Commissioner, Commercial Tax, (Earlier Trade Tax) vs Kashi Vishwanath Steel Ltd.

Barin Ghosh, C.J.—After the creation of the State of Uttarakhand, purchases were made by the respondent-assessee, which purchases were used for manufacturing or packaging of the goods manufactured by the respondent-assessee. The goods so manufactured by the respondent-assessee were notified by the State Government of Uttar Pradesh in exercise of power u/s 4BB of the U.P. Trade Tax Act, 1948. u/s 4BB of the Act, a similar manufacturer is entitled to credit for the tax paid on such purchases. Relevant portion of section 4BB of the Act is as follows: Where tax has been paid on the purchase or sale of raw material or packing material inside the State and such raw material or packing material has been used in manufacture or packing of such goods as are notified by the State Government in this behalf and such goods are sold in the State or in the course of inter-State trade or commerce, the amount of tax paid on the purchase or sale of the raw material or packing material shall, subject to such conditions and restrictions as may be specified in the said notification, be deducted from the tax payable on the sale of such goods----

The purchases, in terms of the provisions of section 4BB of the Act, are required to be made inside the State for the purpose of taking advantage of the provisions of section 4BB of the Act. The appellant-Revenue contended that since the purchase was made from the State of Uttar Pradesh and not from the State of Uttarakhand, purchases were not made inside the State and, accordingly, advantage of section 4BB of the Act was not available. This contention of the State, though was upheld by the first appellate authority, but the same has been negated by the Tribunal. Hence, the present revision application.

The learned counsel appearing on behalf of the respondent has drawn our attention to section 86 of the Uttar Pradesh Reorganisation Act, which is as follows:

Territorial extent of laws.--The provisions of Part II shall not be deemed to have affected any change in the territories to which the Uttar Pradesh Imposition of Ceiling of Land Holdings Act, 1961 (U.P. Act 1 of 1961) and any other law in force immediately before the appointed day, extends or applies, and territorial references in any such law to the State of Uttar Pradesh shall, until otherwise provided by a competent Legislature or other competent authority be construed as meaning the territories within the existing State of Uttar Pradesh before the appointed day.

Part II of the Reorganization Act contains four sections, namely, sections 3, 4, 5 and 6. Section 3 forms the new State of Uttarakhand by caning out a part of the territory of the State of Uttar Pradesh. Learned counsel for the respondent submitted that, in that background, one has to read the provisions of section 86 of the Reorganisation Act insofar as the same applies to the U.P. Trade Tax Act. Reading that it appears to us, that section 86 conveyed that creation of the State of Uttarakhand by carving out a part of the State of Uttar Pradesh shall not be deemed to have affected any change in the territories, to which U.P. Trade Tax Act, 1948 extends or applies and territorial references in the U.P. Trade Tax Act, 1948 to the State of Uttar Pradesh shall, until otherwise provided by a competent Legislature or other competent authority, be construed as meaning the territories within the existing State of Uttar Pradesh before the appointed day, i.e., before creation of the State of Uttarakhand.

That being the situation, the conclusion would be that the State mentioned in section 4BB of the U.P. Trade Tax Act, 1948 shall mean the territories of the State of Uttar Pradesh as well as the territories of the State of Uttarakhand until such time, the competent Legislature of the State of Uttar Pradesh or of the State of Uttarakhand decides otherwise. That was not done until March 23, 2002. Therefore, until March 23, 2002, purchases made in any part of the State of Uttar Pradesh as it stood before the creation of the State of Uttarakhand would come within the meaning of purchases made inside the State as mentioned in section 4BB of the Act. In the event, purchases were made on or after March 23, 2002, the same will have a different effect. We, accordingly, permit only that effect to be ascertained by the assessing officer in accordance with law. The revision application is disposed of.