2014 (5) TMI 912 - HC - VAT and Sales Tax

Taxability u/s 21 - Whether on the facts and in the circumstances of the case, Trade Tax Tribunal was legally justified in knocking down tax imposed u/s 21 of the Act despite the fact that the turnover in question has escaped from assessment as a result of treating the Commissioner Circular dated 23.7.1987 as notification issued by the Gov - Held that - once the view has been taken by the Assessing Authority granting exemption on the turnover of inter-state sales made to Military Canteens/Canteen Stores Department after applying the provision of Section 8(2-A) of the Central Sales Tax Act on the ground that such sales are generally exempted under the U.P. Trade Tax Act, it is not open to the Revenue Authority to take a different view inasmuch as, such view was based on Government opinion vide letter dated 16th July, 1987 and Circular of the Commissioner of Trade Tax dated 23rd July, 1987. It may be mentioned here that in the presence of circular dated 23rd July, 1987 in which inter-State sales made to Military Canteens/Canteen Stores Department has been categorically held exempted from tax under Section 8 (2-A) of the Central Sales Tax Act, for taking a contrary view, one has to examine the notification afresh and to apply its mind again. - Decided against Revenue.

Summary

Issues Involved:
1. Interpretation of law regarding the Trade Tax Tribunal's authority to waive tax imposition.

Detailed Analysis:

The judgment by the High Court of Allahabad involved a revision arising from the Trade Tax Tribunal's order dated 09.09.2004, where the Tribunal had allowed the second appeal of a dealer for the assessment year 1989-1990 (Central) and completely waived the tax. The main question of law in this case was whether the Trade Tax Tribunal was legally justified in knocking down the tax imposed under section 21 of the Act, despite the turnover in question escaping assessment due to the treatment of the Commissioner Circular dated 23.7.1987 as a government-issued notification. The learned standing counsel for the revisionist agreed that the matter was covered by a previous judgment of the Court in M/s Dabur India Limited, Ghaziabad Vs. Commissioner of Trade Tax [2005 U.P.T.C. 666]. The Court referred to paragraph 16 of the judgment, which emphasized that circulars issued by the Department, even if contrary to the provisions of the Act, are binding. Once a view has been taken by the Assessing Authority based on such circulars, it is not open to the Revenue Authority to challenge it. The presence of a circular exempting certain sales from tax under the Central Sales Tax Act made it debatable whether a different view could be taken. The Court concluded that the alleged mistake in this case was not a mistake apparent on the face of the record that could be rectified under Section 22 of the Act. As a result, the question was answered against the Revenue, and the revision was dismissed.

In summary, the judgment clarified the binding nature of circulars issued by the Department, the limitations on Revenue Authority to challenge views based on such circulars, and the criteria for rectifying mistakes under the Act. The decision highlighted the importance of consistency in applying legal interpretations and the need to adhere to established opinions and circulars in tax assessments.