2014 (3) TMI 608 - 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 2004 (11) TMI 88 - 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. Whether the Tribunal was justified in exempting inter-State sales of Rectified Spirit and Denatured Spirit along with export duty?
2. Whether the export pass fee payable by Ex. U.P. purchaser on purchase of Denatured Spirit from Distillery is liable to be included in the taxable turnover of the Revisionist-Assessee?

Analysis:

Issue 1:
The first issue revolves around the Tribunal's decision to exempt inter-State sales of Rectified Spirit and Denatured Spirit from tax along with export duty. The learned Standing Counsel argued that a previous Division Bench judgment had already ruled against the Assessee in a similar matter, stating that the payment of central sales tax on inter-State sale of alcohol was not exempted, despite a general exemption under the 1948 Act. The Tribunal's decision was overturned, and the question was answered against the Assessee and in favor of Revenue based on the precedent.

Issue 2:
The second issue concerns the inclusion of the export pass fee paid by the Ex. U.P. purchaser on the purchase of Denatured Spirit in the taxable turnover of the Revisionist-Assessee. This matter was addressed in a Division Bench judgment and a previous Single Judge judgment. The Division Bench ruling stated that the liability for the export pass fee lies with the purchaser, not the distillery exporting the spirit. The amount of the export pass fee paid by the purchaser should not be considered part of the turnover of the distillery. The Single Judge judgment further emphasized that the dealer exporting the spirit is not liable to pay the export pass fee, as it is the responsibility of the purchaser. Consequently, the Court ruled in favor of the Assessee and against Revenue, stating that the export pass fee should not be included in the turnover of the Assessee.

In conclusion, the judgment partially allowed the Revision, setting aside the Tribunal's decision on the first issue and remanding the matter back to the Tribunal for further proceedings. The second issue was decided in favor of the Assessee based on the legal principles established in the Division Bench and Single Judge judgments.