1. Dispute regarding the adjustment of State Development Tax under Section 3-H of the U.P. Trade Tax Act, 1948, against exemptions granted under Section 4-A. (Para 4 , 5 , 6 , 7 , 8 )
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2022 Supreme(SC) 832
SUPREME COURT OF INDIA
SANJIV KHANNA, BELA M. TRIVEDI, JJ.
COMMISSIONER OF TRADE TAX, U.P. & ORS. Appellant(s)
VERSUS
SANTOSH KUMAR KUSHWAHA Respondent(s)
CIVIL APPEAL NO. 1734 OF 2022 (ARISING OUT OF SLP (C) NO. 24643 OF 2012), CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SLP (C) NO. 25543 OF 2012), CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SLP (C) NO. 20820 OF 2014), CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SLP (C) NO. 20819 OF 2014), CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SLP (C) NO. 21275 OF 2014), CIVIL APPEAL NO. OF 2022 (ARISING OUT OF SLP (C) NO. 26967 OF 2015)
Decided on : 02-03-2022
Important Points
The main legal point established in the judgment is the interpretation of Section 3-H of the U. P. Trade Tax Act, 1948, and its interaction with the eligibility certificate issued under Section 4-A, as well as the clarification that the State Development Tax is an independent tax to which the composition scheme under Section 7-D of the Act would not apply.
Subject
Taxation Law - Sales Tax
Act Referred
Headnote
State Development Tax - Interpretation of Section 3-H of the U. P. Trade Tax Act, 1948 - Section 3-H
Fact of the Case:
The court examined the interpretation of Section 3-H of the U. P. Trade Tax Act, 1948, which levies a State Development Tax at a specified rate on dealers with aggregate turnover exceeding a certain limit. The issue revolved around the adjustment of the State Development Tax within the monetary limits specified in the eligibility certificate issued under Section 4-A.
Finding of the Court:
The court held that the assessees were entitled to the benefit of sub-section (3) to Section 3-H by seeking adjustment of the State Development Tax within the monetary limit specified in the eligibility certificate issued under Section 4-A. The court also clarified that the State Development Tax is an independent tax to which the composition scheme under Section 7-D of the Act would not apply.
Issues: The issues revolved around the interpretation of Section 3-H and its interaction with the eligibility certificate issued under Section 4-A, as well as the applicability of the composition scheme under Section 7-D of the Act.
Ratio Decidendi: The court interpreted the provisions of Section 3-H and its interaction with the eligibility certificate issued under Section 4-A, emphasizing that the adjustment of the State Development Tax should be within the monetary limits specified in the eligibility certificate. The court also clarified that the State Development Tax is an independent tax to which the composition scheme under Section 7-D of the Act would not apply.
Final Decision: The appeals were dismissed, and the respondent assesses were held liable to pay the State Development Tax under Section 3-H, even if they were availing the benefits of the composition scheme for other taxes.
Legal Category Hierarchy
Advocates:
Advocate Appeared:
For the Appellant : Mr. R. K. Raizada, Mr. Bhakti Vardhan Singh,
For the Respondent: Mr. Anish Kumar Gupta, Mr. Archana Preeti Gupta, Mr. Puneet Sheoran, Mr. Venugopal Abhay, Ms. Deepshikha Bharati, Mr. Dhruv Agrawal, Mr. Nishit Agrawal, Mr. Harsh Mishra, Mr. Jay Savla, Mr. Akshay Sharma, Mr. Rahul Gupta, Mr. Jasdeep Singh Dhillon, Adv.
Advocate Appeared:
For the Appellant : Mr. R. K. Raizada, Mr. Bhakti Vardhan Singh,
For the Respondent: Mr. Anish Kumar Gupta, Mr. Archana Preeti Gupta, Mr. Puneet Sheoran, Mr. Venugopal Abhay, Ms. Deepshikha Bharati, Mr. Dhruv Agrawal, Mr. Nishit Agrawal, Mr. Harsh Mishra, Mr. Jay Savla, Mr. Akshay Sharma, Mr. Rahul Gupta, Mr. Jasdeep Singh Dhillon, Adv.
