Territorial reference under reorganisation law kept trade tax benefit alive for pre-2002 purchases in the erstwhile State

A preserved territorial reference under the Uttar Pradesh Reorganisation Act meant that section 4BB of the U.P. Trade Tax Act, 1948 continued to apply to the territories of the erstwhile State until changed by competent legislative or executive action. On that construction, purchases made before 23 March 2002 in areas later forming Uttarakhand were treated as purchases inside the State for the purpose of section 4BB, and the assessee obtained the benefit of that provision to that extent. For purchases made on or after 23 March 2002, the position was left to be determined by the assessing officer in accordance with law.

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Issues: Whether purchases made in the territories carved out for the State of Uttarakhand could be treated as purchases made inside the State for the purpose of section 4BB of the U.P. Trade Tax Act, 1948 in the light of section 86 of the Uttar Pradesh Reorganisation Act.

Analysis: Section 86 preserved the territorial operation of laws in force immediately before the appointed day and provided that territorial references to the State of Uttar Pradesh in such laws were to be construed as referring to the territories of the erstwhile State until otherwise provided by a competent legislature or authority. On that construction, the reference to the State in section 4BB of the U.P. Trade Tax Act, 1948 covered both the territories of the existing State of Uttar Pradesh and the territory of Uttarakhand until a contrary provision was made. Accordingly, purchases made in any part of the pre-reorganisation State were to be treated as purchases made inside the State for the relevant period. For purchases made on or after 23 March 2002, the effect was left to be determined by the assessing officer in accordance with law.

Conclusion: Purchases made before 23 March 2002 within the territories of the erstwhile State of Uttar Pradesh qualified for the benefit of section 4BB, and the assessee succeeded to that extent.

Ratio Decidendi: Where a reorganisation statute preserves territorial references in an existing law, those references continue to apply to the territories of the erstwhile State until altered by competent legislative or executive action.

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