Hon'ble Vinod Kumar Misra,J.
(Per: Tarun Agarwala,J.)
1. The petitioner is a Limited Company incorporated under the Companies Act, 1956 and is engaged in the business of purchase and sale of various items from Vadilal Industries Limited such as ice-creams, processed food, frozen food, frozen desserts, mango pulp, etc. The petitioner is registered as a "dealer" under the U.P. Value Added Tax Act, 2008 (hereinafter referred to as the "VAT Act") and, after purchase of the aforesaid goods, the same is sold through its chain of distributors all over the State of U.P.
2. The petitioner has been given a certificate of registration under Section 8(3)(b) of the Central Sales Tax Act (hereinafter referred to as the "Act") in which it is indicated that deep-freezers and tricycles are intended for re-sale by the petitioner in the State of U.P. The petitioner is dealing in perishable items which has a limited shelf life and, in order to extend the shelf life and proper preservation, the petitioner accordingly provides deep-freezers and tricycles on lease to its distributors and dealers. On these tricycles small freezers are mounted and hawkers are appointed by the distributors or dealers of the petitioner in order to keep the product in a saleable and marketable condition.
3. These deep-freezers and tricycles are purchased by the petitioner from outside the State of U.P. from various manufacturers of deep-freezers and tricycles. On the strength of the registration certificate granted under Section 8(3)(b) of the Act, the petitioner is entitled to purchase the deep-freezers and the tricycles from the manufacturers outside the State of U.P. at a concessional rate of tax against issuance of Form-C from its assessing authority. The petitioner contends, that it provides deep-freezers and tricycle to its distributors and dealers on lease rent basis and for this purpose the petitioner has entered into a lease agreement with its distributors and dealers. The lease agreement provides that the ownership of the deep-freezers and tricycles are never transferred and the same could be used by the distributors and dealers only for the purpose of storing the ice-creams, processed food, frozen food etc. supplied by the petitioner. After the termination of the lease period, the lessee are required to return the deep-freezers and the tricycles to the petitioner and thereafter the said product is given to another dealer or distributor on fresh lease agreement. The deep-freezers and tricycles given on lease rent basis is a transfer of right to use the products for which the petitioner deposits the due taxes as and when it is due.
4. On the strength of the registration certificate granted under Section 8(3)(b) of the Act the petitioner applied for issuance of Form-C under the VAT Act in June 2014, but for the reasons best known to the assessing authority, Form-C was not issued. The petitioner was compelled to file Writ Petition No.543 of 2015, which was disposed of by an order dated 9.7.2015 directing the assessing authority to pass an appropriate order in accordance with law on the petitioner's application for grant of Form-C. Instead of issuing Form-C, the petitioner received two show cause notices dated 5.8.2015 under Section 7(4) and Section 8 of the Act to show cause why the registration certificate should not be amended and deep-freezers and tricycles should not be deleted from the registration certificate. On receipt of the aforesaid notices the petitioner filed a detailed reply indicating that the deep-freezers and tricycles are being purchased for giving them on lease and in view of Section 2(g)(iv) of the Act the said items could be given on lease as transfer of right to use the goods which is deemed to be a sale. The petitioner submitted that such transfer of right to use the goods would be covered under the heading "for resale".
5. The Deputy Commissioner, Commercial Tax, Bareilly, after considering the reply passed the impugned order dated 20.10.2015 under Section 7(4) of the Act and amended the registration certificate after deleting the two items, namely, "deep-freezer" and "tricycle", on the ground, that the petitioner is not re-selling the said items. By another order of the same date, the Deputy Commissioner rejected the petitioner's application for issuance of Form-C, on the ground, that the registration certificate has been amended and, therefore, Form-C could not be issued. The petitioner, being aggrieved, has filed two writ petitions questioning both the orders, which have been clubbed and are being decided together.
6. In this back drop, we have heard Sri Bharatji Agarwal, the learned senior counsel assisted by Sri Piyush Agarwal, the learned counsel for the petitioner and Sri C.B.Tripathi, the learned special counsel for the State.
