2013 (12) TMI 864 - HC - VAT and Sales Tax

State Development Tax levied under Section 3-H of the U.P. Trade Tax Act, 1948 - Whether the assessee revisionist whose actual turnover for the period 1.4.07 to 31.12.07 of the assessment year 2007-08 had remained below 50 lacs rupees, is liable for payment of State Development Tax as in the remainder period of assessment U.P. Value Added Tax Act, 2008 - Held that - assessee revisionist has not discontinued its business after 31.12.07 and as such Section 18 of the Act would have no application - assessee revisionist is clearly within the ambit of State Development Tax and is liable to pay the same accordingly. The authorities below accepted that the aggregate turnover of the assessee revisionist is more than 50 lacs rupees in the assessment year but have calculated it by adding the proportionate turnover for the three months in the actual turnover of the preceding 9 months which in effect is not the correct legal position - Since the assessee revisionist has continued with the business its actual turnover for the assessment year in question ought to have been taken into account. Notwithstanding enforcement of VAT Act w.e.f. 1.1.08 for the purposes of levy of State Development Tax under Section 3-H of the Act, the aggregate turnover for the assessment year would include the turnover for the period of the assessment year prior to the enforcement of the VAT Act as well as for the period after its enforcement - Decided in favour of assessee.

Summary

Issues:
1. Dispute regarding State Development Tax levy under U.P. Trade Tax Act for the assessment year 2007-08.
2. Interpretation of Section 3-H of the Act in relation to the turnover calculation for levy of State Development Tax.
3. Whether the turnover under the VAT Act from 1.1.08 to 31.3.08 should be excluded in calculating the aggregate turnover for State Development Tax purposes.

Analysis:
The judgment by the Allahabad High Court dealt with a dispute concerning the imposition of State Development Tax under the U.P. Trade Tax Act for the assessment year 2007-08. The key issue revolved around the interpretation of Section 3-H of the Act in determining the turnover for the levy of State Development Tax. The court examined whether the turnover under the VAT Act from 1.1.08 to 31.3.08 should be excluded when calculating the aggregate turnover for State Development Tax purposes.

The court highlighted that Section 3-H of the Act mandates the levy of State Development Tax on dealers whose aggregate turnover exceeds 50 lakhs rupees. It emphasized the significance of the term "during the assessment year" in Section 3(2) of the Act, indicating that the aggregate turnover for the complete assessment year is crucial for determining tax liability. The court clarified that the turnover for the entire assessment year must be considered, irrespective of the enactment of the VAT Act during the period.

The judgment underscored that the turnover for the assessment year 2007-08, including the period before and after the enforcement of the VAT Act, should be aggregated for calculating State Development Tax liability. It rejected the argument that turnover under the VAT Act should be excluded, emphasizing that no distinct methods were provided for turnover calculation under the two Acts. The court ruled that the assessee's actual turnover for the assessment year should be the basis for assessing State Development Tax.

In conclusion, the court dismissed the revision, affirming that the aggregate turnover for the assessment year, encompassing the turnover before and after the VAT Act enforcement, determines the liability for State Development Tax. The tribunal was directed to assess the tax based on the assessee's actual turnover for the relevant assessment year.