2013 (6) TMI 319 - HC - VAT and Sales Tax

Concession rate of tax - denial of claim on the ground that there was no contract for the supply of steel structure between the U.P. Power Corporation Ltd. and the assessee - Held that - As on the face of the agreement and the amendment carried out therein which is not in dispute the assessee was authorized to supply the fabricated and galvanized steel structures to the U.P. Power Corporation Ltd. Accordingly, supplies were made and Forms III-D were issued by the U.P. Power Corporation Ltd. covering the supply so made by the assessee. In view of the above provision, the turnover of sale to any Corporation including the U.P. Power Corporation Ltd. is taxable at a concessional rate specified by the State Government provided the transaction is covered by the prescribed form/declaration which under Rule 12-C of the Rules framed under the Act is Form III-D. Both the conditions for availing the benefit of concessional rate of tax on the sale made to the Corporation, namely, the sale is made to the Government, Corporation, Undertaking or Company and secondly dealer furnishes a certificate or declaration as may be prescribed from such Government, Corporation, Undertaking or the Company compiled. In favour of assessee.

Summary

Issues:
1. Dispute over concessional rate of tax on material supplied to U.P. Power Corporation Ltd.
2. Requirement of a contract between the assessee and the Corporation for availing tax benefits under Section 3-G of the Act.

Analysis:
1. The revision pertains to the assessment year 2003-04 where the assessing authority initially accepted the turnover of sales disclosed by the assessee. However, a reassessment under Section 21 of the Trade Tax Act led to an additional demand of Rs. 11,24,218 along with interest, as it was claimed that the assessee was not entitled to a concessional tax rate on material supplied to U.P. Power Corporation Ltd. The denial was based on the absence of a contract for supply between the two entities. This decision was upheld in appeal and second appeal by the tribunal.

2. The core issue raised in the revision was whether a contract between the assessee and the Government Department or Corporation is essential for granting a concessional tax rate under Section 3-G of the Act, despite the goods being supplied and covered by Form III-D issued by the Corporation. The assessee, a fabricator, had indeed supplied steel structures to the U.P. Power Corporation Ltd., supported by Form III-D. The denial of the concessional tax rate solely based on the lack of a formal contract was challenged by presenting agreements authorizing the supply of steel structures to the Corporation. These agreements clearly outlined the collaboration between the assessee and other entities for supplying the required materials.

3. Section 3-G of the Act allows for special tax rates on specified goods sold to Government Departments, Corporations, or Undertakings, subject to furnishing the prescribed certificate or declaration. The provision does not mandate the existence of a formal contract for availing the concessional rate. In this case, the assessee fulfilled all necessary conditions by supplying to the Corporation and producing Form III-D. The judgment emphasized that no additional agreement for supply was required beyond the prescribed forms for availing tax benefits under Section 3-G of the Act.

4. Consequently, the court held that the authorities erred in denying the concessional tax rate to the assessee based on the absence of a specific supply contract with the Corporation. The judgment favored the assessee, emphasizing that the prescribed forms and declarations sufficed to avail the tax benefits under Section 3-G of the Act. As a result, the impugned orders by the assessing authorities and tribunal were set aside, and the revision was allowed in favor of the assessee.