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2018 (3) TMI 235 - HC - VAT and Sales TaxClaiming benefit of exemption notification issued under old act even after introduction of VAT Act - Correctness of Notification dated 14th November, 2000 - only reason to deny benefit of exemption notification is that rate of tax is different between the two Act, and therefore, the notification dated 14.11.2000 is inconsistent with the Act of 2008 - Whether the Tribunal is justified in holding that notification dated 14th November, 2000 issued by the State of Uttar Pradesh is inconsistent with U.P. VAT Act, and therefore, not saved under Section 81 thereof? Held that - A taxing statute ordinarily provides for the transaction to be taxed, the rate of tax and the incidence of tax. In an exemption notification of the kind in hand i.e. notification dated 14.11.2000, the transaction itself is exempted from liability to pay tax. The rate of tax, which otherwise would be payable, is not a relevant factor when the Government decides to exempt a transaction itself from payment of tax - In the present case, the transfer by a Bus owner to the UPSRTC of the right to use a Bus under any contract, is the goods specified in the schedule, and thus to be exempted from the applicability of tax. Such a notification would not become inconsistent only because the right of tax payable for the transaction in the Act of 2008 is different from the rates specified in the Act of 1948. In Central Indian Machinery Manufacturing Co. Ltd. Vs. State of M.P. and another, 1997 (1) TMI 549 - SUPREME COURT , a question arose regarding continuance of notification under a repealed Act on the ground that a deduction of 10% towards statutory allowance was contemplated in lieu of cost of repair etc. from the gross annual letting value. The High Court had observed that for such reasons, the notification issued under the repeal Act would not become wholly inconsistent with the new Act. Notification dated 14.11.2000, issued under the Act of 1948, is not inconsistent with the Act of 2008, and therefore, the notification would continue to subsist and would be deemed to have been issued under the Act of 2008, by virtue of Section 81(2)(a). Revision allowed - decided in favor of assessee.
Issues Involved:
1. Justification of Tribunal's decision regarding the inconsistency of the notification dated 14th November 2000 with the U.P. VAT Act. 2. Taxability of rental receipts from the transfer of the right to use buses to the U.P. State Road Transport Corporation. 3. Continuation and applicability of the notification dated 14th November 2000 under the U.P. VAT Act, 2008. Detailed Analysis: 1. Justification of Tribunal's Decision: The primary issue addressed is whether the Tribunal was justified in holding that the notification dated 14th November 2000 is inconsistent with the U.P. VAT Act, 2008, and therefore not saved under Section 81 thereof. The Tribunal's decision was based on the premise that the notification issued under the U.P. Trade Tax Act, 1948 (referred to as the 'Act of 1948') was inconsistent with the provisions of the U.P. VAT Act, 2008 (referred to as the 'Act of 2008'). The Tribunal concluded that the notification could not continue under the new Act due to differences in the rate of tax between the two Acts. 2. Taxability of Rental Receipts: The authorities under the Act issued notices to the assessee treating the rent received from the U.P. State Road Transport Corporation (UPSRTC) as constituting a transfer of the right to use, which was liable to be taxed at 5%. The assessing authority relied upon a prior order to hold that rental receipts from the corporation were taxable and accordingly raised a demand. The assessee contended that the payment of trade tax under the U.P. VAT Act continued to remain exempted due to the notification dated 14.11.2000 and argued that there was no transfer of the right to use in favor of the corporation. However, the first appellate authority and the Tribunal rejected the assessee's claims on both counts. 3. Continuation and Applicability of the Notification: Section 81(2)(a) of the Act of 2008 provides that any notification issued under the repealed Act of 1948, insofar as it is not inconsistent with the provisions of the new Act, shall be deemed to have been issued under the new Act. The court analyzed whether the notification dated 14.11.2000 was inconsistent with the Act of 2008. The notification exempted the transfer by a bus owner to the UPSRTC of the right to use a bus under any contract from the applicability of tax. The court found that the statutory scheme under both Acts was similar regarding the transfer of the right to use, with the only difference being the rate of tax (5% under the Act of 1948 and 4% under the Act of 2008). The court emphasized that a notification exempting a transaction from liability to pay tax would not become inconsistent merely because the rate of tax payable under the new Act was different. It concluded that the notification dated 14.11.2000 was not inconsistent with the Act of 2008 and thus continued to subsist under the new Act by virtue of Section 81(2)(a). The court referred to several judgments, including those of the Supreme Court and various High Courts, which supported the view that unless a new enactment manifested an intention to destroy the rights and liabilities created by the repealed Act, such rights are saved. The court also cited cases where notifications issued under repealed Acts were deemed to continue under new enactments unless explicitly inconsistent with the new provisions. Conclusion: The court held that the notification dated 14.11.2000, issued under the Act of 1948, was not inconsistent with the Act of 2008 and would be deemed to have been issued under the Act of 2008. The Tribunal's contrary view was found to be unjustified. The revision was allowed in favor of the assessee, confirming the continuation of the tax exemption under the notification.
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