2005 NTN (Vol. 27) - 99 [ALLAHABAD HIGH COURT] Hon ble Arun Tandon, J. Trade Tax Revision No. 116 of 2005 AND

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1 2005 (Vol. 27) - 99 [ALLAHABAD HIGH COURT] Hon ble Arun Tandon, J. Trade Tax Revision No. 116 of 2005 AND Trade Tax Revision No. 13 (defective) of 2005 M/s Three Star Paper Mill Pvt. Ltd., Chithera, district Gautam Budh Nagar vs. Commissioner of Trade Tax, U.P., Lucknow Date of Decision : 7th March, 2005 For the Revisionist : Sh. Kunwar Saxena, Advocate & For the Respondent : Standing Counsel Sh. Rishi Raj Kapoor, Advocate Exemption News Print Paper A.Y News Print Paper sold to person other than news paper publishers prior to issue of Notification dt U/s 3-A Whether exemption available under earlier Notification dt U/s 4 available? Held Yes Exemption is available Vide Notification No. ST-II-7038 dated issued in exercise of powers under Section 4 (a) of the Trade Tax Act a general exemption, with no condition imposed, was granted in respect of News Print Paper By means of Notification No. KA-NI-2-101, dt issued U/s 3-A News print when sold to person other than news paper publishers have been 8% - In view of the language of the two notifications for the Assessment Year the sale of the News Print Paper to a person irrespective of the fact as to whether it was to be used for the publication of news paper or not was immaterial. The use of the news print paper after sale was not relevant factor for the purposes of grant of exemption under notification dated The change brought about by the enforcement of Notification dated 15th January, 2000, makes it obligatory upon the assessee to establish that the sale of news print paper has been made to publisher of a newspaper, for the purposes of availing the benefit of the exemption from the date of notification only. Cases referred : 2001 (34) STR 529 Macneill and Magor Ltd. vs. C. T. T (Vol. 26) 6 JUDGMENT

2 (Hon ble Arun Tandon, J.) Heard Sri Kunwar Saksena Advocate and Sri Rishi Raj Kapoor, Advocate on behalf of the assessee-revisionist and Standing Counsel on behalf of respondent. 2. This revision under Section 11 of the U.P. Trade Tax Act has been filed by M/s Three Star Paper Mill Pvt. Ltd., Chithera, district Gautam Budh Nagar (hereinafter referred to as the assessee ), a private limited company under the Companies Act registered under the U.P. Trade Tax Act as well as under the Central Sales Tax Act. The assessee is carrying on the business of manufacture and sale of News Print Paper and other types of paper. In respect of the Assessment Year a survey was conducted by the Assistant Commissioner, Trade Tax on at the business premises of the assessee company and on the basis of the survey so conducted a notice dated was issued to the assessee to show cause as to why the sale of News Print Paper as alleged by the assessee had not treated as sale of paper other than news print paper. A reply to the said notice was submitted by the assessee along with the record i.e., stock register, production register etc. The Assistant Commissioner, Trade Tax, Gautam Budh Nagar, vide order dated accepted the account books but rejected the claim for exemption of tax on new print paper as claimed by the assessee, and estimated sales at Rs. 2,14,46,035.00, accordingly fixed a tax liability of Rs. 16,08, Feeling aggrieved by the said order of the Assistant Commissioner the assessee preferred two appeals before the Deputy Commissioner one under the U.P. Trade Tax Act and the other under the Central Sales Tax Act. The appeals so filed were registered as Appeal No. 787 of 2000 and 788 of 2000 for the Assessment Year The appeals so filed were allowed by the Deputy Commissioner vide order dated Feeling aggrieved by the aforesaid order of the Deputy Commissioner (Appeals) Trade Tax, the Commissioner Trade Tax, Uttar Pradesh, Lucknow preferred two second appeals before the Trade Tax Tribunal, Ghaziabad one appeal under the U.P. Trade Tax Act and the other appeal under the Central Sales Tax Act. Both the appeals were numbered as Appeal No. 925 of 2000 and 926 of The Trade Tax Tribunal vide order dated has allowed the appeals and set aside the order passed in the first appeals, with a direction that recovery be effected in accordance with the original assessment order. The order of the Tribunal has been challenged by means of the present two trade tax revisions. For the purposes of decision of the present revisions it would be relevant to refer to the following facts. 4. Vide Notification No. ST-II- 7038, dated issued in exercise of powers under Section 4 (a) of the Trade Tax Act a general exemption, with no condition imposed, was granted in respect of News Print Paper. A copy of the exemption notification has been enclosed along with the revision petition. The aforesaid notification continued as such upto By means of Notification No. KA. NI /XI-9(231)/94-U.P. Act Order-2000, dated 15th January, 2000 issued in exercise of powers under Section 3-A of the U.P. Trade Tax Act read with Section 21 of the General Clauses Act, the Governor of Uttar Pradesh was pleased to declare that with effect from 17th January, 2000 the turnover on the first purchases in respect of the goods mentioned in

