Turnover computation on discontinuance by operation of law governs development tax liability under the U.P. Trade Tax framework.

Section 3-H imposes State Development Tax on dealers whose aggregate turnover under Section 3(2) crosses the statutory limit, and Section 3(2) is expressly subject to Section 18. Section 18 treats turnover as the aggregate turnover for cases where business is discontinued during the assessment year. In the context of the U.P. Trade Tax Act ceasing to apply after 31 December 2007 and the assessee thereafter falling under the VAT regime, the turnover for the period when the Trade Tax Act remained operative was computed by applying Section 18. The stated legal effect is that discontinuance by operation of law can trigger the special turnover computation for determining liability under the linked development tax provision.

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Issues: Whether the assessee's turnover for the period when the U.P. Trade Tax Act remained operative could be computed by applying Section 18 for determining aggregate turnover under Section 3(2) and, on that basis, attract development tax under Section 3-H.

Analysis: Section 3-H levies State Development Tax on dealers whose aggregate turnover, as referred to in Section 3(2), exceeds the statutory limit. Section 3(2) is expressly subject to Section 18. Section 18 applies where business is discontinued during the course of an assessment year and, for such cases, deems the turnover to be the aggregate turnover referred to in Section 3(2). The assessee carried on business under the U.P. Trade Tax Act only up to 31 December 2007, after which the Act ceased to apply by operation of law and the assessee was assessed under the VAT regime for the remaining period. The discontinuance of business under the U.P. Trade Tax Act was therefore treated as having occurred by operation of law, making Section 18 applicable for computing turnover for the nine-month period during which the Trade Tax Act operated.

Conclusion: The application of Section 18 for computing aggregate turnover and the consequent levy of development tax under Section 3-H were upheld.

Final Conclusion: The revision failed because the Tribunal's determination of turnover for the period governed by the U.P. Trade Tax Act was found to be lawful, and no interference was called for.

Ratio Decidendi: Where a tax statute applicable for part of an assessment year ceases to operate for the remaining period, the business under that statute is treated as discontinued by operation of law and the special turnover-computation provision for discontinuance applies for determining liability under the linked levy provision.

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