2014 (4) TMI 224 - HC - VAT and Sales Tax

Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that - The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. 2014 (2) TMI 1003 - ALLAHABAD HIGH COURT followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a sales tax law within the meaning of Section 2(i) of CST Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8(2-A) of the 1956 Act even though there was general exemption u/s 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided against assessee. Inclusion of export pass fee in taxable turnover Held that - Decision in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited 2004 (11) TMI 88 - ALLAHABAD High Court followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover Decided in favour of assessee.

Summary

Issues:
1. Whether the Tribunal was justified in exempting inter-State sales of Rectified Spirit and Denatured Spirit along with export duty?
2. Whether the export pass fee payable by Ex. U.P. purchaser on purchase of Denatured Spirit from Distillery is liable to be included in the taxable turnover of the Revisionist/Assessee?

Analysis:
1. The first issue revolves around the justification of the Tribunal in exempting inter-State sales of Rectified Spirit and Denatured Spirit along with export duty. The court referred to a Division Bench judgment, which ruled against the Assessee and in favor of Revenue. The judgment highlighted that the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a 'sales tax law' within the meaning of the Central Sales Tax Act, 1956. It emphasized that the payment of central sales tax on inter-State sale of alcohol was not exempted despite general exemptions under other acts. Consequently, the court answered Question No. 1 against the Assessee and in favor of Revenue.

2. Moving on to the second issue, the court addressed whether the export pass fee paid by the Ex. U.P. purchaser should be included in the taxable turnover of the Assessee. Citing a Division Bench judgment and an earlier Single Judge judgment, the court concluded in favor of the Assessee. The court highlighted that the liability for the export pass fee rests with the purchaser and not the distillery. It clarified that the amount paid as an export pass fee cannot be considered part of the turnover as it was not received by the Assessee. The court emphasized that the export pass fee is the responsibility of the purchaser, and hence, it should not be included in the Assessee's turnover. Consequently, Question No. 2 was answered in favor of the Assessee and against Revenue.

In conclusion, the court partially allowed the Revision, setting aside the Tribunal's judgment on the mentioned issues. The matter was remanded to the Tribunal for further proceedings in accordance with the court's findings. No costs were awarded in this regard.