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M/s Vadilal Enterprises Limited Versus State of U.P. and another

2016 (1) TMI 872 - ALLAHABAD HIGH COURT

Purchase of Goods against Form C - concessional rate of tax - Deputy Commissioner amended the registration certificate after deleting the two items, namely, “deep-freezer” and “tricycle”, on the ground, that the petitioner is not re-selling the said items. By another order of the same date, the Deputy Commissioner rejected the petitioner's application for issuance of Form-C, on the ground, that the registration certificate has been amended and, therefore, Form-C could not be issued.

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sub-dealers and is paying taxes every year on the lease rent.

The order amending the registration certificate is quashed as well as the order refusing to grant Form-C is also quashed. - Form-C to be issued - Decided in favor of assessee. In the light of the aforesaid provisions, it is apparently clear, that deep-freezers and tricycles are re-sold to the distributors and dealers of the petitioner in the same form and condition as a transfer on the right to use the goods. Such “transfe .....

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N AGARWALA AND VINOD KUMAR MISRA, JJ For the Petitioner : Piyush Agrawal For the Respondent : C.S.C. ORDER Per: Tarun Agarwala ,J. 1. The petitioner is a Limited Company incorporated under the Companies Act, 1956 and is engaged in the business of purchase and sale of various items from Vadilal Industries Limited such as ice-creams, processed food, frozen food, frozen desserts, mango pulp, etc. The petitioner is registered as a dealer under the U.P. Value Added Tax Act, 2008 (hereinafter referred .....

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n order to extend the shelf life and proper preservation, the petitioner accordingly provides deep-freezers and tricycles on lease to its distributors and dealers. On these tricycles small freezers are mounted and hawkers are appointed by the distributors or dealers of the petitioner in order to keep the product in a saleable and marketable condition. 3. These deep-freezers and tricycles are purchased by the petitioner from outside the State of U.P. from various manufacturers of deep-freezers an .....

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ement with its distributors and dealers. The lease agreement provides that the ownership of the deepfreezers and tricycles are never transferred and the same could be used by the distributors and dealers only for the purpose of storing the ice-creams, processed food, frozen food etc. supplied by the petitioner. After the termination of the lease period, the lessee are required to return the deep-freezers and the tricycles to the petitioner and thereafter the said product is given to another deal .....

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file Writ Petition No.543 of 2015, which was disposed of by an order dated 9.7.2015 directing the assessing authority to pass an appropriate order in accordance with law on the petitioner's application for grant of Form-C. Instead of issuing Form-C, the petitioner received two show cause notices dated 5.8.2015 under Section 7(4) and Section 8 of the Act to show cause why the registration certificate should not be amended and deep-freezers and tricycles should not be deleted from the registra .....

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eilly, after considering the reply passed the impugned order dated 20.10.2015 under Section 7(4) of the Act and amended the registration certificate after deleting the two items, namely, deep-freezer and tricycle , on the ground, that the petitioner is not re-selling the said items. By another order of the same date, the Deputy Commissioner rejected the petitioner's application for issuance of Form-C, on the ground, that the registration certificate has been amended and, therefore, Form-C co .....

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tificate without any valid cause and on an incorrect ground, namely, that the items purchased by them were not meant for resale, which was wholly incorrect and based on a wrong interpretation of the law. The learned counsel submitted that the petitioner is entitled to purchase goods from outside the State at concessional rate, if the said goods was intended for resale by the petitioner. In the instant case, deep-freezers and tricycles purchased by the petitioner by a deeming fiction comes within .....

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sale and that any amount received as lease rent would be subjected to payment of VAT under the VAT Act. 8. On the other hand, the learned senior counsel further submitted that the Deputy Commissioner committed an error in refusing to issue Form-C. The learned counsel submitted that the impugned order could only be prospective and could not apply to pending applications and, therefore, Form-C in any case should have been issued on those applications which were pending prior to the date of passing .....

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Rule 12(7) of the Central Sales Tax Rules, the Forms are required to be furnished by the assessing authority within three months or such extended period as the authority deems fit. In the instant case, Form-C for the assessment years 2010-11 and 2011-12 and 2012-13 has been requested which has become belatedly barred by limitation and, consequently, no mandamus could be issued for issuance of Form-C for such period. It was further contended that against the amendment of the registration certific .....

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ve remedy, the High Court could entertain a writ petition depending on the facts of each case. Exceptions to the Rule of alternative remedy has been carved out by the Supreme Court and one such exception is, that the writ petition would be maintainable under Article 226 of the Constitution despite the availability of an alternative remedy, if a pure question of law is involved for interpretation and where no factual dispute exists. 11. This Court has dealt at length on the issue of alternative r .....