Table of Contents
2. Whether State Development Tax adjustment under Section 3-H(3) should be proportional to tax rates or based on the overall monetary limit in the eligibility certificate. (Para 10 )
3. The monetary limit in Section 3-H(3) refers to the quantified limit in the eligibility certificate and Annexure-1, not the tax rate specified in Column 4. (Para 10 , 11 )
4. State Development Tax adjustment under Section 3-H(3) is governed by the monetary limits of the Section 4-A eligibility certificate, prevailing over other notification stipulations. (Para 11 )
5. Appeals regarding tax adjustment dismissed; appeals regarding composition scheme partly allowed, holding State Development Tax as an independent tax. (Para 13 , 18 , 19 )
6. How is State Development Tax adjusted under Section 3-H(3) of the U.P. Trade Tax Act, 1948?
It is adjustable within the monetary limits specified in the eligibility certificate issued under Section 4-A, including the limits quantified in the certificate and Column 5 of Annexure-1, regardless of the tax rate. (Para 10 , 11 )
7. Does the tax rate specified in Section 4-A notifications limit the adjustment of State Development Tax?
No. Section 3-H(3) refers specifically to the monetary limit, not the rate of tax. The legislature intended to protect assessees under Section 4-A except to the extent of the monetary limits. (Para 10 , 11 )
8. Does the composition scheme under Section 7-D of the U.P. Trade Tax Act, 1948, apply to State Development Tax?
No. State Development Tax levied under Section 3-H is an independent tax to which the composition scheme under Section 7-D does not apply, though assessees must pay it even if availing composition benefits for other taxes. (Para 18 )
9. What is the general rule for interpreting taxing statutes?
Taxing statutes must be read literatim or ad verbum based on clear expression, leaving no room for intendment, equitable considerations, or assumptions to supply perceived deficiencies. (Para 12 )
ORDER :
SLP(C) No. 21275/2014 and SLP(C) No. 26967/2015
1. Delay condoned.
2. Leave granted.
3. Heard the learned counsel for the parties at some length.
4. As the issue raised in this appeal relates to interpretation of Section 3-H of the U. P. Trade Tax Act, 1948, inserted w.e.f. 01.05.2005, we deem it appropriate to reproduce Sub-Sections (1) and (3) of Section 3-H, which read:
“3-H. State Development Tax- (1) There shall be levied a State Development Tax at the rate not exceeding one per cent of the taxable turnover as the State Government may by notification specify on the dealers whose aggregate turnover as referred to in subsection (2) of Section 3, exceeds fifty lakh rupees. The State Development Tax shall be realised in addition to the tax payable under any other provision of this Act. This tax shall cease to be levied after a period of five years from the date of publication of the notification issued by the State Government under this section.
(2) xxxxxxxxxxxxxxxxxxxxxxxxx
(3) The State Development Tax shall be adjustable in the monetary limit specified in the eligibility certificate issued under Section 4-A.
(4) xxxxxxxxxxxxxxxxxxxxxxxxx”
5. Section 3-H applicable from 01.05.2005 levies a new tax, namely the State Development Tax, payable as may be specified by the State Government in a notification at the rate not exceeding one per cent of the taxable turnover by the dealers whose aggregate turnover exceeds Rs. 50 lakhs. The State Development Tax is in addition to the tax payable under any other provision of the said Act. The tax imposed would cease to apply after five years from the date of publication of the notification issued by the State Government under Section 3-H. Sub-section (3) of Section 3-H states that the assessee is entitled to adjustment of the State Development Tax within the monetary limits specified in the exemption certificate issued under Section 4-A of the 1948 Act. We would, therefore, like to reproduce the relevant portion of sub-section (1) to Section 4- A of the U.P. Trade Tax Act, 1948, which reads:
“Section 4-A. Exemption from trade tax in certain cases. - (1) Notwithstanding anything contained in any other provisions except the provisions of Section 3-H of this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any district or parts of district in particular, it may on application or otherwise, in any particular cases or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production, and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to tax at such reduced rate as it may fix:
Provided that in respect of goods manufactured in a new unit having a fixed capital investment of five crore rupees or more in an existing unit which may make fixed capital investment of five crore rupees or more in expansion, diversification, modernisation and backward integration or in any one of them, within such period not exceeding five years as may be specified in the notification, the exemption from or reduction in the rate of tax may be granted.”
XX XX XX
6. The words “Notwithstanding anything contained in any other provisions except the provisions of Section 3-H of this Act” in Sectio
