These are two revisions under Section 11 of the U.P. Trade Tax Act (hereinafter referred to as "Act") are directed against the order of the Tribunal dated 11.06.2003 for the assessment years 1994-95 and 95-96 both under the Central Sales Tax Act.
Heard Sri K.Saksena, learned counsel for the applicant and Sri B.K.Pandey, learned Standing Counsel.
The applicant was carrying on the business of polyester staple fibre and staple fibre waste. According to the learned counsel for the applicant for both the assessment years, the applicant had deposited the tax on the turn over of inter-state sales of stable fibre waste @ 4% as the rate of tax was not settled and ultimately settled by this Court. This Court in the case of assessee itself, Swadeshi Polytex Limited Vs. CTT, reported in 1995 NTN, 538 has held that stable fibre waste is also stable fibre and liable to tax @ 2% and along with surcharge @ 2.5%. He further submitted that the tax has been calculated on the turnover in accordance to formula given in Section 8-A of the Central Sales Tax Act (hereinafter referred to as the "Central Act") taking tax at the rate of 2% only. Accordingly, at the time of assessment proceedings, the tax @ 2.5% had been admitted. The assessing authority had levied the tax @ 2%. The applicant claimed refund of the excess amount deposited towards the tax, which has been denied under Section 29-A of the Act. According to applicant tax had been paid on the net turnover determined as per the formula under Section 8-A of the Central Act. Being aggrieved by the order of the assessing authority, the applicant filed two appeals before the Deputy Commissioner (Appeals). Both the appeals have been dismissed. The applicant further filed two appeals before the Tribunal. The Tribunal by the impugned order, has dismissed both the appeals. The case of the applicant was that it had not realised any amount towards tax from its customers and, therefore, the provisions of Section 29-A of the Act did not apply. It is further contended that the tax has been paid on the turn over determined under the statutory formula contemplated under Section 8-A of the Central Act and merely because the tax payable was deducted from the amount realised from the customers towards the sale consideration to arrive to the net turnover, it can not be presumed that the tax had been realised. The Tribunal has held that the applicant had paid the tax on the turnover determined as per the formula given under Section 8-A of the Central Act and claimed deduction of the amount from the amount realised from the customers shows that the tax has been realised from the customers. Applying the provisions of Section 29-A of the Act refund has been denied.
Learned counsel for the applicant submitted that no tax had been realised from the customers in the bill, which is not in dispute. The first appellate authority has sought report from the Assessing Officer about the realisation of tax on the bills and the assessing authority on the examination of all the bills reported that no tax had been charged in the bills. The tax had been paid @ 2.5% which was payable on the net turnover determined under Section 8-A of the Central Act. Section 8-A of the Central Act does not provide levy the tax on the tax and, therefore, the deduction of the amount of tax is contemplated from the sale consideration. The determination of the net turnover is statutory and it does not lead to the conclusion that the applicant had realised tax from the customers. He submitted that in any view of the matter, it can not be inferred that the excess tax over and above 2% has been realised and the net turnover has also been determined taking the 2% tax. He further submitted that the presumption that the tax has been realised from the customer is based on no material.
Sri B.K.Pandey, learned Standing Counsel relied upon the order of the Tribunal.
Having heard learned counsel for the parties, I have perused the order of the Tribunal and the rival submissions.
Section 8-A of the Central Act and Section 29-A of the Act reads as follows:
"Section 8-A of the Central Sales Tax Act:
8-A. Determination of turnover - (1) In determining the turnover of a dealer for the purposes of this Act, the following deductions shall be made from the aggregate of the sale prices, namely :-
(a) the amount arrived at by applying the following formula-
rate of tax X aggregate of sale prices 100 + rate of tax.
Provided that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this Act, has been otherwise deducted from the aggregate of sale prices.
Explanation - Whether the turnover of a dealer is taxable at different rates, the aforesaid formula shall be applied separately in respect of each part of the turnover liable to a different rate of tax;
(b) the sale price of all goods returned to the dealer by the purchases of such goods,--
(i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of May, 1966;
(ii) within a period of six months from the date of delivery of the goods, in the case of goods returned on or after the 14th day of May, 1966;
provided that satisfactory evidence of such return of goods and of refund or adjustment in account of the sale price thereof is produced before the authority competent to assessee or, as the case may be, reassess the tax payable by the dealer under this Act; and
(c) such other deductions as the Central Government may, having regard to the prevalent market conditions, facility of trade and interests of consumers, prescribe."
