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TMI Blog2014 (6) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sale invoice. The purchasing dealer would be entitled for input-tax credit if the said amount is adjusted or set off, as the case may be. The circular of the Commissioner, Commercial Tax, dated April 17, 2008 insofar as it interprets section 76(6)(c) to the effect that benefit would only be given to those purchasing dealers who have actually paid the tax to the seller, is patently erroneous and against the provision of section 76(6)(c) of the Act. - Consequently, the circular dated April 17, 2008 of the Commissioner, Commercial Tax, insofar as it interprets section 76(6)(c), is patently erroneous and to that extent is quashed. Since the notice dated March 3, 2009 was issued on the basis of the said circular, the same is wholly illegal and without any basis and is also quashed. - Decided in favour of assessee. - Writ Petition Nos. 496,1901 (M/S) of 2009 & 285 (M/S) of 2011 - - - Dated:- 6-7-2011 - TARUN AGARWALA J. , J. TARUN AGARWALA J. M/s. Bhushan Steel Ltd., is engaged in the manufacture of steel and iron in Uttar Pradesh and holds an eligibility certificate under section 4A of the U. P. Trade Tax Act, 1948 pursuant to the notification dated February 21, 1997 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment of any industry in the State generally or in any district or part of a district in particular, it may on application or otherwise in any particular case or generally, by notification declare that to the dealers running new units whose date of starting production falls on a date prior to the date of commencement of this Act and dealers owning manufacturing units which have undertaken expansion, diversification or modernization or backward integration prior to the date of commencement of this Act and if such dealers hold an eligibility certificate issued under the provisions of section 4-A of the Uttarakhand (the Uttar Pradesh Trade Tax Act, 1948) Adaptation and Modification Order, 2002, Rules made or notifications issued thereunder, moratorium for payment of admitted tax in lieu of exemption from tax on sale of goods whether wholly or partly or at reduced rate, will be allowed subject to the conditions given in this section and such other conditions as may be prescribed or as the State Government may, by notification in the Gazette, specify. (2) to (5) . . . (6) Subject to other provisions of this section, the dealers holding eligibility certificate either granted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, within 30 days of the commencement of this Act, it shall be presumed that the dealer desires to continue as per provision (i) above. (c) any taxable dealer purchasing goods from such dealer holding eligibility certificate and who is exempt from tax, whether wholly or partially, shall be entitled to input-tax credit of the aggregate amount of tax charged in the sale invoice of the selling dealer and the amount of exemption from tax as per eligibility certificate, and for this purpose the selling dealer shall append a certificate in the sale invoice in the following pro forma. CERTIFICATE Certified that the dealer is entitled to exemption from tax at . . . % as per Eligibility Certificate No. . . . . . . . dated . . . and the amount of exemption from tax in this sale invoice comes to Rs. . . . . . . . A perusal of section 76(6)(b) indicates that the dealers who were enjoying exemption of tax for any period prior to October 1, 2005 when the Act came into force would also be entitled for exemption for the remaining period of exemption. Section 2(17) defines input tax . For facility, the said provision is extracted hereunder: 2. (17) Input tax in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for input-tax credit since the petitioner had not actually paid the tax to the selling dealer and was consequently not liable for any set-off on the said amount of tax. The petitioner, being aggrieved by the issuance of such notice, has filed the present writ petition praying that the respondents be restrained from imposing any tax pursuant to the notice dated March 3, 2009 and further prayed that the circular dated April 17, 2008 insofar as it relates to the denial of input-tax credit on the goods purchased from the selling registered dealer holding an eligibility certificate, be quashed. The respondents in the counter-affidavit have admitted that the petitioners are purchasing iron and steel from M/s. Bhushan Steel, who holds an eligibility certificate and is exempted under section 4A of the U.P. Trade Tax Act. The respondents contend that under section 76(6)(c), the petitioner would be entitled to input-tax credit only when he has paid the tax on the purchase of his goods and if the petitioner has not paid any tax on his purchase, he would not be entitled to any input-tax credit. In the light of the conflicting stand taken by the parties, the court has heard Sri Bharat Ji A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment amounts to payment of tax or receipt of tax by the taxing Department and consequently, the set-off or the input-tax credit is required to be given under section 76(6)(c) to the purchasing dealer. The word charge as defined in Concise Oxford English Dictionary (10th Edition), means a demand (an amount) as a price for a service rendered or goods supplied . Words and Phrases Permanent Edition defines charge as to lay on or impose as a load, tax, or burden; to tax or demand a price for a thing or service . Websters 3rd New International Dictionary (Unabridged) defines charge as to impose a pecuniary burden . From the aforesaid, it is clear that the words tax charged do not mean the tax actually paid by the purchasing dealer. It only refers to a liability which has been ascertained or quantified. It is only a demand which is reflected in the sale invoice and which is liable to be adjusted. The expression tax charged has to be understood in the context as explained aforesaid. In Commissioner, Trade Tax, U. P., Lucknow v. Shri Mahaveer Rolling Mills (P) Ltd., Fazal Ganj, Kanpur [2010] 36 VST 473 (All); [2010] UPTC 977, the court held that it was not necessary that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commissioner of Commercial Taxes [1991] 83 STC 234 (SC); [1992] Supp. 1 SCC 21. In the light of the aforesaid, the question of exemption arises only when there is a liability. Exigibility to tax is not the same as liability to pay tax. The former depends on a charge created by the statute and latter on computation in accordance with the provisions of the statute and Rules framed thereunder, if any. In the present case, the liability to pay tax chargeable under section 3 of the Act is different from quantification of the tax payable on assessment. The liability to pay tax and actual payment of tax are conceptually different and if there was an exemption, the dealer would be required to pay the tax in terms of section 3 of the Act. In the light of the aforesaid, the petitioner was liable to pay tax under the Act but for the exemption. Section 76(6)(c) clearly provides that a purchasing dealer would be entitled to input-tax credit of the amount of tax charged and this provision relating to exemption has to be liberally construed as held by the Supreme Court in Associated Cement Companies Ltd. s case [2004] 137 STC 389 (SC); [2004] UPTC 1226 In State of Punjab v. Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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