At, High Court of Judicature at Allahabad
By, THE HONOURABLE MR. JUSTICE MAHESH CHANDRA TRIPATHI & THE HONOURABLE MR. JUSTICE ASHOK BHUSHAN
For the Appellant: Ashok Mehta, Advocate. For the Respondent: Bharat Ji Agarwal, M. Manglik, P. Agarwal, Advocates.
Ashok Bhushan, J.
1. These revisions filed u/s 11 of the U.P. Sales Tax Act, 1948 (Trade Tax Act, 1948) have been placed before this Division Bench on a reference made by learned Single Judge hearing the revision vide its order dated 10.5.1999 doubting the correctness of a judgment of learned Single Judge reported in Oudh Sugar Mills Ltd. v. CST 1987 U.P.T.C. 1034 and other three other judgments following the above judgment. The facts giving rise to the above mentioned reference need to be noted first. It shall be sufficient to note the facts giving rise to Sales Tax Revision No. 1238 of 1989 for deciding all these cases. The assessee M/s. Upper Doab, Sugar Mills Ltd. is a manufacturer of denatured spirit, rectified spirit and foreign liquor. The assessee in the Assessment Year 1974-75 disclosed taxable turnover of Rs. 19,72,183/- under the Central Sales Tax Act and deposited a sum of Rs. 5,90,24/-. The Assessing Authority accepted the book version and created a tax liability of Rs. 65,210/-. The assessee filed an appeal before the Assistant Commissioner (Judicial) Sales Tax. The assessee before the appellate authority claimed that denatured spirit and rectified spirit are alcohol which is exempted u/s 4 of the U.P. Sales Tax Act, 1948 (hereinafter referred to as '1948 Act') hence, no tax can be imposed. It was submitted before the appellate authority that since tax is exempted under the 1948 Act, there is no liability to pay any central sales Lax. The appeal was dismissed on 18.7.1980 against which the assessee filed a second appeal before the Tribunal. Before the Tribunal, the assessee submitted that by virtue of U.P. Act No. 8 of 1975 Section 4 of the 1948 Act has been amended and w.e.f. 2.5.1974 rectified spirit and denatured spirit were unconditionally exempted from tax hence, there was no liability to pay central sales tax also. The Tribunal relying on its earlier judgment in M/s. Swaroop Vegetable Products Industries Ltd. accepted the submission of the assessee and deleted the central sales tax on rectified spirit and denatured spirit. Against the order dated 27.7.1989, passed by the Tribunal, the revision No. 1238 of 1989 has been filed by the Commissioner Sales Tax. In the revision challenging the order of the Tribunal, grounds have been taken that during the relevant year rectified spirit was taxable under the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 (hereinafter referred to as T939 Act') although it was exempted under the 1948 Act hence, central sales tax was payable. The ground has further been taken that assessee himself has accepted the leviability of central sales tax on his turnover hence, he having himself admitted the tax liability and having filled 'C Form', he should not be allowed to contest the taxability on rectified spirit. The revision came for hearing before a learned Single Judge before whom the learned counsel for the assessee has placed reliance on the judgment of Oudh Sugar Mills Ltd. (supra) wherein learned Single Judge of this Court has held that there is no liability of central sales tax according to Section 8(2A) of the Central Sales Tax Act, 1956 (hereinafter referred to as T956 Act'). Learned Single Judge (Justice M.C. Agarwal) hearing the revision was of the view that learned Single Judge in Oudh Sugar Mills (supra) has not correctly interpreted Section 8(2A) of the 1956 Act. Learned Single Judge hearing the revision took the view that alcohol being taxable under the 1939 Act, there shall be liability of central sales tax in accordance with Section 8(2A) of the 1956 Act. Doubting the correctness of the aforesaid judgment and three other judgments of the learned Single Judge of this Court following the aforesaid judgment, learned Single Judge has referred the matter for constituting a Larger Bench for deciding these cases.
2. We have heard Sri C.B. Tripathi, learned special counsel for the revisionist and Sri Bharat Ji Agarwal, learned Senior Advocate assisted by Sri Piyush Agarwal for the assessee.
3. Before we note and consider the submissions made by learned counsel for the parties in support of their respective cases, it is necessary to refer the necessary constitutional and statutory provisions governing the field. The provincial Legislature in exercise of powers u/s 75 of the Government of India Act, 1935 enacted an Act namely; the United Provinces Sales of (Motor Spirit, Diesel Oil and Alcohol) Taxation Act, 1939 to provide for the levy of a tax on the retail sales of motor spirit. The provincial Legislature again enacted the U.P. Sales Tax Act, 1948 (U.P. Trade Tax Act, 1948) to provide for levy of a tax on the sales or purchase of goods in Uttar Pradesh. Both the aforesaid enactments were enacted by the provincial Legislature exercising the legislative powers given in Section 100 of the Government of India Act, 1935 read with Entry 48A of List II of the Seventh Schedule to the Government of India Act, 1935. List II i.e. Provincial Legislative List contained Entry 48 which is to the following effect:
48. Taxes on the sale of goods and on advertisements.
4. Section 2 of the 1948 Act contains definition of various terms. Section 3 provides for Liability to tax under the Act. Section 3A provides for Rate of tax. Section 4 provides for exemption from tax. Section 3 was a charging Section of 1939 Act. By U.P. Act No. 12 of 1974, amendments were made in 1939 Act. The definition of 'alcohol' was inserted by Section 2(aaaa) which was to the following effect:
(aaaa) "Alcohol" means Ethyl Alcohol not being alcoholic liquor for human consumption and includes rectified spirit, denatured spirit and absolute alcohol.
5. Section 3(1)(c) provides for levy of tax on purchase of alcohol. Section 3(1)(c) is as follows:
there shall be levied at the point of first purchase of alcohol other than alcoholic liquor for human consumption in the State a tax at the rate of eight paise per litre, and such tax shall be collected
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