Alpa Engineers and Fabricators (P) Ltd. vs Commissioner, Trade Tax

Satish Chandra, J.—This revision has been filed u/s 11 of the U.P. Trade Tax Act, 1948, against the judgment and order dated August 17, 2004 passed by the Trade Tax Tribunal, Lucknow, in Second Appeal No. 475 of 1997 for the assessment year 1991-92. The brief facts of the case are that the revisionist is a private limited company and is engaged in fabrication, installation, etc., of sugar mill machinery, parts and accessories. Being a new manufacturing unit, the revisionist was having an eligibility certificate u/s 4A of the Act for its unit at Jagdishpur, (Rae Bareilly) vide order dated March 31, 1994.

On August 7, 1989, the revisionist company had entered into an agreement with M/s. Chhata Sugar Company Limited at Chhata, District Mathura, for manufacturing erecting and commissioning of complete boiling house plant, which includes the juice heaters, clarifiers, evaporator ponds, and centrifugal machine, etc. For this purpose, the revisionist has made purchase of the brass tubes and centrifugal machine parts from outside the State of U.P.

The assessing officer vide his order dated January 23, 1996 observed that the brass tubes, centrifugal machine parts were not used at the unit established at Jagdishpur (Rae Bareilly), thereby the revisionist-company is not entitled to get any exemption from payment of trade tax by virtue of section 4A as the same were directly supplied to M/s. Chhata Sugar Mill, Mathura, after being imported from outside the State of U.P. So, he made the addition.

In appeal, the first appellate authority vide order dated May 30, 1996 observed that the assessing officer will have to enquire again as to whether brass tubes and centrifugal machine were used in the manufacturing/commissioning of complete boiling house plant as per the agreement or not. For this purpose, the matter was remanded to the assessing officer. The assessing officer has again passed an order dated March 10, 1997 and levied the tax of Rs. 5,85,909. Being aggrieved, the assessee has filed an appeal before the first appellate authority, who allowed the appeal on the ground that under the terms of the agreement, the employees of the revisionist company have fitted the brass tubes and centrifugal machine at the sites as per drawing of the complete boiling house plant. So, he observed that the assessee is entitled for the benefit of section 4A of the Act as per his order dated June 26, 1997.

Not being satisfied, the Department has filed second appeal u/s 10 of the U.P. Trade Tax Act before the Tribunal, who observed that the supply of the goods was not integral part of the agreement. So, the addition made by the assessing officer was restored by setting aside the order of the first appellate authority. Being dissatisfied, the assessee-revisionist has filed the present revision.

With this backdrop, Mohd. Arif Khan, senior counsel, assisted by Sri Mohudduin Khan, learned counsel for the revisionist, submits that the Tribunal has passed the impugned order in an arbitrary manner without considering the fact that the revisionist was entitled for the benefit of section 4A being a new unit. He also submits that the agreement between the revisionist company and M/s. Chhata Sugar Mill was for manufacturing, erecting and commissioning of complete boiling house plant after importing its parts from outside the State. He also submits that the first appellate authority for the first round had remanded the matter to the assessing officer, but the order was passed by the assessing officer without considering the remand order. According to the learned counsel, the revisionist company was set up with the financial assistance given by the U.P. Financial Corporation, just to avoid the interest on payment, it raised the bills separately of the goods supplied in the shape of raw material or semi-finished position. Finally, he relied on the ratio laid down in the case of Jasraj Inder Singh Vs. Hemraj Multanchand, , where it was observed that:

In an appeal against the High Court''s finding, the Supreme Court is not bound by what the High Court might have held in its remand order.

On similar analogy, he submits that the Tribunal is not bound by the order passed by the assessing officer on remand report. Lastly, he made a request that the addition may kindly be deleted.

On the other hand, Ms. Madulima Bhargava, learned standing counsel, justified the impugned order passed by the Tribunal. He submits that the revisionist has raised the separate bills and got the payment directly from M/s. Chhata Sugar Mill. He also submits that the benefit of section 4A was confined to Jagdishpur (Rae Bareilly) unit, which was declared tax-free.

After hearing both the parries, it appears that the assessee was entitled for the benefit of section 4A, as its plant/office was located at Jagdishpur (Rae Bareilly), but fact remains that it is supplying the goods and carrying out contract works/business outside Jagdishpur (Rae Bareilly), which were duly shown in the books of account and the assessing officer has taken cognizance of the same in the assessment order. So, the same benefit is available to the revisionist for carrying its activity at various places, within U.P. other than Jagdishpur (Rae Bareilly).

Further, in the instant case, the agreement entered into between the revisionist company and M/s. Chhata Sugar Mill for manufacturing, erecting and commissioning of complete boiling house plant, which includes the juice heaters, clarifiers, evaporator ponds and centrifugal machine, etc. This plant cannot be completed without having the brass tubes and centrifugal machine parts. The project/plant cannot be completed without its parts. These parts were purchased from outside the U.P., but were used in the plant in question. There is no case of Revenue that the parts were resale by the revisionist. The said parts were consumed by the assessee in the plant, for which an agreement was entered into. If there is a mistake of the accountant, who raised the bills separately for the parts, perhaps to escape the interest liability, but for his mistake or accounting, the assessee cannot be penalized.

In the remand report, the lower authorities have stated that the plant was established at the place, i.e., Chhata (Mathura) which was shown in the agreement. When there is no case of the resale or use the parts other than the plant in question then there is no justification for levy the tax for importing parts and centrifugal machine parts outside U.P. which were used in U.P.

In view of the above, the impugned order passed by the Tribunal is set aside and the order of first appellate authority is upheld for the reasons mentioned therein. The assessee will get the relief accordingly. The revision is allowed. No cost.