TMI Blog2008 (8) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... The dealer though disclosed a sale of wood etc. at Rs. 60,99,456.70, but did not accept any tax liability. It is also admitted to the dealer that he made the purchases of timber from unregistered dealer without paying any tax. Part of such purchase was disposed of by the dealer by cutting the timber in small sizes and making pulpwood. The pulpwood was sold to M/s. Star Paper Mills, Saharanpur. The remaining timber was sold to unregistered dealer. The assessing officer by the order dated August 23, 1999 taxed the purchase of timber from unregistered dealer for the period 1st October, 1997 to 31st of March, 1997 on the turnover of Rs. 33,51,508/-. He also taxed the pulpwood as timber product at the rate of 15% on the turnover of Rs. 42,30,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them either to M/s. Star Paper Mills by cutting the timber in small pieces and making it pulpwood and remaining to the unregistered dealers. He submits that since the timber has not been sold in the same form and condition in which it was purchased, in view of Section 3AAAA the liability of tax on such sale shall remain on the dealer whether the sale was effected to a registered dealer namely M/s. Star Paper Mills or to unregistered dealers. Shri Rakesh Ranjan Agrawal, the learned counsel for the dealer, on the other hand, supports the impugned order of the tribunal. The crux of the controversy is the applicability of Section 3AAAA of the Act. The said section was introduced by way of amendment w.e.f. 1st of October, 1997. It provides tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiterates the above view and submits that the manufacture of pulpwood out of the wood does not amount manufacturing and as such the view taken by the tribunal is legally justified. The said argument is not tenable. Section 3AAAA of the Act does not talk about manufacture . On the contrary, it provides that no tax shall be payable besides the other things if the purchasing dealer resells such things......................in the same form and condition in which had purchased them. The learned counsel for the dealer could not give any reply with regard to the fulfilment of the above statutory ingredient. On the admitted facts, the timber war reduced in size by cutting them. Not only this it was thereafter controverted into pulpwood. Necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est or by importer : Provided that where the sale is by the Forest Department to the Uttar Pradesh Forest Corporation, the tax shall be levied on the point of sale by the said Corporation, and not on the point of sale by the Forest Department. 12.00% 5. The Apex Court in Hotel Balaji v. State of Andhra Pradesh, 1993 U.P.T.C. 318 while examining the constitutional validity of the said provision has made the following observations with regard to the scheme of the section which is reproduced below :- The scheme of Section 3-AAAA of U.P. Sales Tax Act, 1948 as it stands after amendment of 1992 is this : (1) If a dealer purchases the goods liable to tax at the point of sale to the consumer from any reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed in the above quoted paragraph the central idea is that no transaction of sale of goods taxable at the point of sale to the consumer should go untaxed. Either the seller pays the tax or the purchaser pays. Keeping this in the background of mind, Section 3AAAA has been enacted. It has been further pointed out that it is immaterial whether the goods purchased or used in the manufacture of other goods are dealt with otherwise. The sub-section (1) is clear and simple. The tax becomes payable by the purchasing dealer in two circumstances contemplated by clauses (a) and (b) of sub-section. Exemption can be granted if a dealer can establish any of the facts mentioned in the proviso therein, otherwise not. 7. In M/s. Kumar Motors, Bareil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act since an artificial meaning of manufacture is given in Section 2(e-1). 8. Having regard to the definition of 2 (e-1) as explained above, the order of the authorities below that the dealer opposite party has not carried on any manufacturing activity by cutting the wood in small pieces by converting it into pulpwood, is not correct. 9. Respectfully following the dictum as laid down by the Apex Court, the orders of the tribunal and the first appellate authority are indefensible. 10. In the result, the revision succeeds and is allowed. The orders of the tribunal and that of the first appellate authority are hereby set aside and the assessment order is restored. No order as to costs. - - TaxTMI - TMITax - Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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