2013 (1) TMI 696 - HC - VAT and Sales Tax

Court Upholds Tax Liability on Opium Cultivation by Farmers

Deputy Narcotics Commissioner Versus Trade Tax Tribunal Bench-III, Lucknow

Deputy Narcotics Commissioner Versus Trade Tax Tribunal Bench-III, Lucknow - [2013] 64 VST 208 (All) Issues:1. Interpretation of tax liability on opium cultivation by farmers on behalf of the Narcotic Department.2. Imposition of interest under section 8(1) of the U.P. Trade Tax Act, 1948.3. Tax levied on opium grown by farmers on behalf of the Narcotic Department.Analysis:I. The case involved disputes regarding tax liability on opium cultivation by farmers on behalf of the Narcotic Department. The Narcotic Department claimed ownership of the opium crop and argued against the concept of sale. However, the Additional Chief Standing Counsel cited Supreme Court judgments emphasizing that opium sale to the Narcotic Department is a taxable item. The court upheld previous orders and dismissed the revisions filed by the Narcotic Department based on the established legal precedents.II. Regarding the imposition of interest under section 8(1) of the U.P. Trade Tax Act, 1948, the court highlighted the mandatory nature of interest charges as per legal precedents. Citing cases like Pepsico India Holdings Ltd. v. Commissioner of Trade Tax, the court emphasized that once tax liability is established, interest becomes payable as per the statutory provisions. The court dismissed the revisions seeking waiver of interest, upholding the Tribunal's orders.III. The issue of tax levied on opium grown by farmers on behalf of the Narcotic Department was also addressed. The Tribunal had ruled against tax liability on opium grown by farmers, but the court referred to the Union of India v. Sales Tax Officer judgment, establishing opium as a taxable item under the U.P. Trade Tax Act. Consequently, the court set aside the Tribunal's orders and allowed the revisions filed by the Department, thereby dismissing the revisions filed by the assessee.