7. Sri Bharatji Agarwal submitted that the respondent committed a manifest error in amending the registration certificate without any valid cause and on an incorrect ground, namely, that the items purchased by them were not meant for resale, which was wholly incorrect and based on a wrong interpretation of the law. The learned counsel submitted that the petitioner is entitled to purchase goods from outside the State at concessional rate, if the said goods was intended for resale by the petitioner. In the instant case, deep-freezers and tricycles purchased by the petitioner by a deeming fiction comes within the definition of "sale" as defined under Section 2(g) of the Act and under Section 2(ac)(iv) as well as resale as defined under Section 2(ab) of the VAT Act which clearly provides that "sale" or "resale" would include a transfer of the right to use any goods. The learned senior counsel further submitted that under Rule 10 of the U.P. VAT Rules, 2008 read with Section 3 of the VAT Act, the determination of turnover of sale includes the transfer of right to use any goods, which is considered to be a "sale" and that any amount received as lease rent would be subjected to payment of VAT under the VAT Act.
8. On the other hand, the learned senior counsel further submitted that the Deputy Commissioner committed an error in refusing to issue Form-C. The learned counsel submitted that the impugned order could only be prospective and could not apply to pending applications and, therefore, Form-C in any case should have been issued on those applications which were pending prior to the date of passing of the impugned order.
9. On the other hand, Sri C.B.Tripathi, the learned special counsel for the State submitted, that the Deputy Commissioner had all powers under Section 7(4)(a) of the Act to amend the registration certificate. In the instant case the authority found that the goods mentioned in the registration certificate were not meant "for resale" in the same form and, therefore, the authority was justified in amending the registration certificate. The learned counsel submitted that under Rule 12(7) of the Central Sales Tax Rules, the Forms are required to be furnished by the assessing authority within three months or such extended period as the authority deems fit. In the instant case, Form-C for the assessment years 2010-11 and 2011-12 and 2012-13 has been requested which has become belatedly barred by limitation and, consequently, no mandamus could be issued for issuance of Form-C for such period. It was further contended that against the amendment of the registration certificate, the petitioner has an efficacious remedy of filing an appeal and therefore, the writ petition should be dismissed on the ground of alternative remedy.
10. On the question of alternative remedy, we are of the opinion, that Article 226 of the Constitution confers very wide powers to issue a writ, but, this power is discretionary and the High Court may refuse to exercise its discretion, if it is satisfied that the aggrieved person has an adequate remedy elsewhere. Even if there is an alternative remedy, the High Court could entertain a writ petition depending on the facts of each case. Exceptions to the Rule of alternative remedy has been carved out by the Supreme Court and one such exception is, that the writ petition would be maintainable under Article 226 of the Constitution despite the availability of an alternative remedy, if a pure question of law is involved for interpretation and where no factual dispute exists.
11. This Court has dealt at length on the issue of alternative remedy in M/s Shree Bhawani Paper Mills Ltd. vs. State of U.P. and another, Writ Petition (Tax) No.255 of 2012, decided on 10.9.2015, which is wholly applicable in the instant case. In State of M.P. and others vs. Sanjay Nagayach and others, 2013(7)SCC 25, the Supreme Court held as under:
"The High Court, in our view, has therefore rightly exercised its jurisdiction under Article 226 of the Constitution and the alternative remedy of appeal is not a bar in exercising that jurisdiction, since the order passed by the Joint Registrar was arbitrary and in clear violation of the second proviso to Section 53(1) of the Act."
12. In the instant case, we find, that no factual dispute exists and the Court is only required to interpret the words "for resale" as used in Section 8(3)(b) of the Central Sales Tax Act. Accordingly, the preliminary objection raised by the respondent is rejected.
13. Every dealer, who is required to pay tax under the Central Sales Tax Act is required to be registered in terms of Section 7 of the said Act. The registration certificate could be amended for the reasons specified therein under Section 7(4)(a) of the Act. Section 8 of the Act provides that even a dealer who in the course of inter State trade or commerce sells to a registered dealer goods of the description referred to in Section 8(3) of the Act shall be liable to pay tax under this Act at a concessional rate. Section 8(3) of the Act contends that the goods referred to in sub section (1) of Section 8 of the Act would be such goods as specified in the certificate of registration which are intended "for resale" which would be subjected to concessional rate of tax. For facility, Section 8(1)(2)(3) and (4) of the Central Sales Tax Act are extracted hereunder:-
"8. Rates of tax on sales in the course of inter-State trade or commerce,--
(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three per cent of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower:
PROVIDED that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section.
(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of the State.
Explanation.- For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.
(3) The goods referred to in sub-section (1),--
(a) [***]
(b) [***] are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or [in the telecommunications network or] in mining or in the generation or distribution of electricity or any other form of power;
(c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;
(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause(c).
(4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority:
Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit.]"
