2018 (8) TMI 1162 - HC - VAT and Sales Tax

Court remands matter to Tribunal for further inquiry on deductions under U.P. Trade Tax Act

The Court remanded the matter back to the Tribunal for further inquiry regarding the disallowance of deductions under Section 3-F(2)(b)(iii) of the U.P. ... Deduction u/s 3-F(2)(b)(iii) of U.P. Trade Tax Act, 1948 - Works contract - deduction was disallowed on the ground that the revisionist was a manufacturer of finished aluminium windows - Whether the Tribunal has erred in treating the petitioner as a 'manufacturer' so as to deny the benefit claimed by it under section 3-F(2)(b)(iii) of the U.P. Trade Tax Act 1948 based on the work-contracts dated 1.12.2006 and 25.3.2006? Held that:- The Tribunal shall also take into account the assertion of the revisionist herein that in the earlier assessment year i.e. 2003-014 and the years subsequent to the one in dispute, i.e. year 2007-08 such deductions were allowed by the Revenue under similar works contract with the same parties - In view of the above, the question as to whether the revisionist was entitled to the deductions claimed under Section 3-F(2)(b)(iii) or not shall be looked into by the Tribunal in the light of what has been stated herein and record its finding accordingly in accordance with law keeping in mind Rule 68(5) of the U.P. Trade Tax Rules, 1948, as the relevant issue have not been appropriately considered. Tax Revision disposed off. Issues:Challenge to disallowance of deductions under Section 3-F(2)(b)(iii) of U.P. Trade Tax Act, 1948 based on being treated as a manufacturer.Analysis:The revisionist challenged the disallowance of deductions under Section 3-F(2)(b)(iii) of the U.P. Trade Tax Act, 1948, contending that they were wrongly treated as a manufacturer of finished aluminium windows. The dispute arose when goods were seized from a vehicle, and the driver stated that the revisionist loaded finished aluminium windows from the factory, leading to the conclusion that deductions were disallowed for works contract with U.P. Rajkiya Nirman Nigam Ltd., Lucknow. The revision was admitted based on the question of law regarding the Tribunal's error in treating the petitioner as a manufacturer.The First Appellate Authority and the Tribunal rejected the revisionist's claims, stating that the seized goods were related to the works contract, and as the revisionist was considered a manufacturer, the deductions were disallowed. The revisionist argued that the seized goods were not connected to the works contract, questioning the basis for treating the entire amount as that of a manufacturer. The revisionist also highlighted that opposite parties had allowed deductions under a different section, further challenging the disallowance under Section 3-F(2)(b)(iii).The State contended that the revisionist failed to prove that the seized goods were manufactured at the work contract site, supporting the disallowance of deductions. However, the Court noted discrepancies in disallowing the entire claimed amount solely based on the seized goods not being manufactured at the contract site. The Court found that the issue had not been appropriately considered at any level, leading to the decision to remand the matter back to the Tribunal for a detailed inquiry.The Court directed the Tribunal to investigate whether the seized goods were purchased from a registered dealer, paid tax on purchase, and had any relation to the works contract. The Tribunal was instructed to consider evidence, previous deductions allowed, and relevant laws while determining the admissibility of deductions under Section 3-F(2)(b)(iii). The Tribunal's order was set aside, allowing the revisionist to amend the revision and present evidence on the specified issues. The Court emphasized the need for substantial justice and a thorough examination of the matter before reaching a final decision.