2011 (8) TMI 1043 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of proceedings initiated u/s 3B of the U.P. Trade Tax Act.
2. Interpretation of section 4B(2) of the U.P. Trade Tax Act and rule 25B(1) of the U.P. Trade Tax Rules.
3. Applicability of the Supreme Court decision in Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax.

Summary:

1. Validity of proceedings initiated u/s 3B of the U.P. Trade Tax Act:
The assessee challenged the proceedings initiated u/s 3B of the U.P. Trade Tax Act, arguing that no false declaration was made in form IIIB. The assessing authority, however, found that the declaration was false since the tendu patta was used for manufacturing bidi outside Uttar Pradesh, where no exemption certificate u/s 4B was granted. The Tribunal upheld this view, and the High Court found no error in the Tribunal's decision, dismissing the writ petition.

2. Interpretation of section 4B(2) of the U.P. Trade Tax Act and rule 25B(1) of the U.P. Trade Tax Rules:
The court emphasized that a manufacturer with an exemption certificate u/s 4B for a unit within Uttar Pradesh can only issue form IIIB for concessional tax rates. The raw material must be used for manufacturing within the state. The court held that the assessee's use of tendu patta for manufacturing outside Uttar Pradesh violated this provision, making the declaration in form IIIB false.

3. Applicability of the Supreme Court decision in Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax:
The assessee relied on the Supreme Court's decision in Polestar Electronic (Pvt.) Ltd., arguing that the declaration form did not require specifying the place of manufacture. The court distinguished this case, noting that the statutory provisions and declaration forms in Uttar Pradesh differ from those in Delhi. The court concluded that the decision in Polestar Electronic (Pvt.) Ltd. was not applicable to the present case due to these differences.

Conclusion:
The High Court dismissed the writ petition, upholding the Tribunal's decision that the assessee issued a false declaration in form IIIB. The court found no legal error in the Tribunal's order and emphasized the necessity of using raw materials for manufacturing within Uttar Pradesh to avail of concessional tax rates.