1993 (11) TMI 247 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of interest under Section 8(1) of U. P. Sales Tax Act for the assessment year 1979-80.
2. Interpretation of the Explanation to Section 8(1) regarding tax admittedly payable.
3. Dispute over whether purchases were first purchases liable to tax under Section 3-D.
4. Tribunal's decision on the liability of the dealer for purchase tax.

Analysis:
1. The judgment revolves around a revision petition challenging the Sales Tax Tribunal's order quashing the levy of interest under Section 8(1) of the U. P. Sales Tax Act for the assessment year 1979-80. The dealer, engaged in foodgrain business, contested that purchases were not first purchases subject to tax under Section 3-D, resulting in the imposition of interest by the assessing officer. The Tribunal, on Second Appeal, sided with the dealer, emphasizing that purchases were made from registered dealers and were wrongly treated as first purchases due to the absence of Form 3-C(2).

2. The crux of the matter lies in the interpretation of the Explanation to Section 8(1) regarding tax admittedly payable. The Explanation defines tax admittedly payable as the tax disclosed in the dealer's accounts or admitted in returns, whichever is greater. The Tribunal found that the turnover in question was not reflected in the dealer's accounts as taxable turnover, as the purchases were made from registered dealers. Consequently, the tax levied could not be deemed as admitted by the dealer, aligning with the Tribunal's decision to reject the levy of interest under Section 8(1).

3. The dispute over whether the purchases constituted first purchases liable to tax under Section 3-D was pivotal. The Tribunal acknowledged that the purchases were made from registered dealers, absolving the dealer from purchase tax liability. This stance was supported by the fact that in the preceding year, the Court had ruled in favor of the dealer on a similar issue, reinforcing the dealer's position regarding the non-liability for purchase tax under Section 3-D.

4. Ultimately, the Court upheld the Tribunal's decision, dismissing the revision petition as lacking merit. It concurred with the Tribunal's reasoning that no interest under Section 8(1) could be imposed on the dealer, given the absence of the turnover in question as taxable turnover in the dealer's accounts. The judgment highlighted the importance of purchases from registered dealers in determining tax liability and emphasized the need for adherence to legal provisions in levying interest under the Sales Tax Act.