2023 (1) TMI 587 - HC - VAT and Sales Tax

Refusal to grant concession under Section 4-AA UP VAT Act - non-submission of From-C against the transaction on inter-State sale - whether non-production of form 'C' could be taken to be a ground to deny set-off of such higher rate of tax than the payable rate of tax from the limit prescribed in the eligibility certificate under Section 4A of the Trade Tax Act? - HELD THAT - The issue is no more res-integra as Division Bench in case of Yamaha Motor Escorts Limited 2010 (9) TMI 1243 - ALLAHABAD HIGH COURT has settled the issue that non-production of form C/D, cannot be taken to be a mere ground to deny the setoff of higher rate of tax from the limits prescribed in the eligibility certificate under Section 4A of the Trade Tax Act, subject to other conditions, namely, the maximum limit for particular year or period and maximum amount for which such exemption is provided. The order passed by the Tribunal dated 16.02.2010 is unsustainable in the eyes of law and the same is hereby set aside - revision allowed.

Summary

Issues:
1. Entitlement to rebate/concession under notification No.TT-2-779 dated 31.3.1995
2. Applicability of the amendment to the Central Sales Tax Act, 1956 made by Finance Act, 2002 to notification No. 781 dated 31.3.1995
3. Denial of set-off due to non-production of form 'C'
4. Validity of the judgment in Yamaha Motor Escorts Ltd. Vs. State of U.P. regarding non-production of form 'C'

Entitlement to Rebate/Concession:
The revisionist, a Private Limited Company engaged in the manufacture of Multi Layer Poly Film, was granted exemption under Section 4-A of the U.P. Trade Tax Act, 1948. The assessing authority for the assessment year 2004-05 refused to grant concession under Section 4-AA of the Act due to the non-submission of Form-C against the transaction on inter-State sale. The first appeal and subsequent second appeal before the Tribunal were dismissed, leading to the present revision under Section 58 of the U.P. VAT Act, 2008.

Applicability of Amendment to Central Sales Tax Act:
The revision was admitted based on questions of law regarding the entitlement to rebate/concession under notification No.TT-2-779 dated 31.3.1995 and the applicability of the amendment to the Central Sales Tax Act, 1956 made by Finance Act, 2002. The Court found a substantial question of law regarding the impact of non-compliance with conditions on tax exemption, as per the judgment in Yamaha Motor Escorts Ltd. Vs. State of U.P.

Denial of Set-Off due to Non-Production of Form 'C':
The revisionist cited the Division Bench's decision in Yamaha Motor Escorts Ltd. Vs. State of U.P., which held that non-production of Form C/D cannot be a ground to deny the set-off of higher tax rates as per the eligibility certificate under Section 4A of the Act of 1948. The Court noted that the Division Bench's judgment established that non-production of Form C/D should not lead to the denial of set-off, subject to specific conditions.

Validity of Judgment in Yamaha Motor Escorts Ltd. Vs. State of U.P.:
The Court acknowledged the Division Bench's ruling in Yamaha Motor Escorts Ltd. case, emphasizing that non-compliance with the amended provisions of the Central Sales Tax Act, specifically non-production of Form C/D, should not be a basis to deny the set-off of higher tax rates under the eligibility certificate. The judgment clarified that the denial of set-off based on non-compliance was not justified, provided other conditions were met.

In conclusion, the Court found that the Tribunal's order was unsustainable in law, setting it aside and allowing the revision in favor of the assessee. The judgment in Yamaha Motor Escorts Ltd. case was upheld, establishing that non-production of Form C/D should not result in the denial of set-off under the Trade Tax Act, subject to specified conditions.