2011 (1) TMI 1282 - HC - VAT and Sales Tax

Penalty levied under section 10A read with section 10(d) of the Central Sales Tax Act 1956 challenged Held that - For the purpose of levy of penalty under clause (d) of section 10 of the Central Act the relevant consideration is whether the goods purchased against form C have been used for the purpose for which registration has been granted or not. As stated above the raw materials etc. have been used for the printing of lottery tickets for which the registration was granted and therefore there was no violation of clause (d) of section 10 of the Central Act. In the result all the three revisions are allowed. The penalty levied under section 10A read with section 10(d) of the Central Act is hereby quashed.

Summary

Issues:
1. Penalty levied under section 10A read with section 10(d) of the Central Sales Tax Act, 1956.
2. Printing of lottery tickets considered as job-work.
3. Validity of using raw materials purchased against form C for printing lottery tickets.

Analysis:
1. The judgment involved three revisions under section 11 of the U.P. Trade Tax Act against the Tribunal's order confirming the penalty levied under section 10A read with section 10(d) of the Central Sales Tax Act for the assessment years 1998-99, 1999-2000, and 2000-01. The applicant, engaged in printing lottery tickets, had purchased raw materials against form C at a concessional rate of tax. The assessing authority alleged that raw materials worth a specific amount had not been used for manufacturing goods for sale but for job-work, leading to the penalty imposition.

2. The applicant argued that they were registered for printing lottery tickets and had used the raw materials purchased against form C for the intended purpose. The counsel contended that the goods were used solely for printing lottery tickets, as per the registration certificate's conditions. The standing counsel, however, cited previous court decisions that classified printing lottery tickets as works contract, making the ink and materials used liable for tax as they were transferred to customers.

3. The court referred to a previous case involving the same applicant, where printing lottery tickets was considered a works contract, and materials used were taxable. However, the court emphasized that for penalty imposition under section 10(d) of the Central Act, the crucial factor was whether the goods purchased against form C were used for the granted purpose. As the raw materials were indeed used for printing lottery tickets, as allowed under the registration certificate, the court ruled in favor of the applicant, quashing the penalty levied under section 10A read with section 10(d) of the Central Act in all three revisions.

In conclusion, the judgment addressed the penalty issue under the Central Sales Tax Act, clarified the classification of printing lottery tickets as job-work, and upheld the validity of using raw materials purchased against form C for the intended purpose, ultimately ruling in favor of the applicant and quashing the imposed penalty.