Concessional sales tax benefit denied where raw materials were used for goods sent outside the State on consignment basis

Concessional raw-material purchases under section 4-B of the U.P. Sales Tax Act were restricted to use in notified goods not intended for consignment dispatch outside the State. Where hydrochloric acid was bought at concessional rate for manufacture, but the finished goods were subsequently sent outside Uttar Pradesh on consignment basis, the statutory benefit did not apply. The Tribunal was justified in sustaining the levy of differential tax under section 4-B(6), and the assessee remained liable for the difference tax.

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Issues: Whether the assessee was liable to pay the difference of tax under section 4-B(6) of the U.P. Sales Tax Act when raw materials were purchased at concessional rate but the manufactured goods were sent outside the State on consignment basis.

Analysis: The assessee had purchased hydrochloric acid on concessional terms for manufacture of notified goods, but the goods ultimately manufactured from those materials were dispatched on consignment basis outside Uttar Pradesh. The statutory scheme treated the benefit under section 4-B as confined to raw materials intended for use in goods not meant to be sold or moved on consignment basis. In that situation, the Tribunal was justified in sustaining the levy of the differential amount of tax under section 4-B(6).

Conclusion: The demand of difference tax was upheld and the assessee was held liable; the decision was against the assessee.

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