2010 (5) TMI 767 - HC - VAT and Sales Tax

Whether, on the facts and circumstances of the case, the assessing authority was justified in law in imposing tax on the appli- cant/revisionist treating him as manufacturer under section 2(ee) of the U.P. Trade Tax Act, where the applicant/revisionist purchased the timber/logs from the tea estates who are the registered dealers and proper sale memo were issued to the applicant/revisionist, wherein sales tax registration number was duly printed on the sale memo? Whether, on the facts and circumstances of the case, the assessing authority was justified in law in interpreting the Government Order dated November 23, 1998 issued by the State Government where it was specifically provided that the event of tax will be deemed to have taken place at the point of sale made by the Forest Department, the U.P. Forest Corporation, or the owner of private forest? Held that - The following substantial questions of law posed for adjudication are answered in favour of the Revenue and against the assessee. Revision dismissed.

Summary

Issues:
1. Interpretation of Section 3 of the U.P. Trade Tax Act, 1948 regarding liability to tax on timber purchases.
2. Application of Gazette Notification dated November 23, 1998, on the taxation of timber sales.
3. Determination of whether the timber was grown in a private forest owned by the sellers.
4. Assessment of the imposition of tax on the revision petitioner by the authorities.

Analysis:
1. The revision petitioner, an unregistered dealer, bought timber from registered dealers, M/s. East Hope Town Estate and M/s. Arcadia Tea Estate. Tax was levied on the revision petitioner for these purchases. The petitioner challenged the orders of the assessing officer, appellate authority, and Commercial Tax Tribunal, Uttarakhand.
2. The petitioner's argument was based on Section 3 of the U.P. Trade Tax Act, 1948, which outlines the liability to pay tax on turnover of sales or purchases. The contention focused on the Gazette Notification dated November 23, 1998, specifically entry 76, which imposes a 15% tax on timber sales by the Forest Department, U.P. Forest Corporation, or private forest owners.
3. The Court examined whether the timber purchased was grown in private forests owned by the sellers. As M/s. East Hope Town Estate and M/s. Arcadia Tea Estate were primarily tea planters, the Court found no evidence to conclude that they owned private forests where the timber was grown. The lack of material evidence led to the rejection of the petitioner's argument.
4. The Court dismissed the revision petition, upholding the tax imposition on the petitioner. The substantial questions of law raised in favor of the Revenue and against the assessee were answered accordingly, affirming the assessing authority's decision to impose tax on the revision petitioner for timber purchases.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Court's reasoning in deciding the case.