JUDGMENT Prakash Krishna, J.
1. These two revisions are directed against the common order dated 9th February, 1993, passed by the Sales Tax Tribunal, Agra in two connected second appeal Nos. 324 of 1989 and 314 of 1991 for U.P. and Central respectively.
2. The dispute relates to the assessment year 1984-85 (U.P, and Central), The applicant is a registered dealer engaged in the business of oils oil cakes and organic fertilizers etc. The acceptance of the account books for the relevant assessment years is not in dispute, However, the Asstt. Commissioner (Assessment) on examination of the account books rejected the claim of the applicant regarding non taxability of sale of pulsa de-oiled cake amounting to Rs. 19,528/- and lumba de-oiled cake amounting to Rs. 5880/- and subjected to these two sales at the rate of 4%, rejecting the claim that they were cattle fodder or organic fertilizer in respect of turn over relating to U.P. Similarly, it rejected the claim of the dealer/applicant with regard to inter State sales of aforesaid two items and levied the tax under the Central Sales Tax Act for the assessment year in question. The assessing authority, besides rejecting the claim of exemption from tax of the aforesaid two items, imposed interest also under Section 8(1) of the U.P. Sales Tax Act. The said orders have been confirmed by the Tribunal by the order under revision.
3. Since the common questions of fact and law are involved in both these revisions, they were heard together and are being disposed of by a common order.
4. Learned Counsel for the applicant in support of the revisions submitted two points namely, (i) turn over of lumba de-oiled cakes and pulsa de-oiled cakes are exempt being cattle fodder in view of exemption notification issued under Section 4 of the U.P. Sales Tax Act; (ii) since there was a classification dispute, the authorities below were not justified in levying the interest on such turn over.
5. The learned Counsel for the applicant on the first point submitted that cattle fodder is exempt under the exemption notification issued under Section 4 of the Act. Elaborating the argument it was submitted that the pulsa de-oped and lumbaa de-oiled cakes being included in the fodder of cattle fodder are liable to be exempt. By subsequent notification dated 31st January, 1985 issued under Section 3-D of the Act the earlier notification dated 7.9.1981 was amended. The de-oiled cake has been made taxable w.e.f. 3/4/1975 vide notification No. 2994 and the rate of tax was fixed at the rate of 4% by the subsequent notification dated 31.1.1985, vide entry No. 10. It was submitted that notwithstanding the notification, if any, issued under Section 3-D of the U.P. Sales Tax Act, the commodity having been declared non taxable by a prior notification issued under Section 4 of the Act, no tax liability can be fastened on the dealer/applicant. In contra, the learned Standing Counsel submitted that assuming for a moment that the oil cake was cattle fodder but it having been specifically made taxable by the subsequent notification issued under Section 3-D of the Act there is no error in the order of the Tribunal.
6. I have given careful consideration to the respective submissions of the learned Counsel for the parties. The controversy involved in the present revision is no longer resintegra and is fully covered by the judgment of the Supreme Court in the case of Commissioner of Sales Tax of U.P. v. Agra Belting Works 1987 UPTC 850. The Supreme Court has considered the notification issued under Section 4 and 3-A of the Act and has come to the conclusion that when a notification under Section 4 granting exemption from liability, a subsequent notification under Section 3-A prescribes the rate of tax, it is beyond doubt that the intention to withdraw the exemption and make the sale liable to tax at the rate prescribed in the notification is there. As the power both for grant of exemption and variation of the rate of tax vests in the State Government and it is not requirement of the Statute that a notification of recall of exemption is a condition precedent to imposing tax at any prescribed rate by a valid notification under Section 3-A, the Supreme Court rejected the contention of the assessee which was accepted by the High Court. It has been held when the power to grant exemption by issuing notification under Section 4 of the Act and to levy tax on a commodity both vests in the State Government and intention to levy tax is clear, there is no justification for ndt giving effect to the notification issued subsequently levying tax on the commodity. The Tribunal has, therefore, rightly placed upon the aforesaid judgment of the Apex Court and the learned Counsel for the applicant could not place any material before me to take a view different from the one taken by the Tribunal. I find no legal infirmity in the order of the Tribunal, so far as point No. 1 is concerned.
7. Learned Counsel for the applicant also placed reliance upon a judgment of this Court in the case, of Commissioner of Trade Tax v. S/S Paras Ram Lakshi Ram (2005) 41 STR 42. The reliance placed upon the said judgment is misplaced one. The controversy involved therein was totally different and the law laid down therein was in a different factual context. No such controversy was involved therein as it is involved here. The Court was not called upon to adjudicate as to what would happen if an item which has been granted general exemption under Section 4 of the Act is subsequently made taxable by issuing a fresh notification under Section 3-D of the Act. The sad ruling, therefore, does not support the argument of the learned Counsel for the applicant.
8. Learned Counsel for the applicant then submitted that in any view of the matter the applicant was disputing the classification of the commodity in question. It was submitted that according to the applicant's case the commodity in question was not liable to be taxed being cattle fodder, an exempted item, but it has been held to be otherwise. There being a dispute with regard to the applicability of correct rate of tax and as such there was a classification dispute, no interest could be charged from the applicant. On the other hand the learned Standing Counsel submitted that the dispute raised by the applicant was for the sake of the dispute and as such the order levying a penalty was correctly affirmed by the Tribunal.
9. After hearing the learned Counsel for the parties, it does appear that the applicant since the very beginning raised a dispute with regard to the applicability of correct rate of tax on the turnover of pulsa and lumba de-oiled cakes. In this facts situation the Supreme Court in the case of CST. v. Hindustan Aluminium Corporation 1989 U.P.T.C. (S.C.) has held that when there is a classification dispute of a commodity the correct rate of tax would be known only after finalization of the assessment order and in such type of cases the levy of interest Under Section 8(1) of the Act is unjustified. Sub Section (1) has no application to such a situation.
10. Respectfully following the aforesaid judgment of the Supreme Court, I find sufficient force in the argument of the learned Counsel for the applicant and accordingly it is held that the order demanding interest by the authorities below under Section 8(1) of the Act is legally incorrect.
11. In view of the above discussion, both the revisions are hereby allowed in part as indicated above. The demand of levy of interest under Section 8(1) of the Act is hereby set aside and to that extent the order of the Tribunal stands modified. No order as to costs.