14. From the aforesaid, it is clear, that the goods mentioned in the certificate of registration granted under Section 8(3)(b) of the Act if purchased from outside the State of U.P. would be subjected to concessional rate of tax upon issuance of Form-C by the assessing authority of the petitioner under the VAT Act.
15. The word "resale" has not been defined under the Central Sales Tax Act. However, the word "sale" has been defined under Section 2(g) of the Act. For facility, Section 2(g) of the Act is extracted hereunder:
"2. (g) "sale", with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes,"
16. A perusal of the aforesaid definition of "sale" includes a transfer of the right to use any goods for any purpose. The word "sale" has also been defined under Section 2(ac)(iv) of the VAT Act. For facility, the said provision is extracted hereunder:
"2(ac) "sale" with its grammatical variations and cognate expressions, means any transfer of property in goods (otherwise than by way of a mortgage, hypothecation, charge or pledge) by one person to another, for cash or for deferred payment or for any other valuable consideration and includes,
(iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration."
A perusal of the said provision indicates that "sale" includes a transfer of the right to use any goods for any purpose.
17. The word "resale" has not been defined under the Central Sales Tax Act, but has been defined under Section 2(ab) of the VAT Act, which means a sale by any person of any goods in the same form and condition, in which such goods were purchased by such person. Section 2(ab) of the VAT Act reads as under:
"2(ab) "re-sale" means a sale by any person, of any goods in the same form and condition in which such goods were purchased by such person;"
18. "Sale price" has been defined under Section 2(h) of the Central Sales Tax as under:
"2(h) "sale price" means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged:
[Provided that in the case of a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, the sale price of such goods shall be determined in the prescribed manner by making such deduction from the total consideration for the works contract as may be prescribed and such price shall be deemed to be the sale price for the purposes of this clause;]
19. "Sale Price" has also been defined under Section 2(ad) of the VAT Act as under:
"2(ad) "sale price" means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of goods at the time of or before the delivery of such goods, other than cost of outward freight or delivery or cost of installation in cases where such cost is separately charged;
Explanation:
(i) In a case in which any amount of any duty payable by a dealer is deferred for a period or in a case in which point of payment of any duty is shifted, amount of such duty shall be deemed part of the sale price;
(ii) The price of packing material in which any goods are packed shall be deemed part of sale price of goods sold;
(iii) Sale price of goods in relation to transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, shall be determined after deducting the aggregate of actual amount incurred towards labour and services, amount of profit relating to supply of labour and services and such other amounts as may be prescribed from the total amount received or receivable in respect of such works contract;
(iv) In respect of transfer of right to use goods, any goods for any purpose (whether or not for a specified period) sale price means the valuable consideration received or receivable in respect of such transfer of right to use goods but does not include any sum payable as a penalty or as compensation or damages for breach of contract;
(v) Tax charged or chargeable shall not form the part of the sale price;
(vi) Cash or trade discount at the time of sale as evident from the invoice shall be excluded from the sale price but any ex post facto grant of discounts or incentives or rebates or rewards and the like shall not be excluded from the sale price;"
20. Section 2(h) of the VAT Act defines "dealer" and sub section (viii) of Section 2(h) provides that any person who carries on the business of transfer of the right to use any goods for any purpose would also be a dealer. For facility, Section 2(h)(viii) of the VAT Act are extracted hereunder:
"2(h)"dealer" means any person who carries on in Uttar Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration and includes, -
....
....
(viii) any person who carries on the business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash or for deferred payment or other valuable consideration;
21. From the aforesaid, it is apparently clear, that a dealer means any person who carries on the business of buying and selling or supplying or distributing the goods. Further, any person who carries on the business of transfer of the right to use any goods for any purpose would be deemed also to be a dealer of such business. By a deeming fiction, the definition of the word "sale" includes transfer of right to use any goods for any purpose. Therefore, the amount received on such transfer of right to use is leviable to tax. Section 3 of the VAT Act is the charging Section. The incidence and levy of tax as specified under Section 3(6)(a) of the VAT Act reads as under:
"(6) For the purposes of this Act, following shall be determined in the prescribed manner:-
(a) Turnover of sale of goods-
(i) involved in the execution of works contract in which property in goods is transferred; or
(ii) in cases of transfer of right to use any goods;"
22. A perusal of the aforesaid indicates that the turnover of sales of goods would also include the lease rent in cases of transfer of right to use any goods. The turnover of sales in cases of "transfer of right to use any goods" is determined under Rule 10 of the U.P.VAT Rules, 2008. For facility, Rule 10 of the Rules provides as under:
"10. Determination of turnover of sale in cases of transfer of right to use any goods:-
The tax on the turnover of sale where such sale of any taxable goods is effected by way of transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be computed on taxable turnover. For the purpose of determining the taxable turnover of sale of such goods, the amounts specified below shall be deducted if they are included in the gross turnover-
(a) the amount representing the amount receivable in respect of transfer of right to use any exempt goods;
(b) amount receivable as penalty for defaults in payments or as damages or any loss caused to the goods by the person to whom such transfer was made;
(c) amount receivable in respect of transfer, delivery or supply of goods under the contract or agreement of transfer of right to use goods for any purpose where such transfer, by the lessor to the lessee, is made as a result of a sale-
(i) in the course of inter-state trade or commerce; or
(ii) outside the State; or
(iii) in the course of export of the goods out of the territory of India or in the course of import of goods into the territory of India."
