TaxTMI 
TaxTMI 
2009 (3) TMI 872
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....2005 w.e.f. 1.5.2005, Section 3-H of the Act has been introduced levying State Development Tax at the rate not exceeding one percent of the taxable turnover as the State Government may by notification specify on the dealers whose aggregate turnover as referred to in sub-section (2) of Section 3, exceeds fifty lakh rupees. The Commissioner of Trade Tax has issued circular dated 4.6.2007 to all officers concerned stating therein that in case of civil and electrical contracts under the compounding scheme one percent State Development Tax is also leviable. By means of the present writ petitions, the petitioners are challenging the circular dated 4.6.2007 and the levy of one percent State Development Tax. Heard Sri Bharat Ji Agrawal, learned Senior Advocate, Sri Kunwar Saxena, Advocate, Sri S.D.Singh, Advocate, Sri N.C. Gupta, Advocate and Sri Ashok Kumar, Advocate appearing on behalf of of the petitioners and Sri S.P. Kesharwani, learned counsel appearing on behalf of the respondents. Sri Bharat Ji Agrawal, learned Senior Advocate submitted that under Section 7-D of the Act composition money is payable in lieu of the tax payable. The tax payable under section 7-D of the Act me....
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....ating levy of State Development Tax not exceeding one percent of the taxable turnover in case if the turnover of the dealer exceeds Rs. 50 lacs, in addition to the tax payable under any other provisions of the Act. He emphasis that for the levy of State Development Tax, assessing authority has to determine the total turnover and then taxable turnover and in case if the total aggregate turnover exceeds Rs. 50 lacs, the State Government Tax may be levied on the taxable turnover. This whole exercise of determination of the turnover and the taxable turnover is against the compounding scheme. He submitted that the composition amount fixed under the compounding scheme includes all the taxes under the provisions of the Act including the State Development Tax and, therefore, apart from the composition amount fixed under the compounding scheme, State Development Tax cannot be levied and demanded separately. He submitted that Section 7-D of the Act has an overriding effect over all the sections of the Act including Section 3-H of the Act. He further submitted that in Section 3-H (2) of the Act, the word used is "shall" which means that it is mandatory. He placed reliance on the decisions in ....
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....he compounding scheme and it has been provided that the State Development Tax shall not be chargeable over and above the composition amount. While, in the case of civil and electrical contracts under the compounding scheme such benefit has not been specifically provided. He submitted that in the counter affidavit, State Government has pleaded that they have not provided any compounding for State Development Tax in respect of civil and electrical contracts. He submitted that in case, if in an Act the word "notwithstanding" are used in two sections, the provision which is introduced later will prevail. He submitted that since section 3-H of the Act has been introduced subsequent to Section 7-D of the Act, therefore, Section 3-H of the Act will prevail over section 7-D of the Act. Reliance has been placed on the decision of the Apex Court in the case of M/S Maruti Udyog Ltd Versus Ram Lal and others reported in JT 2005 (1) SC, 449. He submitted that text and context has to be looked into and not the word "notwithstanding" only. Reliance is placed on the decision in the case of M/S Anand Swarup Mahesh Kumar Versus Commissioner of Sales Tax, reported in 1980 UPTC, 1308 (para 10 & 11). H....
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....ded in Section 18, be liable to tax under sub-section (1) if, during the assessment year, the aggregate of his turnover of --- (a) purchases of goods notified under Section 3-D; (b) purchases liable to tax under any other provisions of this Act; (c) sale of goods notified under Section 3-D, where such goods have not been purchased within the State; (d) sale of all goods (except those notified under Section 3-D), whether such sale is made by the dealer directly or through his branch, depot or agent inside the State, in the course of inter- State trade or commerce or outside the State, is less than two lakh rupees i the case of manufacturers and three lakh rupees in the case of other dealers, or such larger amount as the State Government may, by notification in the Gazette, specify in that behalf either in respect of all dealers in any goods or in respect of a particular class of such dealers. (3) Nothing in sub-section (2) shall apply in respect of --- (a) the sale by a dealer of goods imported by him from outside Uttar Pradesh, the turnover whereof is liable to tax under sub-sectio (1) of Section 3-A, or (b) the sale by a dealer of --- (i) goods imported ....
