Court No. - 1
Case :- SALES/TRADE TAX REVISION No. - 1394 of 2007 Revisionist :- M/S Kisan Sahkari Chini Mills Ltd. Opposite Party :- Commissioner Of Trade Tax U.P. Lko. Counsel for Revisionist :- Shakeel Ahmad Counsel for Opposite Party :- S.C.
Hon'ble Saumitra Dayal Singh,J.
1. The present revision has been filed by the assessee – M/S Kisan Sahkari Chini Mills Ltd. against the order of the Trade Tax Tribunal, Saharanpur dated 28.05.2007 passed in Second Appeal No.802 of 2003 for A.Y. 2000-01 (UP). By that order, the Tribunal has dismissed the appeal filed by the assessee and confirmed the order of the first appeal authority. Various additions arising therefrom with respect to: (i) purchases from unregistered dealers (under Section 3 AAAA); (ii) sale of used machinery (at higher rate of 8% as against 5% disclosed by the assessee); (iii) sale of tender forms (since the tax liability had been admitted); (iv) the transfer right to use machinery (under Section 3F) and; (v) transfer of property involved in the execution of works contract have been made under the provisions of U.P. Trade Tax Act, 1948 (hereinafter referred to as the Act).
2. The present revision has been pressed on the following questions of law:
“(A) Whether upon the facts and circumstances of the case, the imposition of tax on purchases made from unregistered dealers can be subjected to tax within the meaning of Section 3 AAAA of the Uttar Pradesh Trade Tax Act, despite the disclosed production has been accepted by the assessing authority?
(B) Whether upon the facts and circumstances of the case, the Tribunal was justified in confirming the orders of lower authorities in imposing tax @ 8% on the sale of old and useless machineries without affording proper opportunity to produce evidence for the same?
(C) Whether upon the facts and circumstances of the case, the amount received for providing tender forms to customers be termed as sale within the meaning of Section 3 F of the U.P. Trade Tax Act?
(D) Whether upon the facts and circumstances of the case, the Tribunal was justified in confirming the tax on machineries given to other chini mills and returned to revisionist after use, treating the same as sale?
(E) Whether upon the facts and circumstances of the case, the supply of cement and iron to contractors for construction of building and adjusted at the time of payment to them be termed as sale?”
3. Heard Sri Shakeel Ahmad, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue.
4. Learned counsel for the assessee first submits that the assessee is a cooperative sugar mill. In the running of the sugar mill, it had to carry out minor repair etc. of the mill building and equipments for which purposes, it had made certain purchases from petty unregistered dealers. The assessing authority has wrongly subjected the assessee to tax under Section 3 AAAA of the Act on the purchase of Rs.40,161/-. He would submit that the selling dealers were petty dealers who did not meet the threshold limit prescribed for the purposes of obtaining registration. In such circumstances, it appears they could not have charged tax from the assessee on the sales made by them to the assessee. Therefore, the liability of tax has been wrongly imposed.
5. On the other hand, learned Standing Counsel has rightly points out that under Section 3 AAAA(1)(b) of the Act, any registered dealer who may make purchase of goods from an unregistered dealer without payment of tax would remain liable to pay tax on the purchases so made irrespective of other facts. In view of the clear provision of law, there appears to be no error, insofar as the asseessee has been subjected to tax on purchase worth Rs.40,161/- made from the unregistered dealer. The question of law no. A is answered in the affirmative i.e. against the assessee and in favour of the revenue.
6. Second, it has been submitted that the assessee had sold used machinery which was old, discarded and/or obsolete worth Rs.49,09,481.15/-. It admitted tax liability @ 5% under Notification Entry No.101 dated 15.01.2000 as amended from time to time.
7. On the other hand, the assessing authority completely erred in taxing the same as machineries and spare parts under the same notification. In view of the fact that the machinery sold by the assessee were not new but old, the assessment made and the taxing @ 8% has been contested to be wholly unfounded.
8. On this issue, learned Standing Counsel would submit that though the assessee claimed machinery to be old, he did not produce the vouchers or other documents or evidence to establish its claim. Accordingly, the assessing officer and the authorities have not erred in taxing those goods @ 8%.
