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TMI Blog2019 (9) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... ever issued by the Department of Agriculture, Uttar Pradesh to specify the percentage of Phosphatic contents in Single Super Phosphate (SSP). The clear legal position that emerges is, de hors notification No. 784 dated 31.3.1995, it may have been permissible to the revenue authorities to tax the value of Gypsum (CaSO4.2H2O) [as Gypsum is a non-Phosphatic component of Single Super Phosphate (SSP)] if such guidelines had been found existing. However, in absence of such exclusionary clause in that notification, it is not permissible for the revenue authorities to break the identity of Gypsum (CaSO4.2H2O) so as to determine the percentage value of Sulphur in Gypsum (CaSO4.2H2O) only with the object of imposing tax on the value of Sulphur. The questions of law are answered in the negative i.e. in favor of the applicant-assessee and against the revenue. - Sales/Trade Tax Revision No. - 1068 of 2008, 188 of 2010, 1051 of 2008, 1052 of 2008, 1067 of 2008, 1064 of 2008, 1059 of 2008, 1070 of 2008, 1056 of 2008, 1069 of 2008, 1066 of 2008 And 1060 of 2008 - - - Dated:- 12-9-2019 - Sales/Trade Tax Revision No. - 1057 of 2008, 1062 of 2008, 1065 of 2008, 1058 of 2008, 1071 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ca3(PO4)2 Tri Calcium Phosphate + 2H2SO4 Sulphuric Acid + 4H2O Water = CaH4(PO4)2 Mono Calcium Phosphate + 2CaSO4.2H2O Gypsum 4. Undisputedly, Single Super Phosphate (SSP) is a compound of Mono Calcium Phosphate [CaH4(PO4)2] and Gypsum (CaSO4.2H2O). Though, it is undisputed that Gypsum (CaSO4.2H2O) sold for agricultural use had been separately made exempt from tax, however, Sulphur contents in Gypsum (CaSO4.2H2O) have been held to be taxable, in absence of any information being given by the Department of Agriculture, Government of U.P. In the appeal proceedings arising from the final assessment order, the Tribunal has reasoned, only the Phosphatic component in Single Super Phosphate (SSP) was exempt under notification No. 440 dated 12.02.2001. The other components of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcentage of Sulphur components? (iii) Whether, there being no guidelines issued by the Department of Agriculture, Uttar Pradesh as required under the notification No.440 dated 12.02.2001 regarding percentage of taxable component in respect of Single Super Phosphate and thus the Sulphur component present in Single Super Phosphate being indeterminate, the Commercial Tax Tribunal was legally justified in upholding the taxability of Sulphur component in Single Super Phosphate contrary to law laid down by Hon'ble Supreme Court of India in the case of Govind Saran Ganga Saran (supra)? 7. Heard Sri Nikhil Agarwal, learned counsel for the applicantassessee and Sri B.K. Pandey, learned Standing Counsel for the revenue. 8. Giving the genesis of the present revisions, learned counsel for the assessee has first referred to the exemption notification No. KA.Ni.-2- 440/XI-9(113)/99-U.P. Act 15-48-Order-(13)-2001 dated 12.2.2001. It reads as below: Whereas, the State Government is satisfied that it is necessary so to do in the public interest; Now, therefore, in exercise of the powers under Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers under clause (a) of Section 4 of Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948), read with Section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No. 1 of 1904) and in supersession of Government notification No. ST-2-1419/XI-9(51)/91-U.P. Act-XV/48-Order-91, dated August 30, 1991, the Governor is pleased to direct that, with effect from April 1, 1995, no tax under the said Act No. XV of 1948 shall be payable on sale of Gypsum (IS Code 6046) and Pyrite for agricultural use. 10. Next reference has been made to a letter dated 17.05.2008 issued by the Director of Agriculture, Uttar Pradesh to the assessee stating that the presence of Sulphur in Single Super Phosphate (SSP) occurs as a result of following chemical reaction : Ca 3 (PO4) 2 Tri Calcium Phosphate + 2H 2 SO 4 Sulphuric Acid + 4H 2 O Water = CaH 4 (PO 4 ) 2 Mono Calcium Phosphate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component in the Single Super Phosphate (SSP), however, there is no material to doubt the correctness of the chemical reaction and the certification made by the Agriculture Department, vide its communications dated 17.05.2008 and 22.12.2008 read with communication dated 25.11.2008. 16. Thus, it is his submission that the Single Super Phosphate (SSP) being a chemical compound of Mono Calcium Phosphate [CaH4(PO4)2] and Gypsum (CaSO4.2H2O) is exempt. Insofar as exemption notification No. 440 dated 12.02.2001 is concerned, the value of entire quantity of Mono Calcium Phosphate [CaH4(PO4)2] would remain exempt and there is no quarrel with respect to the same inasmuch as undisputedly, there is no Sulphur content in the same. Then, referring to Gypsum (CaSO4.2H2O), it has been submitted that in any case, Gypsum (CaSO4.2H2O) for agriculture use was clearly exempt under the pre-existing exemption notification No. 784 dated 31.03.1995. Therefore, the fact that the Sulphur was contained in Gypsum (CaSO4.2H2O) would be wholly irrelevant and extraneous to the issue. 