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2019 (8) TMI 744 - HC - VAT and Sales TaxRate of tax - ACR Conductor - rate of 4% on the sale of goods in view of the notification dated 7 March 2005 - jurisdiction under section 22 of the Trade Tax Act - In the instant case, admittedly the transaction was liable to be taxed at 4% but the assessee has only canvased the ground of equity and that he was not at fault while submitting the Form 3 Kha, wherein the rate of Tax was endorsed, hence he cannot be held liable - HELD THAT - The aforesaid argument does not hold good in light of the settled legal position discussed hereinabove. Equity will have to give way to the provisions of law and in the present case according to the Notification No. KA NI 2 731/XI-9(37) U.P. Act 15-48 order(14) 2005, dated 07.03.2005, the transaction was liable to be taxed at the rate of 4% - the Assessing Authority, rightly exercising the jurisdiction vested in him under Section 22 of the Trade Tax Act to rectify the mistake and to levy Tax on the transaction in question as per Notification No. KA NI 2 731/XI-9(37) U.P. Act 15-48 order(14) 2005, dated 07.03.2005. It is always open for the respondent to recover the shortfall of Tax levied on the goods supplied from the purchaser in accordance with law. Revision allowed.
Issues Involved:
1. Jurisdiction of Assessing Authority under Section 22 of the U.P. Trade Tax Act. 2. Legality of the Trade Tax Tribunal's decision to set aside the assessing authority's order. Issue-Wise Detailed Analysis: 1. Jurisdiction of Assessing Authority under Section 22 of the U.P. Trade Tax Act: The primary issue is whether the Assessing Authority correctly exercised its jurisdiction under Section 22 of the Trade Tax Act by imposing a tax rate of 4% on the sale of ACR conductors as per the notification dated 7 March 2005. The facts reveal that during the final assessment for the years 2005-06 and 2006-07, the tax was initially determined at 2.5%. However, upon reviewing the records, the Assessing Authority found that the correct tax rate should have been 4% as per the relevant notification. Consequently, a notice under Section 22 was issued, and after considering the respondent's reply, the tax rate was corrected to 4%, leading to an additional demand. The Tribunal, however, found that the mistake was not on the part of the respondent but due to the lapse of the purchasing dealer who supplied Form-Kha. The Tribunal relied on the case of Commissioner, Sales Tax Vs. Rana Steel Saharanpur, which held that the selling dealer cannot be held responsible for the purchasing dealer's errors. The Tribunal also emphasized that Section 22 is meant for rectifying apparent mistakes and not for errors requiring detailed deliberation. 2. Legality of the Trade Tax Tribunal's Decision: The Tribunal's decision to set aside the assessing authority's order was based on the premise that the error was due to the purchasing dealer's lapse, and the selling dealer (respondent) had acted in good faith by charging the tax rate as endorsed in Form-Kha. The Tribunal relied on precedents indicating that the selling dealer's responsibility is limited to ensuring the form's apparent correctness and not verifying its genuineness or the purchasing dealer's compliance. However, the High Court disagreed with the Tribunal's findings. It emphasized that in tax matters, equity does not play a role, and the letter of the law must be strictly adhered to. The notification clearly mandated a 4% tax rate, and the Assessing Authority was within its jurisdiction under Section 22 to rectify the mistake. The High Court cited several Supreme Court judgments reinforcing that tax laws must be interpreted strictly without considering equitable arguments. The High Court concluded that the Assessing Authority's action was justified and the Tribunal erred in setting aside the order. Conclusion: The High Court allowed the revisions, holding that the Assessing Authority correctly exercised its jurisdiction under Section 22 to rectify the apparent mistake and impose the correct tax rate of 4% as per the notification. The Tribunal's decision was set aside, and the questions of law were answered in favor of the Revenue. The respondent was advised to recover the tax shortfall from the purchaser as per the law.
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