2016 (7) TMI 288 - HC - VAT and Sales Tax

Levy of penalty consequent to iron and steel being used by it for manufacture of two-way cages . - assessee held a recognition certificate under Section 4B of the 1948 Act for manufacture of iron and steel . - Section 4-B (5) of the U.P. Trade Tax Act, 1948 - Held that - Insofar as the question of manufacture of two-way cages and they being covered under the entry of iron and steel goes, the Court finds that Clause (iv) of Section 14 employs the words that is, to say . Following the well settled principles and rules of statutory interpretation especially when the words that is, to say are employed by the legislative author, it is obvious that articles in order to fall under clause (iv) would have to stand encompassed under the various sub clauses which stand appended thereto. Admittedly, two-ways cages do not find mention in any of the sub clauses appended to Clause (iv). The use of the words that is, to say forbids and clearly restricts the Court from conferring an expansive meaning upon the phrase iron and steel . This Court finds no merit in the challenge laid to the order imposing penalty under Section 4-B (5) of the 1948 Act. - Decided against the assessee.

Summary

Issues:
Imposition of penalty under Section 4-B(5) of the U.P. Trade Tax Act, 1948 for using iron and steel for manufacturing two-way cages.

Analysis:
The revisionist-assessee held a recognition certificate for manufacturing "iron and steel" under Section 4B of the 1948 Act. The penalty was imposed for using iron and steel to manufacture two-way cages for the Assessment Years 1978-79 and 1979-80. The counsel argued that "iron and steel" was a generic entry under Section 14 of the Central Sales Tax Act, 1956, and using it for two-way cages should not attract penalty under Section 4-B(5). However, the Court noted that penalty is attracted if goods are used for purposes other than those for which the recognition certificate was granted, even if the certificate is not cancelled.

The Court emphasized that the provision does not require cancellation of the recognition certificate as a condition precedent for imposing a penalty. Regarding the interpretation of "iron and steel" under Section 14, the Court highlighted that the phrase "that is, to say" restricts the meaning to the specific articles listed in the sub-clauses. Since two-way cages were not listed in any sub-clause, they did not fall under the category of "iron and steel." The Court referred to a Supreme Court case to support this interpretation.

The Court rejected the challenge to the penalty order under Section 4-B(5) of the 1948 Act, concluding that the penalty was justified based on the specific provisions and interpretation of the relevant statutes. As a result, the revision was dismissed.