17. In any case, it has been submitted, in absence of any percentage being specified by the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , plainly, Sulphur and Calcium Sulphate have two different chemical identities. Sulphur is an element in its elementary form while the Calcium Sulphate is a compound being a Sulphate of Calcium. Therefore, even if the reasoning pursued by the revenue authorities were to be accepted to any extent, it may never lead to the conclusion reached by the revenue authorities that Single Super Phosphate (SSP) comprised of Sulphur, inasmuch as the Sulphur in its elementary form was not found present to any extent in the Single Super Phosphate (SSP), manufactured by the assessee. 21. Reliance has also been placed on the decision of the Supreme Court in the case of Govind Saran Ganga Saran Vs. Commissioner of Sales Tax and Others., 1985 (Supp) SCC 205 , to submit that the four components of tax imposed must be found existing before a valid levy may arise. Any uncertainty or vagueness, either as to the character of the imposition, or to the person on whom the levy has been imposed or as to the rate on which the tax has been imposed or as to the measure or the value on which the rate is to be applied, would be fatal to the levy. In the instant case, besides other, there is no me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by weight, minimum 11.0 2. Single Super Phosphate (14% P2O5 Powdered) (i) Moisture, per cent by weight, maximum 12.0 (ii) Free phosphoric acid (as P2O5), per cent by weight, minimum (iii) Water soluble Phosphates (as P2O5), per cent by weight, minimum 14.0 (iv) Sulphur (as S), per cent by weight, minimum 11.0 25. Since the assessee had manufactured and sold Single Super Phosphate (SSP) in terms of the prescriptions made by the Central Government, it has been submitted, undisputedly, the commodity sold by the assessee contained minimum Sulphur (11%) by weight. Thus, it has been submitted, there is no dispute as to the Sulphur contents in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Single Super Phosphate (SSP) and not Single Super Phosphate (SSP) as a commodity was exempt. As to the percentage of Phosphatic component in Single Super Phosphate (SSP), the legislature clearly provided that the guidelines issued by the Department of Agriculture, Uttar Pradesh, would be binding. Admittedly, no guidelines were ever issued by the Department of Agriculture, Uttar Pradesh to specify the percentage of Phosphatic contents in Single Super Phosphate (SSP). 31. Reliance placed by learned Standing Counsel on the administrative order issued by the Central Government does not satisfy the condition contained in exemption notification No. 440 dated 12.2.2001. First, the Central Government was clearly not the authority specified in the exemption notification for that purpose. Only the Department of Agriculture, Uttar Pradesh was recognized to prescribe the percentage of Phosphatic component in Single Super Phosphate (SSP). Therefore, it is wholly erroneous on part of the Tribunal and the revenue authorities to have relied on that administrative order issued by the Central Government for the purpose of determining the percentage of exemption granted to Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not possible to allow the revenue to ignore the specific exemption notification No. 784 dated 31.3.1995 to tax Sulphur allegedly present in Gypsum (CaSO4.2H2O). 34. Thus, to the Department of Agriculture, Uttar Pradesh, the Single Super Phosphate (SSP) is a compound comprised of two parts, the first being the Phosphatic component i.e. Mono Calcium Phosphate [CaH4(PO4)2] and the other is Gypsum (CaSO4.2H2O). With respect to the Mono Calcium Phosphate [CaH4(PO4)2], there is no dispute between the parties that the same was wholly exempt under notification No. 440 dated 12.2.2001. 35. Then, in the context of tax sought to be imposed on Sulphur, it is seen that Sulphur is present in Single Super Phosphate (SSP) as Calcium Phosphate in Gypsum (CaSO4.2H2O). The state legislature had already identified Gypsum (CaSO4.2H2O) for agriculture use as a commodity exempt from tax under notification No. 784 dated 31.3.1995. 36. Insofar as the commodity Single Super Phosphate (SSP) has no use other than the agricultural use as a fertilizer, reading exemption notification No. 440 dated 12.2.2001 and the exemption notification No. 784 dated 31.3.19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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