2016 (10) TMI 14 - HC - VAT and Sales Tax

Revision application - denial of the benefit of the provisions of Section 3 F (2) (b) (i) of the U.P. Trade Tax Act - non-allowance of deductions for sales as central sales under Section 3, 4 & 5 of the Central Sales Tax Act - works contract - movement of goods from Nagpur to Saharanpur - Whether even assuming without admitting that the two contracts entered into between the applicant and IVO Power Engineering Limited can be treated as one indivisible works contract liable to tax under Section 3-F of U.P. Trade Tax Act still in view of Section 3 F (2) (b) (i) of U.P. Trade Tax Act the specific goods having moved from outside the State of U.P. in pursuance of the prior agreement, the value of such amount shall be covered by Section 3F of the Central Sales Tax Act and no tax can be legally imposed? Whether evidence with regard to the prior purchase orders contracts at Nagpur were there or not? The tribunal remained silent about this evidence and simply records a finding that in fact the assessee was seeking to evade tax and had resorted to a device in the movement of goods simply for the purposes of evading the tax. Held that - the Tribunal is unable to show any finding or any ground at all, which lends support to the orders passed by the Tribunal as to why it has not even considered the fact that actually material evidence was there on record to show that the entire process of the movement of goods had started from Nagpur nor has it given any real reason for rejection of inter state nature of transaction and why it did not accept the inter state transaction between Nagpur and Saharanpur - the matter requires reconsideration by the Tribunal after examining the material evidence on record as referred to in paragraphs no.13, 14 & 15 of the memo of appeal before the first appellate authority - matter remanded - revision disposed off - decided in favor of revisionist.

Summary

Issues:
Assessee's revision for assessment years 2000-2001 against Tribunal's order denying benefit of Section 3 F (2) (b) (i) of U.P. Trade Tax Act for central sales under Central Sales Tax Act. Question of law: Whether goods moved from outside U.P. under prior agreement are covered by Central Sales Tax Act.

Analysis:
The judgment addresses the controversy surrounding the denial of deductions to the assessee for sales made as central sales under the Central Sales Tax Act. The primary issue revolves around the interpretation of Section 3 F (2) (b) (i) of the U.P. Trade Tax Act and its applicability to goods purchased outside the state of U.P. The question raised pertains to whether the specific goods moved from outside U.P. in accordance with a prior agreement fall under the purview of Section 3 F of the Central Sales Tax Act, thus exempting them from additional taxation.

The learned Counsel for the assessee presented evidence demonstrating that central sales tax was duly paid for the purchase of transmission towers intended for movement from Nagpur to Saharanpur. The grounds of appeal filed before the first appellate authority outlined the details of orders and contracts, emphasizing the inter-state nature of the transactions. The evidence provided, including forms and documents, supported the contention that the goods were part of an inter-state sale, warranting exemption under relevant tax laws.

Upon examination of the evidence presented, the Court found that the tribunal had not adequately considered the material evidence regarding the prior purchase orders and contracts at Nagpur. The tribunal's conclusion of tax evasion lacked substantial support in the face of documented evidence establishing the legitimate inter-state nature of the transactions. The Court highlighted the tribunal's failure to provide valid reasons for rejecting the inter-state character of the transactions and emphasized the need for a thorough reconsideration of the matter based on the evidence presented.

Consequently, the Court set aside the tribunal's order and directed a remand of the matter for further consideration. The tribunal was instructed to reevaluate the case within a specified timeframe, taking into account the material evidence referenced in the appeal before the first appellate authority. The judgment concluded by disposing of the revision without imposing any costs on either party, ensuring a fair and thorough review of the tax assessment issue at hand.