2020 (4) TMI 237 - HC - VAT and Sales Tax

Intra-state transaction or Inter state sale - transaction of the assesses when the seeds have been procured from the farmers for their onward transmission for certification and other processes to its Kota plant - HELD THAT - The procurement of such seeds is taxable within the State of U. P. It has been admitted that the farmers are paid 90 percent of the price at the stage of when the said transaction takes place and the remaining amount is paid depending upon the quality of certification of the seeds issued by the unit at Kota. The Tribunal has rightly held that this aspect of the transaction culminated in the State of U. P. wherein the procurement of the said seeds takes place from the farmers by the assessee through their contractor is an intra-State sale which is totally covered by the provisions of Trade Tax Act. There is no infirmity with the order of the Tribunal which has delved into all the aspects including various contracts and determined that sale of seeds by farmers is taxable in U.P. - There is no material on record which can lead this Court to take a different view other than taken by them. There is no reason to interfere with the same. Revision dismissed.

Summary

Issues involved:
Assessment of tax on the transaction of procuring seeds from farmers and sending them to another state.

Detailed Analysis:

1. Background and Common Judgment:
The revisions relate to assessment years 2004-05, 2005-06, and 2006-07 arising from a common order by the Commercial Tax Tribunal. The revisionists challenged the Tribunal's decision rejecting their appeal against the first appellate order.

2. Arguments by Revisionists:
The revisionists, public limited companies, argued that their transactions involving procuring seeds from farmers for their Kota plant were inter-State and not taxable in Uttar Pradesh. They contended that the seeds were grown under their engineers' supervision and sent to Kota for testing and grading.

3. Revenue's Position:
The Revenue argued that the transactions involved two sets: procurement from farmers and transmission to Kota. The assessing authority taxed the procurement within U.P., which the first appellate authority and Tribunal upheld as just under the U.P. Trade Tax Act.

4. Tribunal's Decision:
The Tribunal found the procurement taxable in U.P., while the transmission to Kota was an inter-State transfer not subject to U.P. taxation. The Tribunal's decision was supported by the Revenue, stating that all relevant aspects were considered, and no infirmity existed.

5. Court's Analysis and Conclusion:
The Court reviewed the agreements between the revisionists and contractors for seed procurement. It noted that the procurement from farmers was taxable in U.P. as per the agreements, with payments linked to seed quality certification in Kota. The Court upheld the Tribunal's decision, finding no reason to interfere as the lower authorities had concurrent factual findings.

6. Final Judgment:
The Court dismissed the revisions, stating they lacked merit. It affirmed the Tribunal's decision on the taxation of seed procurement within U.P. and the inter-State transfer to Kota. The questions of law were answered accordingly, and no grounds were found to overturn the Tribunal's order.