2008 (7) TMI 942 - HC - VAT and Sales Tax

Differential amount of tax due to wrong issuance of form under section 3B of the U.P. Trade Tax Act, 1948 asked by Tribunal - Held that - On the facts of the present case, section 3B of the Act is fully attracted even on the admitted facts. The applicant has at least wrongly issued form IIIB to the Indian Oil Corporation in respect of the purchases of refined furnace oil and represented to it that it is entitled to purchase refined furnace oil and such purchases are exempt. This being the admitted position, whether Indian Oil Corporation has paid the tax or not is wholly irrelevant. Even otherwise, under section 3B of the Act the applicant s liability to pay the difference in the tax by way of penalty, is very much there. It cannot avoid its liability for its own wrong. So far as the argument that there is no column in form IIIB to state as to whether the purchasing dealer is entitled to purchase the raw material at concessional rate of tax or whether such purchase is exempt, is concerned, it will not make any difference on the facts of the present case inasmuch as it is admitted by the dealer-applicant in reply to the show-cause notice that in form IIIB issued by it, it is mentioned that such purchases are totally exempt from payment of tax. The applicant is bound by its own representation and admission. Had there been no such writing on the said form IIIB by the applicant, there might have been an occasion for the selling dealer to ask the applicant, the purchasing dealer, to send a copy of the recognition certificate in support of the claim as to whether the purchasing dealer (applicant) is entitled to purchase the goods at concessional rate of tax or whether such purchases are totally exempt. Thus no illegality in the order of the Tribunal confirming the order passed under section 3B of the Act.

Summary

Issues:
Challenge to orders for payment of differential tax due to wrong issuance of form under U.P. Trade Tax Act, 1948.

Analysis:
The revision was filed challenging orders requiring the dealer-applicant to pay differential tax due to the wrong issuance of forms claiming total exemption under section 3B of the U.P. Trade Tax Act, 1948. The dealer, a recognition certificate holder, purchased refined furnace oil (R.F.O.) from Indian Oil Corporation at a concessional rate but issued forms claiming total exemption from tax. The assessing authority found the dealer wrongly issued forms claiming total exemption, resulting in tax-free purchases worth Rs. 18,75,851.69. The dealer's argument of employee mistake was rejected, and the order for recovery of Rs. 93,792.58 was upheld by the Tribunal. The dealer contended that liability cannot be imposed without a finding that tax ceases to be leviable or is at a concessional rate, citing the absence of disclosure columns in form IIIB. The counsel for the applicant argued against the impugned order, while the Standing Counsel supported it.

The High Court noted the dealer's entitlement to purchase R.F.O. at a concessional rate and the incorrect issuance of forms claiming total exemption. The court highlighted a previous order questioning whether the Indian Oil Corporation had paid tax on sales to the dealer against the disputed forms. The dealer failed to provide evidence of tax payment by the corporation, but the court found section 3B applicable based on the admitted facts. The court emphasized the dealer's wrongful issuance of forms to Indian Oil Corporation, making tax liability under section 3B unavoidable, irrespective of the corporation's tax payment. The court dismissed the argument on the absence of disclosure columns in form IIIB, stating the dealer is bound by its representation on the form. The court also rejected the dealer's reliance on various cases, deeming them inapplicable to the present case due to different factual settings.

The court found no illegality in the Tribunal's order confirming the assessment under section 3B of the Act. The revision was dismissed, with no costs imposed.