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....tive rates of trade tax on all purchases for and sales by a Power Project Industrial Unit, do not exceed the respective rates applicable as on the date of commencement of State Energy Policy subject to the conditions as may be notified in such notification. Section 3-A. Rates of tax.- (1) Except as provided in Section 3-D, the tax payable by a dealer under this Act shall be levied:- (a) on the turnover in respect of "declared goods", at the point of sale to the consumer at the maximum rate for the time being specified in Section 15 of the Central Sales Tax Act, 1956, or where the State Government, by notification, declares any other single point or a lesser rate, at such other point or at such lesser rate; (b) on the turnover in respect of such goods, other than the goods referred to in clause (a), at such point and at such rate, not exceeding fifty percent, as the State Government may, by notification, declare, and different points and different rates may be declared in respect of different goods. (c) on the turnover in respect of goods, other than those referred to in clause (a) or clause (b), at the point of sale by manufacturer or importer at the rate of ten percent....
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....h transfer was agreed to during that assessment year or earlier- (i) the amount representing the sales value of the goods covered by sections 3,4 and 5 of the Central Sales Tax Act, 1956; (ii) the amount representing the value of the goods exempted under section 4; (iii) the amount received as penalty for default in payment or as damages for any loss or damage caused to the goods by the person to whom such transfer was made,- (b) transfer referred to in clause (b) of sub-section (1),- (i) the amount representing the sales value of the goods covered by sections 3, 4 and 5 of the Central Sales Tax Act, 1956; (ii) the amount representing the value of the goods exempted under section-4; (iii) the amount representing the value of the goods on the sale or purchase whereof tax has been levied or is leviable under this Act at some earlier stage; (iv) the amount representing the value of the goods manufactured in a new unit exempted under section 4-A or section 4-AAA; (v) the amount representing the value of the goods supplied to the contractor by the contractee, provided that the ownership of such goods remains with the contractee under the terms of thecontract; ....
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....e case of composition of tax liability under Section 7-D, the turnover tax leviable under sub-section (1) shall be calculated separately and be charged in addition to the amount payable as composition money. (3) No tax under sub-section (1) shall be leviable on.- (a) the news-papers and other goods or the dealers specified or notified under section 4; (b) the declared goods mentioned under Section 14 of the Central Sales Tax Act, 1956; (c)the goods liable for the payment of additional tax; (d) sales to, or purchases by, manufacturers of such goods as specified in the recognition certificate issued under section 4-B; (e) goods on the turnover of which tax is leviable under Section 3-A or 3-D at the rate not exceeding two percent. (f) goods exempted under Section 4-C. Explanation- For the purposes of this section the expression "turnover tax" means the turnover tax on the sale or the purchase of goods as the case may be. Section 3-H of the Act after 1.5.2005. Section 3-H. State Development Tax.- (1) There shall be levied a State Development Tax at the rate not exceeding one percent of the taxable turnover as the State Government may by notification speci....
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....make the payment of the lump sum compulsory. There is no doubt that ex facie the two proviso to S. 4 employ language which is permissive, while the two Rules and the notification employ language which is imperative. The two provisos to S.4 are enabling, and thereby authorise the State Government to accept a lump sum payment in lieu of the tax actually chargeable. The word 'accept" shows that the election to pay a lump sum is with the taxpayer, who may choose one method of payment or the other. The inclusion of such a provision is designed to promote easy observance of the Act and also its easy enforcement. The charge of tax calculated on fares and freights involves difficulties for the operations who have to keep accounts and also difficulties for the taxing authorities, who have to maintain constant checks and inspections. The lump sum payment is a convenient mode by which an amount is payable per year irrespective of whether the tax would be more or less if calculated on actual fares or freights. The operators pay the lump sum if they so choose, to avoid having to maintain accounts and to file returns, and the Government accepts it to avoid having to inspect accounts and to k....
