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of <h1>Supreme Court invalidates Circular imposing State Development Tax on composition scheme dealers</h1> <h3>RCC. Developers Pvt. Ltd. Tru´ Director VK. Goel Versus State of UP. & Others</h3> RCC. Developers Pvt. Ltd. Tru´ Director VK. Goel Versus State of UP. & Others - TMI Issues:Challenge to Circular dated 04.6.2007 | Imposition of State Development Tax | Validity of orders under U.P. Trade Tax ActAnalysis:The petitioner sought writs to quash the Circular dated 04.6.2007 and orders imposing State Development Tax for assessment years 2005-06 and 2006-07. The High Court noted that similar issues were raised previously by Systematic Conscom Ltd., resulting in the quashing of the Circular and setting aside of orders demanding State Development Tax. The Supreme Court upheld the High Court's decision, emphasizing that the introduction of State Development Tax did not constitute a change in the rate of tax under Section 7-D of the Act. The Court clarified that dealers under the composition scheme were not obligated to pay State Development Tax. The State was given the discretion to demand the tax from dealers who opted for composition charges, with the provision for dealers to challenge such demands.The petitioner's counsel argued for relief based on the Supreme Court's decision, which invalidated the Circular dated 04.6.2007. Conversely, the State contended that the legislative amendment introduced State Development Tax as a separate charge under Section 3H of the Act. The Court observed that the issues had been conclusively addressed by both the High Court and the Supreme Court. Given the quashing of the Circular, no further orders were deemed necessary. The orders imposing State Development Tax for the petitioner were set aside, mirroring the Supreme Court's directive. The assessing authorities were granted the discretion to issue demand notices for State Development Tax to dealers under the composition scheme, allowing dealers to challenge such notices before the appropriate forum.In conclusion, the writ petition was disposed of in line with the judgments of the High Court and the Supreme Court. The Circular dated 04.6.2007 was invalidated, and the orders imposing State Development Tax for the petitioner were set aside. The decision provided clarity on the applicability of State Development Tax to dealers under the composition scheme, with provisions for challenging any future demands from the assessing authorities.
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