2010 (4) TMI 981 - HC - VAT and Sales Tax

Quashing the reassessment proceedings under section 21 of the U.P. Trade Tax Act for the assessment years 1997-98 to 1999-2000 in pursuance of notices dated March 15 2004 seeked - quashing the reassessment proceedings under section 21 of the U.P. Trade Tax Act for the assessment years 1997-98 to 1999-2000 in pursuance of notices dated March 15 2004 seeked Held that - Where the prices of the goods and the packing materials are separately charged section 3AB does not apply and accordingly it has been held that if the prices for the country liquor and the packing materials are separately charged the value of the packing materials would not be exempted under section 3AB of the Act. The Division Bench of this court has considered in detail the decisions of the apex court in the case of Premier Breweries v. State of Kerala reported in 1997 (12) TMI 569 - SUPREME COURT OF INDIA Associated Cement Companies Ltd. v. Government of Andhra Pradesh reported in 2006 (1) TMI 244 - SUPREME COURT OF INDIA Raj Sheel v. State of Andhra Pradesh reported in 1989 (5) TMI 292 - SUPREME COURT OF INDIA and Co-operative Company Ltd. v. Commissioner of Trade Tax U.P. reported in 2007 (4) TMI 357 - SUPREME COURT OF INDIA and aims and objects of introducing section 3AB of the Act. The Division Bench decision of this court is a well considered decision. The special leave petition against the said order has also been dismissed by the apex court. Thus no reason to reconsider the issue and we respectfully agree with the view taken by the Division Bench. Accordingly we are of the view that the view expressed in circular dated September 30 2003 is legally correct and in accordance with the provisions of the Act.

Summary

Issues:
Challenge to reassessment proceedings under U.P. Trade Tax Act for assessment years 1997-98 to 1999-2000.
Validity of circular directing imposition of tax on poly pouches for country liquor.
Restraining respondent from imposing tax on poly pouches.
Applicability of section 3AB when prices of goods and packing materials are separately charged.
Reconsideration of Division Bench decision in Majhola Distillery case.

Analysis:
The petitioner sought to challenge reassessment proceedings under the U.P. Trade Tax Act for the assessment years 1997-98 to 1999-2000, aiming to quash the notices issued for levying tax on the value of packing materials separately charged along with country liquor. The petitioner also contested the circular directing tax imposition on poly pouches for country liquor sales. The issue of applicability of section 3AB concerning separate pricing of goods and packing materials arose, leading to a detailed analysis by the court.

The court examined the circulars issued by the Government and the Commissioner of Trade Tax, U.P., Lucknow, which provided differing opinions on the taxation of packing materials when sold separately. The respondent argued for the tax imposition based on a specific interpretation of section 3AB, as seen in a previous Division Bench decision in Majhola Distillery case. The court referenced various apex court decisions and the legislative intent behind section 3AB to determine the correct application of the provision in cases of separate pricing.

The Division Bench decision in Majhola Distillery case was pivotal in establishing that section 3AB does not apply when prices for goods and packing materials are separately charged. The court upheld this interpretation, emphasizing that the provision only exempts packing materials when a composite price is charged. The petitioner's plea for reconsideration of the Division Bench decision was rejected, aligning with the earlier ruling and the dismissal of a special leave petition by the apex court.

Ultimately, the court affirmed the legality of the circular dated September 30, 2003, as it aligned with the provisions of the Act and the interpretation established in the Majhola Distillery case. With no additional points raised, the writ petition challenging the reassessment proceedings and tax imposition on poly pouches was dismissed, maintaining the application of section 3AB and the Division Bench decision's validity.