and rori as the sale of hot mix material and treating it as an unclassified item was questioned. The court did not specifically address this issue in the final judgment, as the modification made was related to the tax rate for rori based on its origin from outside U.P.

In conclusion, the High Court modified the Tribunal's order to charge the tax rate applicable under the Central Sales Tax Act for the rori purchased from outside U.P., while upholding the rest of the decision. The revision was disposed of without costs.