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TMI Blog2016 (5) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... icals etc. used by it in the dyeing, colouring and printing of cloth for various traders. For facility, the facts narrated in Writ Petition No.273 of 2014, M/s Chandok Textiles Enterprises Pvt. Ltd. Vs. State of U.P. and others are being taken into consideration. 2. The petitioner is a Private Limited Company and is engaged in the process of dyeing, colouring and printing of cloth on job-work basis for various traders within and outside the State of U.P. The controversy regarding the taxability of dyes and chemicals used in colouring, bleaching, dyeing, printing of cloth was engaging the attention of the tax authorities for quite some time. The assessing authority was levying the tax on the dyes and chemicals by treating them to be a deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on to the ultimate purchaser. 4. In spite of an authoritative pronouncement by the State Government, the assessing authorities ignored the decision of the State Government and continued to impose tax on various traders treating the use of dyes and chemicals on the processing of cloth as a deemed sale. 5. The matter eventually was challenged in various writ petitions. The leading writ petition was Writ Petition No. 1683 of 2007, M/s Superfine Processors Pvt. Ltd. Vs. State of U.P. and others, which was ultimately decided by the writ Court by a judgment dated 10.01.2013. The writ Court held that dyes and chemicals used in the bleaching, colouring and dyeing of cloth are consumed in the process and are not transferred and, therefore, no t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. and others. The said writ petition was decided in a bunch of writ petitions. The leading writ petition being Writ Petition No. 1020 of 2009, M/s Style Dyers Vs. State of U.P. and others, was decided on 15.01.2013. The writ Court following the decision of Superfine Processors (Supra) allowed the writ petitions and quashed the assessment order. The writ Court held that the order of the State Government dated 07.10.2005 was binding upon the assessing authorities and further held that no tax on use of colours, dyes, chemicals, etc. used in bleaching, dyeing, processing and printing of gray cloths could be imposed. 7. In spite of an authoritative decision in the case of the petitioner, the assessing authority continued to impose tax on dyes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty was payable on cotton fabric, the State Government had issued a notification dated 14.12.57 exempting cotton fabric from imposition of sales tax on which additional excise duty had been paid. It was contended that after the enactment of Taxation Laws (Amendment) Act 2007 (Act No. 16 of 2007) by Parliament with effect from 1.4.2007, Section 4 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and also the IInd Schedule to the said Act have been omitted. The learned Special Counsel, therefore, contended that since additional excise duty was no longer payable, tax is now payable on cotton fabric under the VAT Act. 10. Having heard the learned counsel for the parties, we are of the opinion that the impugned as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law." 11. In the case of the petitioner, this Court in its decision dated 15.01.2013 also held that the order of the State Government dated 07.10.2005 was binding upon the assessing authorities. We are, therefore, of the considered opinion that it was no longer open to the assessing authorities to take a different stand as given by the State Government, which has also been affirmed by this Court. The finding given by the State Government in its order dated 07.10.2005 and by the Division Bench of this Court dated 10.01.2013 in the case of Superfine Processors (Supra) and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the processing of dyeing, colouring, bleaching on the cloth. The State Government has clearly given a decision that dyes and chemicals used in the processing of the cloth loose their identity and are, therefore, consumables and is not a deemed sale, which finding is binding upon the assessing authority. The payment of additional excise duty is wholly irrelevant to the transactions made under the VAT Act. The charge under the VAT Act is on the turnover of sale and not on the manufacture. A transaction may or may not be a manufacture but it has to come within the definition of sale as provided under the Vat Act. If the transaction does not satisfy the definition of sale, the question of subjecting it to tax under Vat Act does not arise. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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