2000 (2) TMI 802 - HC - VAT and Sales Tax

Court quashes sales tax imposition, upholds exemption certificate under U.P. Sales Tax Act.

Anil Kumar Ramesh Chandra Glass Works and Another Versus State of Uttar Pradesh and Another

Anil Kumar Ramesh Chandra Glass Works and Another Versus State of Uttar Pradesh and Another - [2000] 119 STC 305 (All) Issues Involved:1. Validity of notices dated December 10, 1985, issued by the Sales Tax Officer.2. Validity of assessment orders dated December 26, 1985.3. Demand of Rs. 3,39,100 as sales tax.4. Prohibition or restraint on imposing or realizing sales tax.5. Entitlement of the petitioner's unit to exemption under section 4-A of the U.P. Sales Tax Act.6. Jurisdiction of the Sales Tax Officer over the eligibility certificate granted under section 4-A.Detailed Analysis:1. Validity of Notices Dated December 10, 1985:The petitioners challenged the notices dated December 10, 1985, issued by the Sales Tax Officer for various assessment years and provisional assessments. The court examined whether the Sales Tax Officer had the jurisdiction to issue such notices despite the petitioners holding an eligibility certificate under section 4-A of the U.P. Sales Tax Act, 1948. The court concluded that the Sales Tax Officer did not have the jurisdiction to ignore the eligibility certificate as long as it was not canceled by the competent authority.2. Validity of Assessment Orders Dated December 26, 1985:The petitioners also contested the assessment orders dated December 26, 1985. The court found that the Sales Tax Officer had no jurisdiction to assess or demand sales tax from the petitioners' unit, which had been granted an eligibility certificate under section 4-A. The assessment orders were therefore deemed invalid and quashed.3. Demand of Rs. 3,39,100 as Sales Tax:The demand for Rs. 3,39,100 as sales tax was based on the assessment orders that were found to be without jurisdiction. Since the assessment orders were quashed, the demand for the sales tax was also invalidated.4. Prohibition or Restraint on Imposing or Realizing Sales Tax:The court issued a mandamus or prohibition restraining the Sales Tax Officer from imposing or realizing any amount as sales tax on the turnover of glass bangles manufactured by the petitioners' unit. The court held that the Sales Tax Officer could not act against the eligibility certificate unless it was canceled by the competent authority.5. Entitlement to Exemption Under Section 4-A:The petitioners were found to be entitled to the exemption under section 4-A of the U.P. Sales Tax Act. The eligibility certificate granted by the Joint Director of Industries was valid and binding until canceled by the competent authority. The court reiterated that the Sales Tax Officer had no authority to question or ignore the eligibility certificate.6. Jurisdiction of the Sales Tax Officer:The court concluded that the Sales Tax Officer lacked jurisdiction to sit in judgment over the eligibility certificate granted under section 4-A. The power to grant or cancel such certificates rested solely with the State Government or the designated authorities, and not with the Sales Tax Department. The court cited previous judgments to support this view, emphasizing that the eligibility certificate remains operative until canceled by the competent authority.Conclusion:The writ petition was allowed, and the impugned notices and assessment orders were quashed. The court held that the Sales Tax Officer had acted without jurisdiction, and the petitioners were entitled to the exemption granted under section 4-A of the U.P. Sales Tax Act. There was no order as to costs.