Allahabad High Court
The Commissioner, Commercial Tax U.P. vs S/S Munni Lal Mahadev Prasad on 2 February, 2021
Author: Saumitra Dayal Singh
Bench: Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 38 Case :- SALES/TRADE TAX REVISION No. - 53 of 2021 Revisionist :- The Commissioner, Commercial Tax U.P. Opposite Party :- S/S Munni Lal Mahadev Prasad Counsel for Revisionist :- Ravi Shanker Pandey Hon'ble Saumitra Dayal Singh,J.
1. Heard Sri Ravi Shanker Pandey, learned Standing Counsel for the revenue and Sri Aditya Pandey, learned counsel for the assessee.
2. The present revision has been filed against the order of the Commercial Tax Tribunal, Kanpur Bench, Kanpur dated 17.07.2020. By that order, the Tribunal has allowed the appeal filed by the assessee and modified the rate of tax assessed on portland cement, assessed at 12% by the assessing authority, to 9% relying on notification no.592 dated 27.02.1998.
3. The revision has been pressed on the following question of law:
"I. Whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in levying the tax on the sale of cement @ 9% which is not a sale of any manufacturer of cement within the State of U.P. but the same was purchased from Satna outside the State of U.P.?"
4. Undisputedly, the State Government had issued notification no.592 dated 27.02.1998 in exercise of powers under Section-5 of UP Trade Tax Act, 1948 (hereinafter referred to as the 'Act') whereby the State Government, in its wisdom, granted a rebate of tax at the rate specified in that notification being 25% and 50% on goods manufactured using fly ash. Thus, a rebate of tax at the rate 25% was granted on sale of goods containing 10%-30% fly ash by weight and rebate of tax at the rate 50% on goods having fly ash exceeding 30%.
5. The said rebate of tax was made subject to fulfilment of certain conditions, one of them being that the goods should have been manufactured in a unit located in a specified area falling within the State of U.P. Yet another condition was imposed with respect to the fly ash used in the manufacture of goods having been procured from within the State of U.P. Also, the dealer claiming rebate was required to maintain specified records and the fly ash contents was stipulated to be mentioned on the goods or the packing material.
6. The stipulation contained in the aforesaid notification with respect to manufacture of goods inside the State of U.P. was challenged by M/S Jai Prakash Associates. The challenge was sustained and the stipulation was held to be discriminatory. The matter was carried to the Supreme Court in State of U.P. & Others Vs Jai Prakash Associates Ltd. 2013 UPTC 1345 where the decision of this Court holding the first condition regarding manufacture of goods inside the State of U.P. invalid, was upheld.
7. At present, the only controversy that has been raised by the revenue is that the assessee had not maintained the specified accounts and had thus not fulfilled one of the conditions for grant of rebate of tax.
8. With respect to such objection, the Tribunal has found that undisputedly the petitioner is a trader who had purchased the goods namely portland cement containing fly ash in excess of 10% weight. It has also been held that the condition to maintain the documents is clearly one applicable to the manufacturers and not to traders. Further, it has been observed that against the declaration made by the assessee that the goods contained more than 10% of fly ash content, by weight, revenue has not brought on record any adverse material.
9. Having heard learned counsel for the parties and having perused the record, though the notification does not make any separate consideration of the manner in which claim for rebate may be made by traders yet it cannot be forgotten that the rebate granted is not to a person but to the goods. In the instant case, State Government has notified that goods containing more than 10% fly ash contents by weight, would be entitled to a rebate of tax @ 25%. Any goods that would have been thus manufactured containing more than fly ash content would attract the rebate of tax. Merely because the goods may exchange hands from the manufacturer to the trader in a retail chain, before they reach the consumer, the same would be of no material consequence to the rate of tax applicable to such goods.
10. Once goods are found eligible to rebate of tax owing to fly ash content of more than 10%, and that fact gets established at the hands of the manufacturer then subject to the goods remaining the same, they would continue to remain taxable at the reduced rate (upon rebate being given effect to), though they may change hands many times, before they come to be consumed.
11. In that light, the observations of the Tribunal that the goods were certified by the manufacturer to be containing fly ash more than 10% by weight, has remained unrebutted, is material. It also does not appear that the goods had been taxed at the full rate when they came to be sold to the assessee. In fact, it appears that the goods were brought by the assessee at the reduced rate of tax.
12. Also, it would be wholly unworkable to require all traders in the retail chain to maintain accounts of the description given in the notification. In fact the traders cannot maintain such document as they are not the manufacturer, who alone may certify the contents of the goods.
13. Therefore, the enquiry to be made in the assessment of a trader would be only two fold. First, whether upon sale by the manufacture the goods were entitled to rebate. Once the claim of rebate was established at the hands of the manufacture, the only thing remaining relevant to be examined would be whether the identity of the goods sold by the trader was the same.
14. In the facts of the present case, the revenue authorities rejected the claim of the assessee only on account of absence of accounts required to be maintained. No other reason was cited to doubt the fly ash content in the portland cement dealt with by the assessee.
15. Looked in that light, the Tribunal has not committed any error in allowing the assessee's appeal. Order does not suffer from any infirmity, the revision lacks merit and is accordingly dismissed.
Order Date :- 2.2.2021 S.Chaurasia