29-A of the U.P. Trade Tax Act:
"Section 29-A. Procedure for disbursement of amount wrongly realised by dealer as tax.
(1) Where any amount is realised from any person by any dealer, purporting to do so by way of realisation of tax on the sale or purchase of any goods, in contravention of the provisions of sub-section (2) of section 8-A, such dealer shall deposit the entire amount so realised in such manner and within such period as may be prescribed.
(2) Any amount deposited by any dealer under sub-section (1) shall to the extent is not due as tax, be held by the State Government in trust for the person from whom it was realised by the dealer, or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of the deposit.
(3) Where any amount is deposited by any dealer under sub-section (1) such amount or any part thereof shall, on a claim being made in that behalf be refunded in the manner prescribed, to the person from whom such dealer had actually realised such amount or part, or to his legal representative and to no other person:
Provided that no such claim shall be entertained after the expiry of three years from the date of the order of assessment or one year from the date of the final order on appeal, revision or reference, if any, in respect thereof, whichever is later.
Explanation:
The expression "final order on appeal, revision or reference," includes an order passed by the Supreme Court under article 32, article 132, article 133, article 136 or article 137 or by the High Court under article 226 or article 227 of the Constitution."
I find substance in the argument of learned counsel for the applicant. Section 8-A (1) of the Central Act provides determination of the turnover for the purpose of the Act. By permitting a deduction from the aggregate of the sale price as per formula given therein. It appears that intent of this formula is that in case if sale consideration includes the amount of tax, the same may be excluded while arriving to the net turnover for the levy of tax so that there should not be a tax on tax. According to the applicant the tax has been paid @ 2.5% on the net turnover arrived on the basis of the said formula. The proviso to section 8-A (1) of the Central Act is not applicable in the present case as there is no evidence that any tax by way of any amount has been deposited by the registered dealer in accordance to the provisions of this Act. There is no evidence on record that the tax has been realised by the applicant in the bills from the customers. The report has been sought in this regard by the first appellate authority from the assessing authority. The assessing authority after examination of the bills has categorically reported that no amount has been charged to tax in the bills separately. According to the applicant only 2% tax has been taken as a rate of tax for the determination of net turnover under the formula as provided under Section 8-A (1) of the Central Act. Therefore, if presumption may be drawn that any tax has been reliased, the same can be liable 2% and not 4% by any stretch of imagination. Though such presumption may be doubtful in the facts and circumstances of the case.
Section 29-A of the Act provides that the amount realised in contravention of the provisions of sub-section (2) of section 8-A of the Act shall not be refunded except as provided for under sub-section (3) of section 29-A of the Act. Section 8-A (2) of the Act provides that dealer may recover an amount equivalent to the amount of trade tax on sale of goods payable from the person to whom the goods are sold by him. Clause II of sub-section (4) of Section 8-A of the Act further provides that where a registered dealer realises trade tax on sale of goods from the purchasers the cash memos or the bills shall separately show the price of goods sold and the amount realised as tax.
From the perusal of the aforesaid provisions of Section 29-A of the Act read with Section 8-A of the Act, it appears that the amount realised as trade tax and shown separately in the cash memos or bills in excess of tax payable, shall be retained by the State and not refunded to the person who had realized it.
In the present case the applicant has not realised any tax in the bills of cash memos.
Therefore, neither the provisions of Section 8-A (2) of the Act applies nor there is any contravention of the said provisions and, therefore, Section 29-A of the Act has no application.
For the foregoing discussion, in view of the fact that there is no evidence that any tax has been realized what to say, the tax in excess of the tax due, any amount deposited can not be retained and refund can not be denied under section 29-A of the Act, which is made applicable under the Central Sales Tax Act. On the facts and circumstances, the assessing authority is directed to refund the amount which is in excess of the tax due forthwith within a period of three months from the date of presentation of the certified copy of this order in accordance to Section 29 of the Act along with the interest in accordance to law.
In the result, both the revisions are allowed.
Dt.07.07.2011 R./