JUDGMENT Arun Tandon, J.
1. Heard Sri S.D, Singh, Advocate on behalf of applicant-revisionist and learned Standing Counsel on behalf of Respondent.
2. This Trade Tax Revision has been filed by M/s Navyug Krishak Suppliers, Chandhausi, Moradbad, a partner-ship firm, in respect of proceedings, which have been initiated against the firm under Section 3-B of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act of 1948').
3. The facts relevant for the purpose of present Trade Tax Revision are as follows:
4. The Assessee-firm is engaged in manufacture and sale of agricultural implements. The firm has received recognition certificate under Section 4-B of the Act of 1948 bearing Registration Certificate No. 153 dated 18t April, 1997 (A copy whereof has been enclosed as Annexure No. 1 to the present Trade Tax Revision). Amongst other certificate categorically records that the Assessee would be entitled for concessional rate of tax on purchase of iron and steel.
5. It is not in dispute that the raw materials so purchased by the Assessee-firm was to be utilized for manufacture of exempted goods. In the normal course of business, Assessee-firm purchased iron and steel from the Steel Authority of India Ltd. (For short SAIL) and for the purposes of availing benefit of concessional rate of tax, Assessee-firm also issued necessary documents which specifically recorded the tax benefit to which petitioner was entitled.
6. For reasons best known to the manufacture seller, namely, M/s Steel Authority of India Ltd. they did not charge any tax on the steel and iron sold to the Assessee-firm.
7. The Trade Tax Department coming to know of the aforesaid facts initiated proceedings under Section 3-B of the Act of 1948 against the Assessee-firm with the allegations that the Assessee-firm had misused his recognition certificate and did not disclose to the Steel Authority of India Ltd. that in fact the Assessee was entitled to concessional rate of tax on purchase of iron and steel and not for total exemption from the Trade Tax. As a consequence thereto the seller was not made aware of the complete facts by the Assessee, which resulted in invasion of tax on purchase of iron and steel from the seller.
8. The Assessee-firm submitted a specific reply and amongst others pointed out that the Assessee-firm had not issue any false or wrong certificate or declaration to the Steel Authority of India Ltd. and therefore, they have not created such a situation whereby on the transaction of purchase of iron and steel liability of tax can be said to have been avoided because of the declaration certificate of the Assessee.
9. The Assessing Authority, by means of the order dated 19th January, 1987 rejected the explanation furnished by the Assessee and raised the demand of tax (concessional rate) in respect of iron and steel purchased by the Assessee under Section 3-B of the Act of 1948. Liability of Tax in that regard was determined at Rs. 20,615.50/=. Feeling aggrieved by the said order of the Assessing Authority, the Assessee preferred, a first appeal Under Section 9 of the Act of 1948. The first appeal was numbered as Appeal No. 221 of 1987, the same appeal has been dismissed by the Assistant Commissioner Judicial by means of the order dated 7th February, 1992.
10. Against the said order of the First Appellate Court, the Assessee preferred second appeal being Appeal No. 482 of 1992. The second appeal so preferred had also been dismissed by the Sales Tax Tribunal, Moradabad, by means of the order dated 28th March, 2000. It is against this order of the Sales Tax Tribunal, Moradabad that the present Trade Tax Revision has been filed.
11. On behalf of the applicant-revisionist it is submitted that the proceedings under Section 3-B of the Act of 1948 can be initiated only If the conditions mentioned therein are satisfied. It is further submitted that the provision of Section 3-B of the Act of 1948 are to be strictly construed.
12. For the purposes to this case, it would be worthwhile to reproduce Section 3-B of the Act of 1948, which reads as follows:
3-B, Liability on issuing false certificates, etc.Notwithstanding anything to the contrary contained elsewhere in this Act, and without prejudice tot he provisions of Sections 14 and 15-A, a [person] who Issue a false or wrong certificate or declaration, prescribed under any provision of this Act or the Rules framed there under, to another [person] by reason of which a tax leviable under this Act on the transaction of purchase or sale [made with or by] such other [person] ceases to be leviable or becomes leviable at a concessional rate shall be liable to pay on such transaction an amount which would have been payable as tax on such transaction had such certificate or declaration not been issued:
Provided that before taking any action under this section, the [person] concerned shall be given an opportunity of being heard.
Explanation,Where a [person] issuing a certificate or declaration discloses therein his intention to use goods purchased by him for such purpose as will make the tax not leviable or leviable at a concessional rate but uses the same for a purpose other than such purpose, the certificate or declaration shall, for the purpose of this section, be deemed to be wrong.
13. From a bare reading of the aforesaid Section of 3-B it is apparently clear that the following conditions must be satisfied, before any proceedings under Section 3-B of the Act of 1948 can be initiated against a person concerned, (a) he had issued false or wrong certificate or declaration to another person, (in the facts of the present case is the Steel Authority of India Ltd.), (b) such wrongful or false declaration or certificate had resulted in non-levy or no levy of tax on the transaction (in the facts of the case on the purchase of steel and iron by the Assessee-firm from the Steel Authority of India Ltd).
14. From the aforesaid provisions it is apparently celar that furnishing of wrongful or false certificate is a condition precedent by the person concerned before any proceedings under Section 3-B can be initiated and liability fastened thereupon the person concerned).
15. From the facts of the present case, it is apparently clear that the Assessee-firm had not furnished any false or wrong certificate/declaration. The order passed by the authorities under the Trade Tax Act, giving rise to the present Trade Tax Revision, do not record any fact about a false or wrongful declaration/certificate having been furnished by the Assessee-firm to the Steel Authority of India Ltd. As a matter of fact it is apparently clear from the records of the present case that the Assessee had submitted documents which clearly disclosed that under Registration certificate issued under Section 4-B of the Act, Assessee is entitled to concessional rate of tax on purchase of iron and steel.
16. In such circumstances it cannot be said that the Assessee-firm created a situation were under the realisation of the tax on the transaction of purchase or sale has been avoided or not short levied. This Court has no hesitation to record that the Assessee-firm has not furnished any false or wrong certificate or declaration to the Steel Authority of India Ltd. and therefore, the fault for non-levy of tax (in the facts of the present case on concessional rate), lies upon the Steel Authority of India Ltd. alone. It is therefore, open to the Department to proceed against the manufacturing sellers in accordance with law.
17. In view of the aforesaid the entire proceedings, giving rise to the present trade tax revision being contrary to the provision of Section 3-B Act of 1948, cannot be sustained.
18. The present trade tax revision is accordingly allowed.