2024 (3) TMI 973 - HC - VAT and Sales Tax

Reduction of turnover - cement imported from outside the State of U.P. - Rule 9 of the Value Added Tax Rules - HELD THAT - Upon perusal of the order of Tribunal it is patently clear that the goods were imported from outside the State of U.P. and were used in one project in the State of U.P. There does not appear to be any perversity in the finding of the Tribunal with regard to the above factum. Such being the case, Rule 9 (1)(e) of the Rules would definitely apply and the petitioner would be entitled to the benefit thereunder. The general rule of law in taxing statutes is that in case of any doubt the benefit should be given to the assessee. However, in case of exemption and deduction to be given, a stricter approach may be followed, as per catena of judgments of the Supreme Court, to examine whether the assessee is eligible for such benefit. In the present case, there is no factual dispute of goods having been imported from outside the State of U.P. and, therefore, the assessee clearly qualifies for the said benefit. The question of law is answered in favour of the assessee and against the Department - Application dismissed.

Summary

Issues:
The judgment involves applications for revision u/s 58 of the U.P. Value Added Tax Act, 2008 for Assessment Years 2010-11, 2011-12, and 2012-13. The main question of law is whether the turnover is liable to be reduced u/s 9(1)(e) of the Value Added Tax Rules for cement imported from outside the State of U.P.

Analysis:
The revisionist argued that the import of goods and specific execution of work contract were not established, thus Rule 9(1)(e) would not apply. They distinguished a previous case where the goods were undisputedly imported for a works contract. In contrast, the respondent relied on findings that goods were imported for a specific works contract, making them eligible for the deduction under Rule 9(1)(e).

The Court examined the Tribunal's findings that imported goods were used in a U.P. project, concluding that Rule 9(1)(e) applied. Referring to a Coordinate Bench judgment, the Court highlighted the necessity of inter-state sale preceding the transfer under the works contract for the exemption. It emphasized that the movement of goods from outside the state for a works contract qualified as a deemed inter-state sale.

The Court noted that the Tribunal found goods were imported for pre-existing works contracts and applied solely for those contracts. It clarified that if goods were held in stock before application to works contracts, a different situation would arise. The interpretation of Rule 9(1)(e) was discussed in the context of legislative competence and the phrase "as a result of sale in the course of inter-state trade or commerce."

In line with the principle of giving the benefit of doubt to the assessee in taxing statutes, the Court ruled in favor of the assessee. It emphasized that since there was no dispute regarding the import of goods from outside U.P., the assessee qualified for the deduction under Rule 9(1)(e). Consequently, the question of law was answered in favor of the assessee.

Conclusion:
The Court disposed of the revision application based on the findings that the assessee was entitled to the benefit of deduction under Rule 9(1)(e) for importing goods from outside the State of U.P.