9911796707
TMI Blog1980 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... he AAC on the ground that on account of the amendment in the U.P. Sales Tax Act in 1970, the amount of purchase tax realised may have to be paid by the assessee and further that in any event it did not constitute a trading receipt. The revenue appealed against this order and the matter was remanded by the Tribunal for the purposes of scrutinising the record of the sales tax case and finding out whether the assessee was liable to pay Rs. 57,76910 as purchase tax for the relevant year. On the appeal being reheard, the AAC found that the purchase tax liability of the assessee for the financial year 1968-69, which was the relevant previous year for the assessment year 1969-70, had been determined at Rs. 57,855.65 by an order dated March 21, 1973. Taking into account the fact that the assessee had furnished quarterly returns for the relevant period, he held that the entire collection had been made by the assessee towards his sales tax liability. On this finding he held that the purchase tax collection constituted a liability which could not be treated as income of the previous year on the mere fact that the assessment order was passed later. The revenue appealed to the Tribunal. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder any other section in respect of the goods so notified. " There is no dispute that purchase tax was not paid on arhar, that is, the full grain of arhar dal, without its being dehusked. The assessee appears to have purchased arhar dal, that is, dehusked and broken arhar from the purchasers of arhar dal. In the case of Tilok Chand Prasan Kumar v. STO [1970] 25 STC 118 (All), it was held that dehusking of arhar dal and breaking the dal into smaller pieces does not change the nature of arhar dal so as to attract purchase tax at two points, one at the point of purchase of arhar dal as the full grain and the other of arhar dal after it has been dehusked and broken into smaller pieces. The matter Was put thus at pages 120 and 121 of the report: " It seems to us that the dal purchased by the petitioner is essentially the arhar dal purchased by the dal mills. There is no change in the chemical composition of the dal. There is no essential physical change except that the dust is shaken off, the husk or covering is removed and the dal itself is broken down into smaller pieces. We specifically enquired of learned counsel for the parties whether there was any essential difference betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... har dal. He, however, became liable as a result of the amendment made in 1970, but in view of the subsequent amendment no liability for purchase tax can be fastened on him for those transactions. There is, however, an assessment order creating a liability for this amount passed on 21st March, 1973, which appears to have become final and the assessee has, also deposited the entire disputed amount of purchase tax. The Tribunal, while disposing of the appeal, has given a direction that the assessee will be entitled to the deduction in the year in which the deposit has been made. Counsel for the assessee contended that in as much as an assessment order under the U.P. Sales Tax. Act has been passed for the financial year 1968-69. which was the relevant previous year for the assessment year 1969-70, the Tribunal erred in not allowing the amount claimed as a deduction. It was contended that the decisions in Chowringhee Sales Bureau [1973] 87 ITR 542 (SC) and Sinclair Murray and Co. [1974] 97 ITR 615 (SC) cannot be appropriately applied to a case where the assessee was maintaining his accounts on the mercantile basis. It was urged that the principle laid down by the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82 ITR 363 (SC). The Calcutta High Court had occasion to consider this question in Chowringhee Saks Bureau P. Ltd. v. CIT [1977] 110 ITR 385 and again in the case of CIT v. Kumardhubi Engineering Works Ltd. [1978] 115 ITR 58 and has, after a detailed examination of the question, taken the same view which we have expressed earlier. Thus, where the mercantile system of accounting is being followed by an assessee he would be entitled to debit sales tax liability in the year in which that arose. But before such an entry can be made the liability must be a legal liability and not a mere hypothetical one. We have seen that in the year 1968-69, the assessee was not liable to pay purchase tax on arkar dal. Tilok Chand's case [1970] 25 STC 118 (All) only declared the true position of law and did not, as has been contended on behalf of the assessee, absolve the assessee of his liability as from the 8th January, 1969, when it was pronounced; the assessee was under no obligation to pay purchase tax under s. 3D on purchases of arhar dal as purchase tax had already been paid on arhar and the assessee was not the first purchaser of the basic commodity. Thus, in the year in which the assessee mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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