1997 (2) TMI 510 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 12A(2) of the U.P. Sales Tax Act, 1948 regarding liability to pay purchase tax based on dealer's declaration. Claim of exemption under section 3-D of the Act and its impact on the presumption under section 12-A. Taxability of transactions as purchases in the course of inter-State trade under the Central Sales Tax Act. Application of legal precedents regarding inter-State sales tax liability. Effect of depositing tax on changing the legal position.

Analysis:
The judgment involved the interpretation of section 12A(2) of the U.P. Sales Tax Act, 1948, which states that a dealer's declaration accepting liability to pay purchase tax is conclusive evidence of tax liability. The court considered the impact of this provision on the liability of dealers claiming exemption under section 3-D of the Act. The respondents contended that since they were not claiming exemption under section 3-D, the presumption under section 12-A could not be raised against them.

Furthermore, the court analyzed the taxability of transactions as purchases in the course of inter-State trade under the Central Sales Tax Act. Legal precedents, such as the case of Commissioner of Sales Tax v. Nand Kishore Chhaki Lal, were cited to support the argument that such transactions are not taxable under the U.P. Trade Tax Act. The court also referred to the decision of the Supreme Court in Commissioner of Sales Tax v. Bakhtawar Lal Kailash Chand Arhti, emphasizing that inter-State sales are taxable only under the Central Sales Tax Act.

Additionally, the court considered the effect of depositing tax on the legal position. It was highlighted that the mere deposit of tax would not alter the tax liability of the transactions. Citing the case of Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh, the court emphasized that collecting excess sales tax does not change the nature of the transaction.

In conclusion, the court dismissed the revisions, stating that the transactions were purchases in the course of inter-State trade and, therefore, not taxable under section 3-D of the Act. The court held that the provisions of section 12-A could not be applied in this scenario, as the dealers were not claiming exemption under section 3-D. The judgment reaffirmed that depositing tax does not change the legal position in such cases.