TMI Blog2017 (3) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst applicant. - Sales/Trade Tax Revision No. 783 of 2003 - - - Dated:- 7-3-2017 - Hon'ble Ashwani Kumar Mishra, J. For the Applicant : Rishi Raj Kapoor, Bharaj Ji Agarwal For the Opposite Party : C.S.C. ORDER 1. This revision under Section 11 of the U.P. Trade Tax Act, questions an order passed by the Tribunal dated 11.6.2003, allowing department's second appeal, and thereby holding the assessee liable to pay interest under Section 8 (1) of the Act, on the ground that tax payable thereunder was admitted. 2. Undisputed facts are that assessee is engaged in manufacturing and sale of G.I. Pipes, Steel Tubes etc. For such manufacturing activity, it purchases raw materials against form III-B. In respect of assessment year 1998-99, the revisionist submitted its books of account disclosing its turnover and liability to pay tax and also claimed set-off under Section 4-BB of the Act to the extent of ₹ 57,76,673.57/-. The Assessing Authority, however, allowed benefit under Section 4-BB to the extent of ₹ 42,26,036/- only as against the amount claimed of ₹ 57,76,673.57/-. Since turnover was accepted, the Tribunal treated the shortfall in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the parties, in the factual scenario of the present case, it would be appropriate to refer to the statutory Scheme. Section 8(1) together with its explanation, and sub-Section (1-B) thereof are reproduced:- 8. Payment and recovery of tax (1) The tax admittedly payment shall be deposited within the time prescribed or by thirty 1st days of August, 1975, whichever is later, failing which simple interest at the rate of two per cent (per menssum) shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed (till the date of payment of such amount) whichever is later, and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest. Explanation:- For the purpose of this Sub-Section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, turnover of purchases, or of both, as disclosed in the accounts mentioned by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts are maintained, then accordance to the estimate of the dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The goods in which he was dealing fell within the category of unspecified goods. For unspecified goods, the rate of tax prior to 1st December, 1973 was 3.5 per cent. With effect from the said date, however, the rate was revised to 7 per cent. In the return filed by the respondent assessee, he arrived at the tax admittedly payable on the trunover disclosed by him, by applying rate of 3.5 per cent. The authorities held that inasmuch as he had not paid the tax admittedly payable within the meaning of Section 8(1) inasmuch as he has not calculated and paid the tax at the rate prescribed by law- he must be held to have failed to comply with the requirement of Section 8(1). Accordingly, interest as prescribed by the said section was levied. The Appellate Authority as well as the Tribunal affirmed the said levy. The matter was carried to the High Court by way of a revision. The learned Judge allowed the revision holding that There have been no finding by the Tribunal that the assessee acted mala fide in not depositing the tax at the rate of 7 per cent. The demand of interest was not justified. 4. We are unable to see any relevance of the mala fides in this case. Section 8(1) does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted under clause (a) or clause (b) shall not exceed the amount of tax payable separately under this Act or the Central Sales Tax, Act, 1956. 9. The authorities have held that tax paid on raw material actually used for manufacture of end product was to the extent of ₹ 42,26,036/- , and thereby restricted the benefit of set-off to that extent. The first Appellate Authority, however, altered liability of interest under Section 8(1-B), on the ground that there was a bonafide dispute with regard to set-off admissible and consequent liability to pay tax. The Appellate Authority, affirmed the set-off allowed by the Assessing Authority based upon actual use of raw materials during the period in question. The assessee did not challenge the determination of set-off, and has deposited the amount of deficient tax and interest in terms of Section 8(1-B) of the Act. The Tribunal, however, has reversed the order passed by the First Appellate Authority to the extent liability of interest under Sub-Section (1) was substituted with sub-Section (1-A), on the ground that turnover and rate of tax were not disputed, and amounted to 'tax admitted'. 10. Learned Senior Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has been a provisional assessment and a notice of demand prescribing the period within which the tax was to be paid. 11. In M/s. Kohinoor Jewellers (Supra), the Division Bench of this Court was dealing in a different factual scenario. The dealer was not required to file monthly, quarterly or annual return as it had opted for payment of tax under the composition Scheme framed under Section 7-D of the Act. Since the assessee was found to have deposited the tax payable by him under the Scheme, the applicability of Section 8(1) of the Act was ruled out. 12. The facts in M/s. Bharti Airtel Ltd. (Supra) is also distinguishable, inasmuch as the liability to pay tax was not admitted, and had been disputed since the very beginning. Para 14 of the Judgement, noticing facts in that regard reads as under:- 14. Having heard the learned counsel for the parties and having perused the impugned order as well as the assessment orders, we find that even though the vires of the Act of 2007 had been upheld, the petitioner nonetheless disputed the liability of payment of tax under the Act of 2007 on the ground that the petitioner was importing electrical equipments and that the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced on behalf of the revisionist that partial set-off was unjustified in view of the law laid down by the Apex court in Commissioner of Sales Tax Bombay (Supra), as relied upon by this Court in M/s Maiden Industries (Supra) do not fall for consideration, inasmuch as the assessee has already accepted partial set-off allowed by the authorities under the Act. The set-off moreover has not been restricted to sales upon which tax is levied or collected but is based upon actual consumption of raw material for manufacturing the end product. There could be no dispute that set-off would be admissible only qua actual use of raw material and not beyond it. Raw material purchased in a specific period, if is not utilized in manufacturing end product and its sale, within that period, then set-off would not be admissible as the object is to obviate double taxation. However, such set-off can be claimed by the assessee during subsequent period, as and when the raw material gets utilized. Section 4-BB permits the tax payable on sale of end product to be set-off from the tax paid on raw material/packing material, to the extent of tax paid on purchases of raw material/packing material from which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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