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2016 Supreme(SC) 1543
SUPREME COURT OF INDIA
A.K. SIKRI, ROHINTON FALI NARIMAN, JJ.
M/s ITC Limited - Appellant
Versus
State of U.P. & Ors. - Respondents
Civil Appeal Nos. 3161-3162 of 2008
Decided On : 22-07-2016
For the Appellant : Mr. Arvind P. Dattar, Mr. Ajay Aggarwal, Ms. Mallika Joshi, Ms. Ruchika and Mr. Rajan Narain
For the Respondents: Mr. Ravi Prakash Mehrotra, Mr. Vibhu Tiwari, Mr. Abhinav K. Malik and Mr. Vinay Garg
The benefit under Section 4B(1)(a-1) and the Notification dated 29.08.2003 is available to the dealer who sells or supplies the goods, and the conditions and restrictions should be interpreted in that context.
Headnote:
Validity of Judgment - U.P. Trade Tax Act - Section 4B(1)(a-1) - Summary of Acts and Sections: Section 4B(1)(a-1) of the U.P. Trade Tax Act, 1948 - The court discussed the provisions of Section 4B(1)(a-1) and the exemption Notification dated 29.08.2003, which provide relief to certain manufacturers and first purchasers of goods liable to tax under Section 3D. The court highlighted the conditions for claiming the benefit under these provisions and emphasized the importance of reading the conditions and restrictions in the context of the dealer who sells or supplies the goods. The court also addressed the misconceived arguments regarding the relevance of Section 3D and the applicability of the benefit to certain manufacturers.
Fact of the Case:
The appellant challenged the imposition of purchase tax on wheat by the Deputy Commissioner, Trade Tax, Saharanpur, under Rule 41(6) of the U.P. Trade Tax Rules. The appellant claimed exemption under Section 4B(1)(a-1) of the Act and the Notification dated 29.08.2003 for the purchase of wheat, which was denied by the Deputy Commissioner and upheld by the High Court.
Finding of the Court:
The High Court's dismissal of the writ petitions was set aside, and the appellant was found entitled to the benefit of Section 4B(1)(a-1) and the Notification dated 29.08.2003. The court emphasized that the provisions of Section 4B(1)(a-1) should be read as they are, and the conditions and restrictions should be interpreted in the context of the dealer who sells or supplies the goods.
Issues: Validity of the imposition of purchase tax on wheat, interpretation of Section 4B(1)(a-1) and the Notification dated 29.08.2003, and the relevance of Section 3D of the Act.
Ratio Decidendi: The court held that the benefit under Section 4B(1)(a-1) and the Notification dated 29.08.2003 is available to the dealer who sells or supplies the goods, and the conditions and restrictions should be construed accordingly. The court rejected misconceived arguments regarding the relevance of Section 3D and the applicability of the benefit to certain manufacturers.
Final Decision: The judgment of the High Court and the order passed by the Deputy Commissioner, Trade Tax, were set aside, and the appeals were allowed with consequential relief.
ORDER :
These appeals are preferred by the appellant/assessee questioning the validity and/or propriety of the judgment dated 16.01.2007 passed by the High Court of Judicature at Allahabad whereby the writ petitions preferred by the appellant have been dismissed. The said writ petitions were filed by the appellant challenging the order dated 17.11.2006 passed by the Deputy Commissioner, Trade Tax, Saharanpur under Rule 41(6) of the U.P. Trade Tax Rules by which purchase tax at the prescribed rate of 4% amounting to Rs. 2,33,00,663/- had been imposed upon the appellant along with interest @ 14% on the admitted purchase of wheat.
2. To state at the outset, the appellant herein wanted to avail the benefit of exemption Notification dated 29.08.2003 issued under Section 4B(1)(a-1) of the Uttar Pradesh Trade Tax Act, 1948 (hereinafter referred to as 'the Act') which plea of the appellant was rejected by the Deputy Commissioner, Trade Tax and the High Court has, as mentioned above, upheld the order of the Deputy Commissioner, Trade Tax while dismissing the writ petitions filed by the appellant. Few relevant facts which need to be noticed to decide the controversy are as follows :
The appellant herein is the first purchaser of wheat from the farmers in the State of U.P. It supplies the wheat so purchased to certain Roller Flour Mills in the State of U.P. for conversion of the same to Atta and Maida. The period with which we are concerned is April, 2006 and May, 2006 during which the appellant had purchased wheat from those farmers and supplied the same for conversion into flour by grinding process to three flour mills. After conversion of wheat into flour it was taken back by the appellant from those flour mills for onward sale. It was the case of the appellant that it had been claiming exemption since 2004 for payment of purchase tax in respect of wheat in terms of Section 4B(1) (a-1) of the Act read with Notification dated 29.08.2003, both of which provide for such exemption in respect of goods that are "sold or supplied" by the first purchaser of the goods to such Roller Flour Mills. However, vide order dated 23.11.2006 passed by the Deputy Commissioner, this exemption was denied on the basis that the same was not available in case of supply of the wheat by the appellant to the Roller Flour Mills. Two show cause notices were issued by the Deputy Commissioner, Trade Tax and after considering reply thereupon and hearing the appellant, the demand of the show cause notices was confirmed. The orders passed by the Deputy Commissioner were challenged by filing two writ petitions which had been dismissed by the High Court by the impugned order.
3. Before adverting to the manner in which the High Court has decided the matter, we would like to reproduce the relevant provisions of the Act as well as exemption Notification dated 29.08.2003.
4. Section 3D of the Act, which is a charging section, prescribes the levy of trade tax on purchaser or sale of certain goods. These goods, admittedly, include wheat. Notwithstanding this provision contained in Section 3D of the Act, Section 4B(1)(a-1) contains a special provision providing special relief to such assessees. The heading of the section is "special relief to certain manufacturers". Since the appellant is claiming the benefit of the special relief that is provided under the aforesaid provision, we would like to reproduce sub-Section (1) of Section 4B in its entirety:
"Sub-Section (1) : Notwithstanding anything contained in Sections 3, 3-A, 3-AAAA and 3-D -
(a) Where any goods liable to tax under sub-section(1) of section 3-D are purchased by a dealer who is liable to tax on the turnover of first purchases under that sub-section, or where any goods are purchased by any dealer in circumstances in which such a dealer is liable to trade tax on purchase of such goods under section 3-AAAA and the dealer holds a recognition certificate issued under sub-section(2) in respect thereof, he shall be liable in res
