2018 (4) TMI 1774 - HC - VAT and Sales Tax

Court rules on tax implications & due process in Trade Tax Act case, emphasizing against double taxation

M/s Tata Motors Limited Lucknow Versus Commissioner, Commercial Tax U.P. Lucknow And Another

The court ruled in favor of the revisionist on the issue of invoking the presumption under Section 3-AAA of the U.P. Trade Tax Act, 1948 for taxing sales ... Sale of motor vehicles/chassis - Section 3-AAA of the U.P. Trade Tax Act,1948 - Transfer of right to use - HELD THAT:- Appeal is admitted on the substantial question of law. Issues:1. Invocation of presumption under Section 3-AAA of the U.P. Trade Tax Act, 1948 for taxing sales to authorized dealers.2. Taxability of rent received for machinery/equipment under 'Transfer of right to use.'3. Consideration of Application under Section 12-B of the Act by the Tribunal.Analysis:1. The first issue revolves around the invocation of the presumption under Section 3-AAA of the U.P. Trade Tax Act, 1948 for taxing sales made by the revisionist to authorized dealers. The key question is whether the sales, which are taxable at the point of sale to the consumer, can also be taxed when the authorized dealers have already collected and deposited the tax on the same transactions. The revisionist argues against double taxation in this scenario.2. Moving on to the second issue, it concerns the taxability of rent received by the revisionist for machinery/equipment under the concept of 'Transfer of right to use.' The crux of the matter lies in determining whether the effective control of the machinery was transferred to a third party, TMML, and whether TMML had the exclusive authorization to use the machinery to the exclusion of the revisionist. Additionally, the revisionist's compliance with service tax obligations on the same amount is highlighted as a relevant factor.3. The final issue pertains to the Tribunal's refusal to consider the revisionist's Application under Section 12-B of the Act. This raises the question of whether the Tribunal, as the last fact-finding authority and the final authority to admit additional evidence under the Act, was justified in not entertaining the revisionist's application. The revisionist seeks a fair opportunity to present additional evidence, emphasizing the importance of due process in the proceedings.In conclusion, the judgment addresses significant legal questions regarding tax implications under the U.P. Trade Tax Act, 1948, focusing on the application of statutory provisions, the interpretation of contractual arrangements, and the procedural aspects of evidence submission before the Tribunal. The parties involved await further proceedings as per the court's directions, ensuring a fair and thorough consideration of the issues at hand.