2014 (3) TMI 512 - HC - VAT and Sales Tax

Exemption from export duty - Inter-State sales of Rectified and Denatured Spirit - Held that - The decision in Commissioner of Sales Tax UP. Versus M/s. Upper Doab-Sugar Mills Ltd. 2014 (2) TMI 1003 - ALLAHABAD HIGH COURT followed - United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 is a sales tax law within the meaning of Section 2(i) of Central Sales Tax Act, 1956 - The alcohol being taxable under the 1939 Act, payment of central sales tax on inter-State sale of alcohol not exempted as per provisions of Section 8 (2-A) of the 1956 Act even though there was general exemption under section 4 of the 1948 Act - The orders of the Tribunal in revisions set aside - Decided in favour of revenue. Inclusion of export pass fee in taxable turnover Held that - Judgment in Commissioner of Income-Tax Versus Rampur Distillery And Chemicals Co. Limited 2005 (3) TMI 756 - ALLAHABAD HIGH COURT followed - export pass fee is the liability of the exporter to pay while getting the export permit - there was no liability of payment of export pass fee on the dealer under the Excise Act - No question of treating the export pass fee as part of the turnover Decided against revenue.

Summary

Issues:
1. Exemption of inter-State sales of Rectified Spirit and Denatured Spirit along with export duty.
2. Inclusion of export pass fee in the taxable turnover of the Revisionist/Assessee.

Analysis:

Issue 1:
The first question of law revolves around the justification of the Tribunal in exempting inter-State sales of Rectified Spirit and Denatured Spirit along with export duty. The learned Standing Counsel argued that a Division Bench of the High Court had already ruled against the Assessee in a previous judgment, emphasizing that the central sales tax on inter-State sale of alcohol was not exempted despite general exemptions under relevant acts. The Tribunal's decision was set aside, concluding that the exemption did not apply in this case, thereby ruling in favor of the Revenue.

Issue 2:
The second issue concerns whether the export pass fee payable by an Ex. U.P. purchaser on purchasing Denatured Spirit from a Distillery should be included in the taxable turnover of the Assessee. This matter was addressed by referring to a Division Bench judgment and an earlier Single Judge judgment. The Division Bench held that the liability for the export pass fee lies with the purchaser and not the distillery, thus it should not be considered part of the turnover. Similarly, the Single Judge emphasized that since the dealer did not receive the export pass fee and was not liable for its payment, it should not be included in the turnover. Consequently, the Court ruled in favor of the Assessee, stating that the export pass fee should not be part of the taxable turnover.

In conclusion, the judgment partially favored the Assessee by ruling against the inclusion of the export pass fee in the taxable turnover. The matter was remanded to the Tribunal for further proceedings in accordance with the legal principles discussed in the judgment.