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der passed by the Joint Registrar was arbitrary and in clear violation of the second proviso to Section 53(1) of the Act. 12. In the instant case, we find, that no factual dispute exists and the Court is only required to interpret the words for resale as used in Section 8(3) (b) of the Central Sales Tax Act. Accordingly, the preliminary objection raised by the respondent is rejected. 13. Every dealer, who is required to pay tax under the Central Sales Tax Act is required to be registered in term .....

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the Act would be such goods as specified in the certificate of registration which are intended for resale which would be subjected to concessional rate of tax. For facility, Section 8(1)(2)(3) and (4) of the Central Sales Tax Act are extracted hereunder:- 8. Rates of tax on sales in the course of inter-State trade or commerce,- (1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liabl .....

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nter-State trade or commerce not falling within sub-section (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of the State. Explanation.- For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (3) The goods referred to in sub-section (1),- (a) [***] (b) [***] .....

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registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale; (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause(c). (4) The provisions of sub-section (1) shall not apply to any .....

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the aforesaid, it is clear, that the goods mentioned in the certificate of registration granted under Section 8(3)(b) of the Act if purchased from outside the State of U.P. would be subjected to concessional rate of tax upon issuance of Form-C by the assessing authority of the petitioner under the VAT Act. 15. The word resale has not been defined under the Central Sales Tax Act. However, the word sale has been defined under Section 2(g) of the Act. For facility, Section 2(g) of the Act is extra .....

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with its grammatical variations and cognate expressions, means any transfer of property in goods (otherwise than by way of a mortgage, hypothecation, charge or pledge) by one person to another, for cash or for deferred payment or for any other valuable consideration and includes, (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. A perusal of the said provision indicates that sale incl .....

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son; 18. Sale price has been defined under Section 2(h) of the Central Sales Tax as under: 2(h) sale price means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases .....

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(ad) of the VAT Act as under: 2(ad) "sale price" means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of goods at the time of or before the delivery of such goods, other than cost of outward freight or delivery or cost of installation in cases where such cost is separately charged; Expla .....

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l be determined after deducting the aggregate of actual amount incurred towards labour and services, amount of profit relating to supply of labour and services and such other amounts as may be prescribed from the total amount received or receivable in respect of such works contract; (iv) In respect of transfer of right to use goods, any goods for any purpose (whether or not for a specified period) sale price means the valuable consideration received or receivable in respect of such transfer of r .....

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tion (viii) of Section 2(h) provides that any person who carries on the business of transfer of the right to use any goods for any purpose would also be a dealer. For facility, Section 2(h)(viii) of the VAT Act are extracted hereunder: 2(h)"dealer" means any person who carries on in Uttar Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other .....

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the right to use any goods for any purpose would be deemed also to be a dealer of such business. By a deeming fiction, the definition of the word sale includes transfer of right to use any goods for any purpose. Therefore, the amount received on such transfer of right to use is leviable to tax. Section 3 of the VAT Act is the charging Section. The incidence and levy of tax as specified under Section 3(6)(a) of the VAT Act reads as under: (6) For the purposes of this Act, following shall be dete .....

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facility, Rule 10 of the Rules provides as under: 10. Determination of turnover of sale in cases of transfer of right to use any goods:- The tax on the turnover of sale where such sale of any taxable goods is effected by way of transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration shall be computed on taxable turnover. For the purpose of determining the taxable turnover of sale of such goods, the amou .....

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such transfer, by the lessor to the lessee, is made as a result of a sale- (i) in the course of inter-state trade or commerce; or (ii) outside the State; or (iii) in the course of export of the goods out of the territory of India or in the course of import of goods into the territory of India. 23. From a perusal of the Section 3 read with Rule 10 of the Rules, it is absolutely clear that the transfer of right to use any goods is considered to be a sale and any amount received as lease rent is s .....

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f tax on the purchase of these products. The respondents have also admitted that the petitioner has entered into a lease agreement with its distributors and sub-dealers and is paying taxes every year on the lease rent. 25. In the light of the aforesaid provisions, it is apparently clear, that deep-freezers and tricycles are re-sold to the distributors and dealers of the petitioner in the same form and condition as a transfer on the right to use the goods. Such transfer of the right to use the go .....

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the Central Sales Tax Rules is patently erroneous. The assessing officer of the petitioner cannot invoke Rule 12(7) of the Rules. Such objection, if any, could be invoked by the assessing officer of the State where the goods indicated in the registration form are being purchased. Once a request has been made for issuance of Form-C and the goods are indicated in the registration certificate issued under Section 8(3)(b) of the Act, the assessing authority could not stall the said request for an un .....

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