1979 (10) TMI 224 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of "Unit" under the U.P. Sugarcane (Purchase Tax) Act, 1971.
2. Tax liability based on the number of crushers actually worked.
3. Validity of the notice and appellate order.
4. Liability to pay commission under Section 18 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953.

Detailed Analysis:

1. Interpretation of "Unit" under the U.P. Sugarcane (Purchase Tax) Act, 1971:
The core issue revolves around whether a "Unit" as defined in Section 2(c) of the Act is synonymous with individual "crushers" or if it refers to the entire setup. The court concluded that a "Unit" is an undivided whole, and the crushers are mere components. The definition in Section 2(c) and the provisions of Section 3 and Rule 13-A consistently use the term "Unit" and not "crusher," indicating the legislative intent to treat the unit as a single entity. The court emphasized that the "Unit" continues to be engaged in the manufacture or production of khandsari sugar as long as any crusher is operational, thus maintaining its status as a "Unit."

2. Tax Liability Based on the Number of Crushers Actually Worked:
The petitioner argued that tax liability should be based on the actual number of crushers operational during different periods, irrespective of the option exercised under the proviso to Section 3(1)(b). The court rejected this contention, stating that once the option is exercised, it is irrevocable for the entire assessment year. The assumed purchase is a substitute for actual purchase, and the tax liability is determined by the crushing capacity and other relevant factors of the entire unit, not individual crushers. The court highlighted that the Act and the Rules do not provide for intermittent closures or exemptions based on non-operational crushers.

3. Validity of the Notice and Appellate Order:
The petitioner challenged the notice dated 12th May 1975 and the appellate order dated 7th February 1979. The court found no merit in the petitioner's arguments. The notice was issued because the petitioner failed to deposit the tax due and obtain a clearance certificate before the closure of the unit, as required by the Act and Rules. The appellate authority correctly dismissed the appeal on merits, holding that the petitioner's liability was based on the entire unit, irrespective of the operational status of individual crushers.

4. Liability to Pay Commission under Section 18 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953:
The petitioner contended that it was not liable to pay the commission of Rs. 5004.51 as claimed in the notice. The court noted that the notice did not indicate that the commission was computed based on assumed sugarcane purchases. There was no evidence in the writ petition to suggest that the commission was not based on actual sugarcane purchases. The court also observed that the petitioner did not challenge the commission liability during the appeal. The court concluded that the petitioner is not entitled to any relief regarding the commission at this stage, as the notice merely provided an opportunity to dispute the liability and show cause.

Conclusion:
The court dismissed the petition with costs to the respondents, affirming the tax liability based on the entire unit and upholding the validity of the notice and appellate order. The interim order, if any, was vacated.