2019 (12) TMI 532 - HC - VAT and Sales Tax

Levy of sales tax - sale made by the revisionist to its authorised dealers who are registered dealers under the U.P. Trade Tax Act, 1948 - Section 3-AAA of the U.P. Trade Tax Act,1948 - Transfer of right to use - additional evidence u/s 12-B of Indian Evidence Act - HELD THAT - On perusal of the orders passed by the Tribunal as well as lower authorities, it would reveal that only the factual averments have been made therein. None of the clauses of the agreement has been referred to or looked into and merely on the basis of the leasing rent amount being received, the liability under section 3-F of the Act has been confirmed - Since the fact of the case has not been looked into by the Tribunal, being a last Court of fact, with regard to clauses of the agreement and case-laws on the subject, it will be appropriate that the matter should be remanded back to the Tribunal for reconsideration of the issue afresh. Levy of tax under section 3AAA of the Act - HELD THAT - The assessment orders of the two parties, namely, M/s Automobiles Sterling and M/s Unique Motor, which are on record, show that tax has been levied and the tabulation, at the bottom of the assessment orders, itself reveals that the tax was deposited, which includes the tax levied on motor vehicle - the learned counsel for the revisionist has submitted that the assessment order were on record, but the Tribunal as well as the lower authorities have failed to get it verified from the respective Assessing Authorities. The matter is remanded to the Tribunal for reconsideration of the issues - revision allowed by way of remand.

Summary

Issues:
1. Interpretation of Section 3-AAA of the U.P. Trade Tax Act,1948 regarding taxation on sales to authorized dealers.
2. Tax liability under 'Transfer of right to use' for machinery leased to another company.
3. Consideration of Application under Section 12-B of the Act by the Tribunal.

Analysis:
1. The revisionist challenged the tax imposed on sales to authorized dealers under Section 3-AAA of the U.P. Trade Tax Act, 1948. The revisionist argued that despite registered dealers admitting and depositing tax on sales to consumers, the Revenue imposed additional tax, leading to double taxation. The revisionist emphasized clauses of the agreement with the sister concern, TMML, to prove no effective transfer of right to use goods occurred. The Court noted that authorities did not consider agreement clauses, leading to incorrect tax imposition. Relying on relevant case laws, the Court remanded the matter to the Tribunal for a fresh review based on agreement details and legal principles.

2. Regarding tax liability for machinery leased to TMML under 'Transfer of right to use,' the Revenue justified tax imposition under Section 3-F of the Act. The revisionist contended that service tax was paid for leasing machinery to TMML, emphasizing no effective control transfer. The Court observed that authorities did not verify assessment orders of two parties, M/s Automobiles Sterling and M/s Unique Motor, who had deposited tax on motor vehicles. The Court remanded the issue to the Tribunal for proper examination based on assessment orders and legal provisions.

3. The revisionist raised a procedural issue regarding the Tribunal's failure to consider the Application under Section 12-B of the Act. The Court acknowledged the oversight and directed the Tribunal to reconsider this issue along with the main tax disputes. The Court allowed the revision, remanding all issues for fresh consideration by the Tribunal in accordance with the law.

In conclusion, the High Court of Allahabad remanded the case back to the Tribunal for a comprehensive review of tax liabilities on sales to authorized dealers, machinery leasing, and procedural matters under the U.P. Trade Tax Act, 1948. The judgment emphasized the importance of considering agreement clauses, assessment orders, and legal principles in tax disputes to ensure correct application of the law.