3 Column 2 of the list mentioned therein shall be liable to tax at the point of sale specified in Column 3 of said list at the rate specified against each in Column 4 thereof. The relevant entry is at item No. 70 which reads as follows:- 70. News print when sold to person M or I 8% other than news paper publishers. 5. On behalf of the assessee it is submitted that in respect of the relevant years the exemption was unconditional and it was immaterial as to whether the News Print Paper has been sold to a person who is a newspaper publisher or not. The notification dated is prospective and it is for subsequent assessment years only that the assessee has to establish that the News Print Paper has been sold to a person publishing the newspaper. In such circumstances the Assessing Authorities and the Tribunal were not justified in treating the sales effected by the assessee including the News Print Paper for the period prior to as chargeable to tax on the ground that the same has been sold to a person other than newspaper publisher. In support of this contention learned Counsel for the assessee has placed reliance on the judgment reported in 2001 (34) STR 529 and 2005 (Vol. 26) page 6 (para 9). Even otherwise it is contended that the Tribunal, except for referring to the fact that the news print paper has been sold to persons who are not publishers of newspapers has not referred to any other relevant evidence which may be taken into consideration for upsetting the findings recorded by the First Appellate Court. Therefore the order passed by the Tribunal cannot be legally sustained. 6. On behalf of the State authority it is contended that the conclusion drawn by the Assessing Authority as well as by the Tribunal are based on material evidence on record and it has been held that the assessee had not manufactured the news print paper and, therefore, the Tribunal was justified in restoring back the order of the Assessing Authority after setting aside the order of the First Appellate Court. 7. I have heard learned Counsel for the parties and gone through the records of the revisions. 8. From a bare reading of the notification dated issued in exercise of powers under Section 4-A which provides for grant of general exemption, it is clear that the news print paper was exempted from tax without any condition being attached and therefore, assessee was not required to establish that the sale of news print paper has been made to a publisher of newspaper only. The change brought about by the enforcement of Notification No. KA. NI /XI-9(231)/94-U.P. Act Order-2000, dated 15th January, 2000, makes it obligatory upon the assessee to establish that the sale of news print paper has been made to publisher of a newspaper, for the purposes of availing the benefit of the exemption from the date of notification only. Meaning thereby that if the news print paper was sold to persons other

4 than the publishers of newspapers after the turn over of the sale was liable to be taxed at the point of sale at the rate specified in the notification i.e. 8%. 9. Subsequent notification can be taken into consideration for ascertaining the purpose for which the subsequent notification has been issued and for interpreting the earlier notification applicable on the subject. The legal position in that regard has been settled in the case of M/s Macneill and Magor Ltd. vs. Commissioner of Trade Tax, U.P. reported in 2005 (Vol. 26) In view of the aforesaid legal position and in view of the language of the two notifications it cannot be disputed that for the Assessment Year the sale of the New Print Paper to a person irrespective of the fact as to whether it was to be used for the publication of news paper or not was immaterial. The use of the news print paper after sale was not relevant factor for the purposes of grant of exemption under notification dated In view of the above the Tribunal has misdirected itself while upsetting the order of the First Appellate Court on the ground as mentioned in the impugned order, namely ßosru fu/kkzj.k vkns k ds i`"b 10 ij Hkh myys[k gs fd O;kikjh }kjk ftu xzkgdksa dks U;wt fizuv dh fcøh iznf kzr dh xbz gs,sls 6 O;kikfj;ksa ds ysvj ism ls ;g Li"V gs fd og O;kikjh,dylkbt cqd] ijh{kk lkexzh o fyqkqs vkfn ds fuekzrk gs rfkk mlesa ls dksbz Hkh U;wtfizUV dk O;kikj ugha djrs gsaa O;kikjh }kjk ftu Øsrkvks dks U;wtfizUV dh vf/kd ek=k esa fcøh djuk fn[kk;k gs,sls nks O;kikfj;ksa lozjh ctkt izfr"bku] bykgkckn rfkk lozjh ljlokrh isij gkml ls Hkh fohkkx }kjk tkap dh xbz vksj mu nksukasa gh O;kikfj;kaas us U;wtfizUV isij ifcy klz dks dksbz fcøh djuk Lohdkj ugha fd;k gs vksj,slh fcøh bykgkckn ds mdr O;kikfj;ksa }kjk fcundh] izrkix<] vktex<] ef<;kgw] tksuiqj] xksj[kiqj] mwpkgkj] Hknksgh] fetkziqj] enyh kgj] ckn kkgiqj vksj bykgkckn ds NksVs&NksVs O;kikfj;ksa dks dh gs rfkk dqn fcøh udn dh gsa blls ;g fu"diz fudyrk gs fd OkkLro esa izfroknh O;kikjh }kjk U;wtfizUV dh fcøh djuk izekf.kr ugha gksrk gsaþ 12. In the opinion of the Court the Tribunal has taken into consideration irrelevant factors for the purposes of upsetting the orders of the First Appellate Authority, namely that the assessee has not sold the news print paper to the newspaper publishers and the goods have been sold to the persons other than the publisher of newspapers. Even otherwise, it is worthwhile to notice that the First Appellate Court while allowing the appeal has specifically referred to the R.G.-I Register, Stock Register and the declarations furnished by the assessee before the excise authority regarding the manufacture of news print paper and various other documents for the purposes of recording a finding that the assessee had manufactured and effected the sale of news print paper. The finding recorded by the First Appellate Court with reference to the aforesaid documents has not at all been considered by the Tribunal. The Tribunal has not even referred to the documents so referred and relied upon by the First Appellate Court while allowing the appeal. In the opinion of the Court the Tribunal was under obligation to have considered the finding recorded by the First Appellate Court on the basis of the material documents etc. which were available on the record and borne out from the inspection report made at the time of survey and it is only thereafter that the Tribunal could have upset the

5 findings of the First Appellate Court. Non-consideration of the findings and documents relied upon by the First Appellate Court vitiates the order of the Tribunal. In view of the aforesaid the order of the Tribunal dated cannot be legally sustained. 13. The revisions are allowed. The orders dated passed by the Trade Tax Tribunal are quashed and the matter is remanded to the Trade Tax Tribunal to decide the appeals afresh in the light of the observations made hereinabove, at the earliest, preferably within 3 months from the date a certified copy of this order is filed before the Trade Tax Tribunal