23. From a perusal of the Section 3 read with Rule 10 of the Rules, it is absolutely clear that the "transfer of right to use any goods" is considered to be a sale and any amount received as lease rent is subjected to payment of VAT under the VAT Act.
24. In the light of the aforesaid provisions the impugned order clearly indicates and is admitted by the respondents that the petitioner was purchasing tricycles and deep-freezers from the manufacturers outside the State of U.P. and these products are mentioned in the certificate of registration issued under Section 8(3)(b) of the Act. The petitioner was, therefore, entitled for issuance of Form-C to enable the petitioner to avail concessional rate of tax on the purchase of these products. The respondents have also admitted that the petitioner has entered into a lease agreement with its distributors and sub-dealers and is paying taxes every year on the lease rent.
25. In the light of the aforesaid provisions, it is apparently clear, that deep-freezers and tricycles are re-sold to the distributors and dealers of the petitioner in the same form and condition as a transfer on the right to use the goods. Such "transfer of the right to use the goods" is a "sale" as defined under the Central Sales Tax Act as well as under the VAT Act. The goods purchased by the petitioner as per the products indicated in the certificate of registration are clearly intended "for resale" by it and consequently, the petitioner is entitled for issuance of Form-C in order to avail concessional rate of tax.
26. The contention that no mandamus could be issued at this stage for issuance of Form-C for the year 2010-11, 2011-12 and 2012-13 in view of Section 12(7) of the Central Sales Tax Rules is patently erroneous. The assessing officer of the petitioner cannot invoke Rule 12(7) of the Rules. Such objection, if any, could be invoked by the assessing officer of the State where the goods indicated in the registration form are being purchased. Once a request has been made for issuance of Form-C and the goods are indicated in the registration certificate issued under Section 8(3)(b) of the Act, the assessing authority could not stall the said request for an unreasonable period and is required to issue the certificate within a reasonable period.
27. This Court, in a series of decisions, have issued a mandamus directing the authorities to issue Form-C where it was found that the authority was not issuing Form-C. In Unitech Ltd. vs. Commercial Tax Officer, Gajuwaka, Visakhapatnam (1991) 83 STC 207, the Court issued a mandamus commanding the respondents to issue Form-C. Similarly a mandamus was issued in OMIL-JSC-JV vs. Union of India and others, (2013)61 VST 370.
28. We also find that the Deputy Commissioner committed a manifest error in rejecting the petitioner's application for issuance of Form-C, on the ground that the registration certificate has been amended. We are of the opinion that the amendment made in the registration certificate could not apply retrospectively and the order, if any, could only apply to an application filed after the amendment. Applications which are pending prior to the amendment of the registration are required to be considered as if the registration certificate had not been amended. The authority, therefore, committed a manifest error in rejecting the petitioner's application for issuance of Form-C on the ground that the certificate had been amended. The Supreme Court in M/s Sivalik Collulose Ltd., Gajraula, District Moradabad and another vs. State of U.P. and others, 1992 UPTC 1, held that the action under Section 7(4) of the Central Sales Tax Act by the authority granting the certificate of registration can only be prospectively and cannot operate retrospectively is fully applicable in the instant case,
29. In the light of the aforesaid, the impugned orders cannot be sustained and are quashed. The order amending the registration certificate is quashed as well as the order refusing to grant Form-C is also quashed. A writ of mandamus is issued commanding the Deputy Commissioner, Commercial Tax, Bareilly, respondent No.2 to issue Form-C within three weeks from the date of the production of a certified copy of this order.
30. In the circumstances of the case parties shall bear their own cost.
31. The writ petitions are allowed.