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2019 (7) TMI 1123 - HC - VAT and Sales TaxImposition of state development tax - Benefit of the scheme for composition of tax liability - HELD THAT - The question of law involved in the present case is no longer res-integra. The same has been authoritatively answered by the Division Bench of this Court in exercise of writ jurisdiction in M/S SYSTEMATIC CONSCOM LIMITED VERSUS STATE OF UP. AND OTHERS 2009 (3) TMI 872 - ALLAHABAD HIGH COURT where it was held that State Development Tax is not payable by the petitioners in addition to the composition amount mentioned in the compounding scheme. Revision allowed - the question of law is answered in negative i.e. in favour of the assessee and against the revenue.
Issues:
Challenge to imposition of State Development Tax under Section 3H of the Act despite opting for compounding scheme under Section 7D of the Act. Analysis: The revisions were filed against the Trade Tax Tribunal's order imposing State Development Tax under Section 3H of the Act for exceeding the threshold limit of &8377; 50,00,000 during the assessment year. The assessee executed civil works contracts and had opted for the compounding scheme under Section 7D of the Act. The key question raised was whether the Tribunal was correct in sustaining the imposition of State Development Tax despite the assessee choosing the compounding scheme. During the hearing, the counsel for the assessee referred to a Division Bench judgment in M/S Systematic Conscom Limited Vs State of U.P. & Others, which clarified that State Development Tax cannot be charged in addition to the composition amount fixed under the Compounding Scheme unless explicitly stated otherwise. The judgment emphasized that the Compounding Scheme introduced a simplified method of tax payment, and charging State Development Tax separately would defeat the scheme's purpose. The Division Bench ruling was considered authoritative, and it was concluded that State Development Tax should not be levied over and above the composition amount specified in the Compounding Scheme. The court agreed with the assessee's position based on the Division Bench's interpretation, and the revisions were allowed in favor of the assessee. The decision was made in accordance with the Division Bench's analysis, which found that the State Development Tax was not payable by the assessee in addition to the composition amount under the Compounding Scheme.
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