2013 (10) TMI 302 - HC - VAT and Sales Tax

Penalty u/s 4B(5) of UPTT - exemption claimed on purchase of plastic granules - it was recorded that he purchased granules were not used for manufacture of packing material instead for manufacturing plastic goods namely plastic bottles and plastic jar. - interpretation of Entry 4 of the notification no. 4519 - Held that - said entry applies when the plastic bottles and plastic jars are used for the purposes of packaging of liquids and other goods so as to answer the description of the packaging material but when the bottles and jars are sold in the open market as plastic goods in themselves to be used by the ultimate consumer for storing whatever he so desires they will answer the description of plastic goods nor covered by item 4 of Annexure I of the notification. Therefore the counsel for the department appears to be justified in submitting that when the assessee in his proforma 4 and form 82 has himself declared the manufacture goods as plastic goods there was little or no evidence before the Tribunal to come to the conclusion that the goods so manufactured were packaging materials. The order of the Tribunal is not supported by cogent reasons as no material fact have been recorded for arriving at the conclusion contrary to what was held by the assessing authority as well as by the First Appellate Authority - Decided in favour of revenue.

Summary

Issues:
Penalty under Section 4B(5) of the U.P. Trade Tax Act for assessment year 1992-93.

Analysis:
The revision was against the Trade Tax Tribunal's order setting aside the penalty imposed under Section 4B(5) of the U.P. Trade Tax Act for the assessment year 1992-93. The assessee had purchased plastic granules claiming tax exemption under form 3B but used them to manufacture plastic bottles and jars instead of packaging material. The penalty of Rs. 48,324 was imposed, later reduced to Rs. 24,162 by the Deputy Commissioner. Two second appeals were filed, leading to the Tribunal's decision that the manufactured plastic bottles and jars qualified as packaging material under a specific notification.

The Tribunal's decision was challenged by the department, arguing that the goods were declared as plastic goods by the assessee, not packaging material. The court examined the relevant notification and found that the plastic bottles and jars, when sold as plastic goods for consumer use, did not qualify as packaging material under the notification. The Tribunal's decision lacked sufficient reasoning and contradicted the assessing authority's findings. Therefore, the court set aside the Tribunal's order.

The court directed the Tribunal to reconsider the appeals within two months, considering the observations made in the judgment and providing an opportunity for both parties to present their arguments. Consequently, the revision was allowed, restoring the original appeal numbers for further proceedings before the Tribunal.