2015 (6) TMI 738 - HC - VAT and Sales Tax

Violation of Section 4-B(5) - Whether the learned Tribunal was legally justified in holding, as per facts and circumstances of the case, that there is no violation of Section 4-B(5) of Trade Tax Act - Held that - A perusal of Section 4-B(2) of the Act would show that it contemplates grant of recognition certificate when a dealer requires any goods referred to in sub-section (1) for the purpose of either manufacturing goods or processing goods by him which are notified goods or in the packing of such notified goods. Then we come to Section 4-B(5) of the Act. It contemplates a situation where a dealer, who has a recognition certificate, purchases goods either on concessional rate or without paying any tax and if he uses goods for a purpose other than that for which recognition certificate is granted or has otherwise disposed of the goods then he would be liable to be proceeded under Section 4-B(5) of the Act. The authorities has invoked Section 4-B(5) and imposed penalty in the matter. Tribunal which is a final fact finding authority as only on a substantial question of law, a revision can be successfully premised under the Act. The fact finding authority has found that neither is there finding of the authority that the assessee was caught selling packing material or raw material in the same form and condition in which it was purchased. It is found that the State could not submit any proof which may lead to a conclusion that the assessee has actually sold packing material separately in the form and condition in which it was purchased under Form 3-B. - revisionist has a case in the revision memo that this finding was without any material, when we asked whether there is anything to show that the packing material was not used or the goods were sold without their packing material being used for the purpose of packing, the learned counsel for the revisionist was not able to show any material as such. What is material referred to is the fact that the packing material is returned back and it is separately accounted in the ledger. - Under the terms, the recognition certificate, the material purchased against Form 3-B was to be used for packing. There was nothing to show that it was not so used. In such circumstances, we see no reason to interfere with the order of the Tribunal. - Decided against Revenue.

Summary

Issues:
Assessment order for the year 1993-94, violation of Section 4-B(5) of the Act, imposition of penalty, appeal by the assessee, substantial question of law, interpretation of Sections 3-B, 4-B(2), and 4-B(5), findings of the Tribunal, revisionist's contentions, final fact-finding authority, lack of material evidence, dismissal of the revision.

Analysis:
The judgment pertains to an assessment order issued by the Commissioner of Commercial Tax regarding the sale of packing trays by the assessee, who is engaged in manufacturing glass bottles. The assessee had purchased packing materials under Section 3-B of the U.P. Trade Tax Act, but it was alleged that the sale of packing material violated Section 4-B(5) of the Act, leading to the imposition of a penalty. The Tribunal allowed the appeal filed by the assessee, stating that there was no evidence of the assessee selling packing material separately, and the penalty was unjustified.

The substantial question of law raised was whether there was a violation of Section 4-B(5) of the Trade Tax Act. The court examined Sections 3-B, 4-B(2), and 4-B(5) of the Act. Section 3-B deals with liability for issuing false certificates, while Section 4-B(2) pertains to the grant of recognition certificates for specific purposes like manufacturing or packing goods. Section 4-B(5) imposes penalties if goods purchased under a recognition certificate are used for a different purpose or disposed of. The court analyzed the provisions to determine if the penalty was rightly imposed.

The revisionist argued that the packing material was sold separately in violation of the recognition certificate's terms. However, the assessee contended that the packing material was used for packing and only accounted for separately due to accounting practices. The Tribunal, being the final fact-finding authority, found no evidence of the assessee selling packing material separately. The court noted that the revisionist failed to provide material evidence contradicting the Tribunal's findings, leading to the dismissal of the revision.

In conclusion, the court upheld the Tribunal's decision, emphasizing the lack of evidence supporting the imposition of the penalty under Section 4-B(5). The judgment highlights the importance of factual findings and adherence to the terms of recognition certificates in tax assessments, ultimately resulting in the dismissal of the revision.