2014 (4) TMI 952 - HC - VAT and Sales Tax

Liability to pay development tax - Tax rate as Per notification u/s 3-H of the U.P. Trade Tax Act Determination of Aggregate turnover Effect of Act being rescinded - Held that - Applying the principle u/s 18 tax authorities have found that the aggregate determined turnover of the assessee was more than ₹ 37.50 lacs for a period of 9 months and accordingly development tax @ 1% u/s 3-H of the Trade Tax Act - It is no doubt true that the assessee has not discontinued his business - It is also true that because of the Act itself having been rescinded, the business carried on within the ambit of the said Act therefore came to an end on 31st December, 2007 - The discontinuation of the business under the Act after 31.12.2007 was by operation of law - It is also not in dispute that for the period 01.01.2008 to 31.03.2008 the assessee has been assessed under the VAT and his liability for payment of tax has been determined under the said Act itself - The provision of the U.P. Trade Tax Act had not been applied in respect of the said period commencing from 01.01.2008 There is no illegality in the order of the Tribunal, whereby the aggregate turnover of the assessee has been determined w.r.t. Section 3(2) r/w Section 18 of the Trade Tax Act for the period of 9 months during which he had done his business under the U.P. Trade Tax Act - Revision is dismissed Decided against assessee.

Summary

Issues:
1. Quashing of Trade Tax Tribunal's order regarding development tax liability based on turnover exceeding Rs. 50 lakhs.
2. Interpretation of turnover calculation for assessment year 2007-08 under U.P. Trade Tax Act and Value Added Tax (VAT).
3. Applicability of Section 18 for determining aggregate turnover under Section 3(2) of U.P. Trade Tax Act.
4. Discontinuation of business under U.P. Trade Tax Act and subsequent assessment under VAT.

Analysis:
1. The applicant sought to quash the Trade Tax Tribunal's order holding them liable for development tax due to turnover exceeding Rs. 50 lakhs. The counsel argued that for the period under the U.P. Trade Tax Act, the turnover did not exceed the threshold. The Tribunal applied Section 18 for determining turnover, which the petitioner contested as inappropriate.

2. The Tribunal found the applicant's turnover exceeded Rs. 37.5 lakhs for the period under the Trade Tax Act, leading to development tax liability. The relevant provision, Section 3-H, allowed for the levy of State Development Tax on turnovers exceeding Rs. 50 lakhs. The petitioner's argument focused on the turnover calculation for the U.P. Trade Tax Act period versus the subsequent VAT period.

3. Section 3(2) of the Trade Tax Act mandates turnover calculation, subject to Section 18 exceptions. Section 18 deals with business discontinuation during the assessment year and provides a method for turnover determination. The turnover calculation under Section 18 is crucial for assessing tax liability accurately.

4. The Court determined that the applicant's business under the Trade Tax Act ceased upon VAT enforcement, invoking Section 18 for turnover calculation. Despite the business continuity under VAT, the turnover determination for the Trade Tax Act period was upheld. The Tribunal's order was deemed legal, considering the turnover calculation method applied.

In conclusion, the Court dismissed the revision, upholding the Tribunal's order on turnover calculation and development tax liability. The business discontinuation under the Trade Tax Act triggered Section 18's application for determining turnover, justifying the development tax assessment. The legal interpretation of turnover provisions under different tax statutes was crucial in resolving the applicant's liability dispute effectively.