Judgment

B. P. JEEVAN REDDY, J.:- Heard the counsel for the parties. This review petition has to be allowed following the ratio of the decision of this Court in Commr of Sales Tax, U. P. v. M/s. Agra Belting Works, Agra, (1987) 3 SCC 140.

2. The assessment year concerned herein is 1975-76. And the matter arises under the U. P. Sales Tax Act. The question pertains to taxability of turn-over relating to ice-cream.

3. The State of U. P. has been issuing from time to time, notifications under Section 4 of the Act, exempting milk and milk products from the levy of Sales Tax. It has also been issuing from time to time notifications under S. 3A notifying the rates of tax on sale/ purchase of different goods. In this case, we are concerned with one notification under Section 4 namely the one dated 21st May, 1974 and two notifications under Section 3-A dated 4th November, 1974 and 30th May, 1975. The notification under Section 4 dated 21-5-74 exempted milk and milk products from the levy of tax. Ice-cream was understood to be a milk product and, therefore, exempt. However, by notifications issued under Sec. 3-A (dated 4th November, 1974 and 30th May, 1975) a rate of tax was prescribed expressly for ice-cream among other goods.

4. In C. S.T. v. Agra Belting Works (1987 (3) SCC 140), a Bench of this Court comprising R. S. Pathak, C.J., Ranganath Misra and B. C. Ray, JJ. held, by a majority, that Sections 3, 3-A and 4 of the U. P. Sales Tax Act are parts of the taxing scheme incorporated in the Act, and therefore, where a notification is issued under Section 3-A prescribing a rate of tax for goods, which may have been exempted from tax by an earlier notification under Section 4, it must be held that the intention was to withdraw the exemption and make the sale leviable to tax at the rate prescribed in the notification. It was held that it is not necessary in such a case that a specific or separate notification withdrawing or revoking the exemption is issued. Following the said decision it must be held that the exemption granted to ice-cream by notification dated 21-5-1974 was undone by the notification dated 4-11-74 as well as by the notification dated 30-5-75.

5. For the above reasons the Review Petition is allowed and the order of the High Court dated 12th December, 1986 (which was the subject matter of SLP 14648/88) is set aside. For the same reasons, the order dated 9-1-89 in the aforesaid SLP 14648/88 is also set aside and the order of the Assessing Authority holding the turnover relating to ice-cream as taxable is restored.

6. Mr. Raju Ramachandra, learned Counsel for the respondent-dealer submitted that setting aside the order of the High Court at this distance of time would expose the respondent-dealer to penalties and other penal consequences in addition to tax. In our opinion the said apprehension is unfounded. No such proceeding for levying penalty or for visiting other penal consequences has been initiated so far. In any event, the facts of this case-particularly the conflict of opinion in the High Court on this point -make it appear that it may not be a case calling for levy of penalty or for visiting other penal consequences.

7. There shall be no order as to costs.

Petition allowed.

For Citation : AIR 1994 SC 2383