1982 (7) TMI 267 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption of sales tax on goods sold under a recognition certificate.
2. Interpretation of Section 4-B of the U.P. Sales Tax Act.
3. Authority of the assessing authority in questioning the validity of a recognition certificate.
4. Precedents regarding the power of the assessing authority in similar cases.

Analysis:
1. The case involved M/s. Metal Cans, Kanpur, selling goods worth Rs. 53,125.63 to M/s. Jain Chemical Industries under a recognition certificate exempt from sales tax. The assessing authority initially refused the exemption, citing that no recognition certificate was issued for packing material during that year. However, the Assistant Commissioner (Judicial) accepted the claim for exemption, reducing the tax liability.

2. The Commissioner of Sales Tax challenged the appellate order, arguing that no recognition certificate could have been issued for packing material during the relevant period. The Commissioner contended that only after May 26, 1975, packing material was included in the category of raw materials eligible for exemption under Section 4-B of the U.P. Sales Tax Act. The Tribunal upheld the view that the assessing authority cannot question the legitimacy of goods covered by a recognition certificate.

3. Referring to the State of Madras v. Radio and Electricals Limited case, the court highlighted that the assessing authority can scrutinize the genuineness of a certificate but cannot question the inclusion of specific items in the certificate. The Tribunal's decision aligned with this principle, supported by precedents like Bowen Press v. State of Maharashtra and Eltex Engineering Corporation (P) Ltd. v. The Joint Commercial Tax Officer.

4. Ultimately, the court dismissed the revision, affirming the Tribunal's decision. The judgment emphasized that the assessing authority should not override the decision of the authority issuing the recognition certificate. The parties were directed to bear their own costs.