2013 (1) TMI 696 - HC - VAT and Sales Tax

Taxability on Opium - interest imposed under section 8(1) of the U.P. Trade Tax Act, 1948 - Held that - Opium grown by the cultivators is taxable item to trade tax. See Vishnu Agencies Pvt. Ltd. 1977 (12) TMI 118 - SUPREME COURT OF INDIA nd Coffee Board, Karnataka 1988 (5) TMI 338 - SUPREME COURT OF INDIA . The charging of the interest is mandatory. When it is so, then there is no merit in the revisions filed by the Narcotic Department for the wavier of the interest. So, by upholding the impugned orders passed by the Tribunal, all the revisions in question are hereby dismissed.

Summary

Issues:
1. Interpretation of tax liability on opium cultivation by farmers on behalf of the Narcotic Department.
2. Imposition of interest under section 8(1) of the U.P. Trade Tax Act, 1948.
3. Tax levied on opium grown by farmers on behalf of the Narcotic Department.

Analysis:
I. The case involved disputes regarding tax liability on opium cultivation by farmers on behalf of the Narcotic Department. The Narcotic Department claimed ownership of the opium crop and argued against the concept of sale. However, the Additional Chief Standing Counsel cited Supreme Court judgments emphasizing that opium sale to the Narcotic Department is a taxable item. The court upheld previous orders and dismissed the revisions filed by the Narcotic Department based on the established legal precedents.

II. Regarding the imposition of interest under section 8(1) of the U.P. Trade Tax Act, 1948, the court highlighted the mandatory nature of interest charges as per legal precedents. Citing cases like Pepsico India Holdings Ltd. v. Commissioner of Trade Tax, the court emphasized that once tax liability is established, interest becomes payable as per the statutory provisions. The court dismissed the revisions seeking waiver of interest, upholding the Tribunal's orders.

III. The issue of tax levied on opium grown by farmers on behalf of the Narcotic Department was also addressed. The Tribunal had ruled against tax liability on opium grown by farmers, but the court referred to the Union of India v. Sales Tax Officer judgment, establishing opium as a taxable item under the U.P. Trade Tax Act. Consequently, the court set aside the Tribunal's orders and allowed the revisions filed by the Department, thereby dismissing the revisions filed by the assessee.