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TMI Blog2014 (4) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment in exercise of power under Section 3-H of the U.P. Trade Tax Act. Challenging the order so passed by the Tribunal, counsel for the petitioner contends that the assessment year 2007-08 has to be divided in two parts; first period being 01.04.2007 to 31.12.2007 i.e. the date up to which the U.P. Trade Tax Act was applicable and the second period w.e.f. 01.01.2008 to 31.03.2008 when the provisions of the Value Added Tax (VAT) became operative. It is case that for the period covered by the U.P. Trade Tax Act his total turnover did not exceed Rs. 50 lacs, therefore the provisions of Section 3-H were not attracted. It is his case that the department could not have applied the provisions of Section 18 of the U.P. Trade Tax Act for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act had exceeded Rs. 37.5 lacs. For the purpose reference was made to Section 3(2) read with Section 18 of the Trade Tax Act. For the purposes of appreciating the contention raised on behalf of the petitioner it is worthwhile to reproduce Section 3-H as was inserted by U.P. Act No. 9 of 2005. Section 3-H reads as follows: ?3-H. State Development Tax.-(1) There shall be levied a State Development Tax at the rate not exceeding one per cent of the Taxable turnover as the State Government may be notification specify on the dealers whose aggregate turnover as referred to in sub-section (2) of Section 3, exceeds fifty lakh rupees. The State Government Tax shall be realised in addition to the tax payable under any other provision of this Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , depot or agent inside the State in the course of inter-State trade or commerce or outside the State, is less than Two lakh rupees in the case of manufacturers and three lakh rupees in the case of other dealers, or such larger amount as the State Government may, by notification in the Gazette, specify in that behalf either in respect of all dealers in any goods or in respect of a particular class of such dealers.? From a simple reading of Section 3(2) it is apparently clear that the Section 3(2) is subject to the provisions of Section 18, inasmuch as it opens with the words 'no dealer shall, except as otherwise provided in Section 18, be liable to tax under sub-section (1)' of the said section. Section 18 provides for situations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the business by the assessee therefore stood discontinued under the U.P. Trade Tax Act after expiry of 9 months of the assessment year by operation of law. Therefore, provisions of Section 18 stood attracted in the facts of the case for the purposes of determination of the average turnover. Applying the principle as enumerated under Section 18, tax authorities have found that the aggregate determined turnover of the assessee was more than Rs. 37.50 lacs for a period of 9 months and have accordingly raised the demand of development tax at the rate of 1% under Section 3-H of the Trade Tax Act. It is no doubt true that the assessee has not discontinued his business. It is also true that because of the Trade Tax Act itself having been resci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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