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....le and receivable by each other. The determination of the lump sum in lieu of tax, displaces the requirement of regular assessment proceedings. The qualification of tax liability is by agreement as per terms of the scheme, which would bind both the parties. The object of introducing such scheme under the Taxing Statute is well established, as so many advantages are attached to such schemes, besides being hassle free to the dealer, it also avoids unnecessary litigation. The department in its turn receive a fixed amount as tax without undertaking the assessment work and thus saves a lot of time. It is also facilitates the speedy recovery of tax. In this background we have to answer the issues raised in the writ petition." In the case of Vora Electric Service, Kanpur Vs. State of U.P. and others, reported in 2005 UPTC, 977. Division Bench of this Court held as follows: "Section 7-D of the Act starts with obstance clause, i.e. "notwithstanding anything contained in the Act." Thus it has an overriding effect over the provision of the Act. Perusal of section shows that it contemplates payment by agreement in lump sum. Once the department agrees to accept the tax in the name of comp....
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....to the said alternate method of taxation, cannot complain. It has further held that having voluntarily and within the full knowledge of the features of the alternate method of taxation, opted to be governed by it, a contractor cannot be heard to question the validity of the relevant sub-sections or the Rules. The impugned sub-sections have been evolved for convenient, hassle free method of assessment of tax, just as the system of levy of entertainment tax on the gross collection capacity of the cinema theatre and by opting to this alternate method, the contractor saves himself the botheration of book keeping, assessment, appeals and all that it means. It has also held that it is not necessary to enquire and determine the extent or value of goods which have been transferred in the course of execution of a works contract, the rate applicable to them and so on. It is only an alternative method of ascertaining the tax payable, which may be availed of by a contractor if he thinks it advantageous to him. The Constitution does not preclude the Legislature from evolving such alternate, simplified and hassle free method of assessment of tax payable making it optional for the assessee. Si....
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....al production basis under Section 3A(4) of the Central Excise Act, 1944 in case it is less than the duty payable under sub-rule (3) of Rule 96ZO. The said sub-rule is quite clear that the option under it is available subject to the condition that once having opted it, the benefit, if any, under sub-section (4) of Section 3A of the Central Excise Act, 1944 shall not be available. In the case of Satish Prakash Ajay Kumar Vs. Assistant Sugar Commissioner, Saharanpur and others, reported in 1980 UPTC, 64 (FB), Full Bench of this Court while interpreting the provisions of Section 3(1)(b) of the U.P. Sugarcane Purchase Tax Act, 1961 and Rule 13 of the Rules framed thereunder, has held that the said Act and the Rules do not contemplate exemption from the liability for payment of tax by the owner of a unit who has opted for the assumed basis merely because he has, either by choice or on account of some mechanical defect, been unable to work some of the crushers composing his unit for any length of time during a particular assessment year. In the case of Venkateshwara Theatre v. State of Andhra Pradesh, reported in AIR 1993 SC 1947, the Apex Court while considering the scheme announce....
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....n 2007 NTN (Vol.33) 53, this Court has considered the provisions of Section 7-D of the Act with reference to Section 10-B of the Act. The question for consideration was whether, that once the assessee and the assessing authority agree for the payment of composition amount in lump sum for a particular period can the same be revised under section 10-B of the Act. This Court held that the agreement between the assessing authority and the assessee is not in the nature of order and cannot be revised under section 10-B of the Act. Perusal of Section 7-D of the Act and other provisions of the Act and various decisions referred herein above, it is apparent that Section 7-D of the Act has an overriding effect over other sections of the Act including Section 3-H of the Act which provides levy of State Development Tax. It is an alternative method of payment of tax. On the scheme being introduced by the State Government, if the assessing authority agrees for the payment of composition amount in lieu of tax payable such agreement is binding on the assessee as well as assessing authority. It can be nullified only under compounding scheme itself, namely, in case of any suppression of fact, mis....