9911796707
TMI Blog2016 (10) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... nter-State trade or commerce” is quite broad and wide. An issue may arise as to whether the stock transfer outside the State in terms of directions issued by the Central Government can be considered as sale or transaction in the course of inter-State trade or commerce. Sub-section (6) is a specific provision which deals with the case of the dealer who has been issued the recognition certificate and has purchased goods without payment of tax or at concessional rates, but has sold the manufactured goods or packaged goods otherwise than by way of sale in the State, or in the course of inter-State trade or commerce or export out of India. The provision specifically deals with cases where the dealer manufactures or packs the notified goods and has taken benefit of lower/concessional or nil rate of tax on the raw material but is unable to fulfill the intendment, i.e., he has not been able to sell the notified goods by way of sale within the State or in course of inter-State state or commerce or by way of export. In such cases, the dealer is liable to pay the amount of difference on the amount of sale or purchase of such goods on which concession or nil rate of tax was paid on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section that if a recognition certificate holder sells goods manufactured by it out of the raw material purchased at the concessional rate of tax against Form III-B in a manner otherwise than prescribed under Section 4-B(2), the said dealer shall be liable to penal action equal to three times of the tax, thus saved by the said dealer on purchase made against Form III-B. 3. At the time of scrutiny, the assessing authority noticed that the respondent had made purchases of natural gas against Form III-B at the concessional rate of tax, and after manufacture of the notified goods, that is, fertilizers, out of the said purchases of natural gas purchased against Form III-B, some of the finished goods were transferred outside the State of Uttar Pradesh. The Revenue issued show cause notice to the respondent for the assessment year 2005-06 and after considering the explanation offered, imposed penalty of ₹ 10,46.98,335/- vide order dated 28.03.2009. Being aggrieved, the respondent preferred an appeal under Section 9 of the Act before the Joint Commissioner (Appeals)-1, Commercial Tax, Bareilly being Appeal No. 798 of 2009, and the appellate authority vide its order dated 12.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% minus 15% = 5%, availing the benefit at the rate of 15% and paying tax at the rate of 5%. The production of urea has been done by using the natural gas obtained at a concessional rate and the manufactured product, that is, urea has been sent by way of stock transfer outside the State in clear violation of Section 3-B and 4-B(2) of the Act. It has been further opined by him that the assessee had acted contrary to the provision of law by purchasing raw material at a concessional rate and thereafter sending the finished goods as stock transfer outside the State which does not come under the term sale and no revenue is generated by the State. Proceeding further, the assessing officer has held thus:- The trader without acting under the provisions of the Section 3B and 4B(2) of the Uttar Pradesh Trade Tax Act, had caused loss of revenue to the State. The State had lost revenue at the rate of 15% on the purchase of raw material used in the produced goods sent as stock transfer, which could have received had these were not purchased against Form 3B. Because the tax has been paid at the rate of 5% against form 3B. Had the trader not declared false declaration against Form 3B, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Section 3-B. The judicial member has arrived at the said conclusion on the foundation that Section 4-B has nothing to do with the fact that how the notified goods are to be disposed of because the provision of Section 3-B is not applicable in case the raw material is used for production of the notified goods mentioned in the recognition certificate. The learned member has expressed the view that the decisions in Camphor and Allied Products Ltd. (supra) and Bareilly (supra) are fully applicable and the case of the assessee is covered by the principles stated therein. He also took note of the fact that the decisions in Camphor and Allied Products Ltd. (supra), Bareilly (supra) and Manoharlal Heeralal (supra) have not been assailed before the Supreme Court and, therefore, they are binding precedents in the field. Eventually, the learned member came to hold thus:- In the present case it is established that the trader had utilized natural gas purchased against the Form 3B in the production of the Urea . As such, in my opinion, proceeding u/s 3B should not have been initiated against the trader. The order which has been passed by the assessing officer u/s 3B of the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement of depositing late fee and conditions as may be prescribed, the assessing authority shall grant to him in respect of such goods a recognition certificate in such form and subject to such conditions, as may be prescribed. Explanation.-For the purposes of this sub-section,-(a) goods required for use in the manufacture shall mean raw materials, processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, fuels or lubricants ; and (b) notified goods means such goods as may, from time to time, be notified by the State Government in that behalf. xxxx xxxxx (6) Where a dealer in whose favour a recognition certificate has been granted under sub-section (2) has purchased any goods after payment of tax at concessional rate under this section, or as the case may be, without payment of tax and the goods manufactured out of such raw materials or processing materials or manufactured goods after being packed with such packing material are sold or disposed of otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of the territory of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of fertilizer and as per the recognition certificate, it is entitled to procure natural gas at a concessional rate and the respondent has procured natural gas from two sources (1) from GAIL at a concessional rate against Form III-B and (2) from outside the State from BPCL/GAIL at normal tax. Learned counsel would submit that the respondent has disposed of urea by local sale and has also transferred the stock to various States which have been pursuant to and in compliance of Movement Orders issued by the Government of India from time to time. He has referred to directions issued by the Ministry of Chemicals Fertilizers under the Fertilizer (Movement Control) Order, 1973. It is urged by him that as per the Fertilizer (Movement Control) Order, 1973 unless the Government of India authorizes a manufacturer to make stock transfer of a particular quantity of urea in a particular month, no urea can be transferred/sold from one State to another. Learned counsel would put forth that the State never disputed the stock transfers made under Fertilizer (Movement Control) Order, 1973. Learned counsel would further propone that show cause notice was issued under Section 3-B for alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption certificate was granted to him. Therefore, the assessee cannot be deemed to have issued a wrong certificate. It also took note of the decision relied upon by the Revenue in Puri Industries v. Commissioner of Sales Tax 1988 UPTC 1197, which took a different view and thereafter came to hold as follows:- 28. The petitioner purchased RFO/furnace oil against form III-B for manufacture of its final product, namely, camphor and other allied products. Section 3-B clearly shows that it is the user of the goods which is relevant for the purpose for which form III-B was given and not how the finished product or manufactured goods are sold. Admittedly form III-B was issued for use in manufacture of camphor and other allied products and RFO/furnace oil for which the recognition certificate was granted. Hence in our opinion the petitioner cannot be deemed to have issued any wrong or false certificate and tax cannot be legally charged under Section 3-B of the Act. xxxxx xxxxx 31. In the present case RFO and furnace oil have admittedly been used in the manufacture of camphor and allied products for which recognition certificate was granted. Hence it cannot be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional rates, but has sold the manufactured goods or packaged goods otherwise than by way of sale in the State, or in the course of inter-State trade or commerce or export out of India. The provision specifically deals with cases where the dealer manufactures or packs the notified goods and has taken benefit of lower/concessional or nil rate of tax on the raw material but is unable to fulfill the intendment, i.e., he has not been able to sell the notified goods by way of sale within the State or in course of inter-State state or commerce or by way of export. In such cases, the dealer is liable to pay the amount of difference on the amount of sale or purchase of such goods on which concession or nil rate of tax was paid on account of issue of the requirement certificate and the amount of tax calculated @ 4%. The sub-section is a particular and a specific section which deals with and specifies the consequences when the dealer is unable to meet and comply with intendment. The sub-section (6) would, thus, be applicable. 18. Section 3-B undoubtedly commences with a non-obstante clause, but the provision has to be read harmoniously with sub-section (6) to Section 4-B. Any other inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
