1981 (5) TMI 130 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Exemption under Section 3-D(1) of the U.P. Sales Tax Act for purchases of foodgrains.
2. Tax rate applicable to certain purchases.
3. Classification and taxability of Mahuwa sales.

Issue-wise Detailed Analysis:

1. Exemption under Section 3-D(1) of the U.P. Sales Tax Act for Purchases of Foodgrains

The main contention was whether the exemption under Section 3-D(1) could be allowed without the necessary Form III-C. The assessing authority and the appellate authorities did not accept the exemption claim of Rs. 52,585/- for foodgrains purchases due to the non-production of Form III-C. The Additional Judge (Revisions) accepted a certificate from the Sales Tax Officer indicating that the business of Rs. 47,820/- had already suffered tax, and thus held that the assessee was not liable to tax at one percent.

The court examined the relevant provisions of the Act, particularly sub-sections (1) and (7) of Section 3-D, which outline the conditions under which tax is levied and the manner of proving a purchase is not the first purchase. The court emphasized that the provision under sub-section (7) is mandatory, requiring specific forms and certificates to rebut the presumption that a purchase is the first purchase. The court concluded that the provision is mandatory and that the onus lies on the assessee to furnish the required proof in the prescribed manner.

The court cited several precedents, including the Full Bench decision in M/s. J. K. Manufacturers Ltd. v. Sales Tax Officer and the Supreme Court decision in Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer, to support its interpretation that the furnishing of the prescribed form is a condition for claiming exemption. The court held that the assessee failed to discharge this onus, and therefore, the entire disputed purchases of Rs. 52,585/- were liable to be taxed under Section 3-D(1).

2. Tax Rate Applicable to Certain Purchases

The Department contended that the liability to tax in respect of the amount of Rs. 4,765/- was at four percent and not at one percent. Given that the court found the entire amount of Rs. 52,585/- taxable under Section 3-D(1), it deemed it unnecessary to delve into the specific tax rate applicable to the Rs. 4,765/- amount.

3. Classification and Taxability of Mahuwa Sales

The court noted that the Additional Judge (Revisions) did not make a clear finding on whether the assessee had sold Mahuwa flowers, Mahuwa nuts, or Mahuwa seeds. This distinction is crucial because Mahuwa flowers became taxable at multiple points at the rate of 3.5% from 1-12-1973, whereas the tax rates for Mahuwa nuts or seeds could differ.

The court referred to "A Dictionary of Urdu, Classical Hindi, and English" to explain the different uses and tax implications of Mahuwa flowers, nuts, and seeds. The court directed the Sales Tax Tribunal to re-examine the classification and taxability of Mahuwa sales, keeping in view the specific observations made in the judgment.

Conclusion

The revision was allowed. The court held that the purchase turnover of Rs. 52,585/- in respect of foodgrains would be taxed under Section 3-D(1). It remanded the issue of Mahuwa sales back to the Sales Tax Tribunal for re-examination. The Commissioner was awarded costs assessed at Rs. 200/-.