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2008 (8) TMI 873 - HC - VAT and Sales TaxWhether, on the facts and in the circumstances of the case, the Trade Tax Tribunal was legally justified to hold the taxability of the dealer on the Central sales against form C in the third year of the exemption of the new unit at the rate of ten per cent of the four per cent despite the fact in the third year of the exemption tax was liable to be paid at the rate of ten per cent of the ten per cent as per provisions of the Act? Held that - The view taken by the Tribunal that the dealer opposite party is liable to pay the tax on Central sales at the rate of 10 per cent of four per cent as prescribed under Central Sales Tax Act in the present case and not 10 per cent of 10 per cent as prescribed under the U. P. Trade Tax Act, is legally correct. Viewed as above, the order of the Tribunal is on terra firma and does not call for any interference in the present revision. The question of law as raised by the Department is, therefore, decided against it and in favour of the dealer-opposite party. Revision dismissed.
Issues Involved:
1. Interpretation of Notification No. 1094 dated July 27, 1991, and its amendment by Notification No. 1228 dated March 31, 1992. 2. Applicability of tax rates under the Central Sales Tax Act vs. U.P. Trade Tax Act. 3. Harmonious construction and purposive interpretation of statutes and notifications. Detailed Analysis: 1. Interpretation of Notification No. 1094 dated July 27, 1991, and its amendment by Notification No. 1228 dated March 31, 1992: The dealer-opposite party was granted an eligibility certificate under section 4A of the U.P. Trade Tax Act, 1948, entitling it to tax exemptions for a specified period. The initial notification granted total exemption for inter-State sales for the first two assessment years and a reduced rate for subsequent years. The dispute arose in the third assessment year regarding the applicable tax rate. The original notification was amended to substitute the term "Act" with "U.P. Sales Tax Act, 1948," implying that the tax rate applicable in U.P. should be considered for calculating exemptions. 2. Applicability of tax rates under the Central Sales Tax Act vs. U.P. Trade Tax Act: The dealer contended that for inter-State sales of P.V.C. sheets against form C, the applicable tax rate should be four percent under the Central Sales Tax Act, not ten percent as per the U.P. Trade Tax Act. The Tribunal supported this view, holding that the dealer should pay ten percent of the four percent rate applicable under the Central Sales Tax Act. The Standing Counsel argued that the dealer should pay ten percent of the ten percent rate as per the U.P. Trade Tax Act, given the amended notification. 3. Harmonious construction and purposive interpretation of statutes and notifications: The court emphasized the need for a harmonious interpretation of the notifications with section 8(5) of the Central Sales Tax Act, which allows states to exempt or reduce tax rates in public interest. The notifications were intended to promote industrial development by providing tax relief, not to impose higher taxes. The court cited several precedents to highlight the principles of delegated legislation and statutory interpretation, stressing that delegated legislation should not conflict with the parent Act and must align with its purpose. The court concluded that the notifications should be read in a manner that avoids absurd results and fulfills the legislative intent. It held that the dealer should be liable to pay tax at the reduced rate of ten percent of the four percent applicable under the Central Sales Tax Act, not ten percent of the ten percent under the U.P. Trade Tax Act. This interpretation aligns with the purpose of section 8(5) and the notifications, ensuring that the tax relief intended by the legislature is effectively granted. Conclusion: The Tribunal's decision that the dealer is liable to pay tax at the rate of ten percent of four percent under the Central Sales Tax Act was upheld. The revision filed by the Department was dismissed, affirming the Tribunal's interpretation as legally correct and consistent with the legislative intent behind the notifications and section 8(5) of the Central Sales Tax Act.
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