2018 (5) TMI 463 - HC - VAT and Sales Tax

Consumption of Diesel oil - manufacture and sale of sugar and bagasse etc - manufacturing activity carried or not? - during the period when the manufacturing activity of the assessee was completely closed, it shown purchases of diesel oil on concessional rate of tax against form 3 Kha and consumption thereof - Section 3-B of the U.P. Trade Tax Act, 1948. Held that - The assessee has set up a case that the diesel oil was consumed in the maintenance of machines during the period when the manufacturing activities were closed. The contention of the assessee was rejected by the authorities. The Tribunal being the last fact finding authority has recorded a finding of fact that the assessee has no records to establish that how the diesel oil in question was used in maintenance of machines. No perversity could be shown by the assessee in the aforesaid findings of fact recorded by the Tribunal - liability of the assessee under Section 3 B of the Act upheld. Liability to tax of sale of bagasse - Held that - Since no tax was paid by the assessee on purchases of sugarcane, therefore, the liability to tax on sale of bagasse as determined by the assessing authority, can not be interfered with. Revision dismissed.

Summary

Issues: Liability under Section 3-B of U.P. Trade Tax Act for diesel oil purchases during non-operational period, tax liability on sale of bagasse produced from sugarcane without paying purchase tax under U.P. sugarcane (Purchase Tax) Act, 1961.

Issue 1: Liability under Section 3-B of U.P. Trade Tax Act for diesel oil purchases during non-operational period
The case involved a challenge to the liability created under Section 3-B of the U.P. Trade Tax Act for purchases of diesel oil during a period when manufacturing activity was not being carried out. The assessee claimed the diesel oil was used for machine maintenance during the non-operational period. However, the Tribunal found that the assessee failed to provide evidence of how the diesel oil was used in maintenance, leading to the conclusion that a false declaration was issued to avail concessional tax rates. The Tribunal's factual findings were upheld, stating no error of law was committed, and no question of law arose. The liability under Section 3-B was upheld.

Issue 2: Tax liability on sale of bagasse produced from sugarcane without paying purchase tax under U.P. sugarcane (Purchase Tax) Act, 1961
The second issue pertained to the tax liability on the sale of bagasse produced from sugarcane without paying purchase tax under the U.P. sugarcane (Purchase Tax) Act, 1961. The assessee relied on a judgment stating that if purchase tax on sugarcane had been paid, then the residue, like bagasse, could not be subjected to sales tax. However, it was found that the assessee had not paid the purchase tax on sugarcane, rendering the judgment inapplicable. The Tribunal and lower authorities concurred that the liability on the sale of bagasse was justified due to the non-payment of purchase tax on sugarcane. The court dismissed the revisions, concluding that the controversies were settled by factual findings, with no legal questions arising.

In conclusion, the High Court dismissed all revisions, upholding the liabilities under Section 3-B of the U.P. Trade Tax Act for diesel oil purchases during a non-operational period and the tax liability on the sale of bagasse produced from sugarcane without paying purchase tax under the U.P. sugarcane (Purchase Tax) Act, 1961. The court found no merit in the challenges raised by the assessee, as the factual findings supported the authorities' decisions, and no legal errors were identified, leading to the dismissal of all revisions.