2003 (4) TMI 596 - HC - VAT and Sales Tax

Summary

Issues:
Penalty under Section 4-B (5) of U. P. Sales Tax Act for purchasing raw materials at a concessional rate and transferring manufactured scrap to another branch.

Analysis:
The revision filed against the Tribunal's order related to the Assessment Year 1979-80. The applicant, involved in manufacturing free wheels, purchased raw materials in the form of iron and steel, using them in manufacturing free wheels and transferring the scrap to a Delhi Branch for sale. The Assessing Authority imposed a penalty of Rs. 35,000 under Section 4-B (5) for purchasing iron and steel at a concessional rate and transferring iron scrap, which was considered a violation of the Act.

The Deputy Commissioner (Appeals) allowed the dealer's appeal, canceling the penalty, stating that the raw materials were used in manufacturing the notified goods as per the Recognition Certificate. The Commissioner of Sales Tax appealed to the Tribunal, which remanded the case back to the Assessing Authority for fresh orders under the appropriate section. The applicant then filed a revision before the High Court, challenging the Tribunal's order.

The High Court observed that Section 4-B (5) applies when raw materials are purchased at a concessional rate but used for purposes other than specified in the Recognition Certificate. The Deputy Commissioner (Appeals) found no contravention of Section 4-B (5) as the raw materials were used as per the Recognition Certificate. The Tribunal, however, exceeded its jurisdiction by considering a breach of Section 4-B (6) and remanding the case, which was not the subject matter of appeal before it. The High Court cited a previous case to support this limitation on the Tribunal's jurisdiction.

Regarding Section 4-B (6), the High Court doubted its applicability in this case, as the scrap transferred to Delhi was not considered disposed of otherwise than by sale or in the course of trade. Consequently, the High Court set aside the Tribunal's order and restored the order canceling the penalty under Section 4-B (5).

In conclusion, the High Court allowed the revision, setting aside the Tribunal's order and restoring the order that canceled the penalty imposed under Section 4-B (5) for the applicant.