Writ maintainability and taxable turnover: tooling amortisation treated as sale consideration under U.P. trade tax law.

A binding trade tax circular and pre-decided show cause notices can justify writ jurisdiction despite the availability of statutory remedies, because insisting on the ordinary process would be an empty formality. In the same U.P. Trade Tax Act context, tooling supplied by the customer and used exclusively in manufacture was treated as part of the pricing arrangement, so the amortisation cost was regarded as consideration for the transfer of the right to use goods and included in taxable turnover. The article therefore states that tooling amortisation remained liable to trade tax, even though it was separately shown in invoices and adjusted in accounts.

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Issues: (i) Whether the writ petition against the impugned circular and consequential show cause notices was maintainable despite availability of statutory remedies; (ii) whether tooling amortisation cost was includible in the taxable turnover under the U.P. Trade Tax Act, 1948.

Issue (i): Whether the writ petition against the impugned circular and consequential show cause notices was maintainable despite availability of statutory remedies.

Analysis: The circular issued by the higher trade tax authority was binding on the assessing authority. The notices showed that the authority had already proceeded on a pre-decided view, so requiring the assessee to pursue the ordinary statutory process would be an empty formality. In such circumstances, the existence of an alternative remedy did not bar writ jurisdiction.

Conclusion: The writ petition was maintainable and the Court entertained it.

Issue (ii): Whether tooling amortisation cost was includible in the taxable turnover under the U.P. Trade Tax Act, 1948.

Analysis: Under the agreement, the customer supplied tooling for use exclusively in manufacturing the parts, retained ownership, and fixed amortisation cost as part of the pricing arrangement. The transaction was treated as a transfer of the right to use goods within the extended meaning of sale. The Court held that the amount described as tooling amortisation cost was part of the consideration for the sale and formed part of turnover, even if separately shown in the invoice and adjusted in accounts.

Conclusion: Tooling amortisation cost was includible in turnover and liable to trade tax.

Final Conclusion: The impugned circular was upheld and the challenge to the proposed assessment failed, leaving the trade tax authority free to proceed on the basis that tooling amortisation formed part of taxable turnover.

Ratio Decidendi: Where a charge represents consideration for the transfer of the right to use goods or forms part of the real sale consideration, it is includible in taxable turnover even if separately described in the invoice or adjusted by agreement; a binding circular coupled with a pre-decided show cause notice may justify writ intervention despite alternative remedies.

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