2008 (7) TMI 935 - HC - VAT and Sales Tax

Summary

Issues: Tax liability on coal turnover purchased from unregistered dealers, constitutionality of section 3AAAA, rejection of rectification application

In the present revision, the main issue revolves around the tax liability of coal purchased by the dealer for consumption in the brick kiln from unregistered dealers. The Tribunal had deleted the tax on this turnover, citing the unconstitutionality of section 3AAAA. The Department filed an application for rectification of the Tribunal's order after the said section was amended with retrospective effect. The key question raised was whether the Tribunal was justified in rejecting the Department's application in light of the retrospective substitution of provisions by U.P. Act 8 of 1992.

The High Court, after hearing the arguments, noted that the controversy was settled by a Supreme Court decision in Hotel Balaji v. State of Andhra Pradesh, where it was held that both the original and amended versions of section 3AAAA were valid legislation. The Supreme Court's ruling overturned the decision of the High Court in a previous case that had declared the section ultra vires. Consequently, the High Court held that the Tribunal erred in rejecting the Department's application for rectification of mistake under section 22 of the Act.

As a result, the revision was allowed, and the dealer was deemed liable to pay tax on the turnover of coal purchased from unregistered dealers. The Tribunal's order deleting the tax was set aside, affirming the tax liability on the said turnover.