9. Having heard learned counsel for the parties and having perused the record, in the first place, the assessing officer had himself observed in the assessment order that the machineries sold by the assessee were old, mill roller, mill turbine, reduction gear box, roller bearing, gear compressor, etc. Thus, it was admitted to the assessing officer that the machineries sold by the assessee were old. The fact that the assessee may not have been able to produce the vouchers may be a reason to suspect or doubt the claim made by the assessee as to the value of goods sold but it could not take the place of proof that the machineries sold by the assessee were new. There is no allegation of the assessee having dealt with in new machinery. There is absolutely no evidence to establish that the machineries sold by the assessee were in any way new. The fact that those machineries may be usable cannot be a decisive or relevant factor. The fact that certain machineries though old may be in working order would not be relevant for the purpose of subjecting the same to tax.
10. In the facts of the present case, the revenue has not only failed to adduce any evidence to establish that the machineries sold by the assessee were new, rather it is admitted to the assesssing officer, that the machineries were old. Therefore there appears no basis on which the same could have been subjected to higher rate of tax @ 8%, treating the same to be new.
11. In view of the above, question of law no. B is answered in the negative i.e. in favour of the asseesee and against the revenue.
12. Third, learned counsel for the assessee would submit that the sold tender forms had been wrongly assessed to tax at the hands of the assessee, inasmuch as those were only documents supplied by the assessee against the tenders floated by it.
13. Here, learned Standing Counsel points out that upto the stage of assessment, the assessee not only admitted the sale of forms made by it but also realised and also deposited the tax thereon. Therefore, in view of the provisions of Section 29 of the Act, no refund would ever be claimable by the assessee even if the question is decided in favour of the assessee on merits.
14. Considering the fact that the present revision is for A.Y. 2000-01 (UP) and 19 years have passed since then, I am of the opinion that the question is purely academic. Therefore, question of law no. C, as framed in the memo of revision, is being returned and answered, leaving it open to the assessee to raise that issue in any year when that issue is an alive issue i.e. where the assessee may have been saddled with the liability by means of the assessment order but it may not have charged or deposited the tax amount.
15. As to question of law no. D, it has been submitted by learned counsel for the assessee that the assessee had only acted in conformity with the directions issued by the federation of the Cooperative Sugar Mills and consequently leased out certain equipments to a sister concern. Therefore, there was no intent to sell any goods to any person or to transfer any property in goods to any person. As cooperative mills exist for the common purpose and work under the directions of the federation, merely because the assessee temporarily transferred certain equipments on the directions issued to it, it may not give rise to a tax liability.
16. Alternatively, it has been submitted that of the total amount of Rs.23,20,631/- received by the assessee against leasing of equipments, Rs.14,21,642/- had been refunded by the assessee to M/S Kisan Cooperative Sugar Factory Ltd. Sarsawan. Therefore, the benefit of that amount should have been given to the assessee.
17. Here, again, learned Standing Counsel has rightly submitted that insofar as it is not disputed that the plant and machinery had been leased out by the assessee and it received lease rent, the fact that the activity of leasing may have been performed upon a direction issued by the federation, would be of no consequence insofar as the tax assessment of the assessee is concerned. For that purpose, all that is relevant to be examined whether the assessee had leased out the equipment against which it received lease rental. Insofar as it is not disputed that the assessee had leased out the equipment against payment towards lease rent as a part of its business operations, there appears no substance in the contention that the assessee was not liable to tax on that amount.
18. As to the refund of Rs.14,21,642/-, admittedly, the same was made by the assessee after six months from the date of delivery of the goods. That finding has been recorded by the Tribunal, which has not been assailed as perverse or otherwise illegal.
19. In view of the above, question of law no. D is answered in the affirmative i.e. against the assessee and in favour of the revenue.
20. Last, it has been submitted that during the assessment order in question, the assessee had got executed certain works contract where against the assessee had supplied certain quantities of cement and iron to the contractor. The value of those goods had been deducted from the payment made to the civil contractors and therefore, it has been submitted, there was no transfer of property in the execution of the works contract.
21. As pointed out by learned Standing Counsel, the aforesaid issue has been decided conclusively against the assessee by a three Judge Bench of the Supreme Court in Karya Palak Engineer CPWD Bikaner Vs. Rajasthan Taxation Board, Ajmer & Ors.;2004 UPTC 1178 wherein it was held that there is involved passing of the property in such supplies by virtue of adjustment in bills. Therefore, it satisfies the definition of sale under the Act.
22. In view of the above, the question of law no. E is answered in the affirmative i.e. against the assessee and in favour of the revenue.
23. Accordingly, the present revision stands partly allowed.
Order Date :- 31.7.2019 Abhilash