Commissioner, Trade Tax, U. P., Lucknow vs Pioneer India

Arun Tandon, J.—Heard Sri. B.K. Pandey on behalf of the Department and Sri. R.D. Gupta on behalf of the assessee. The Department has approached this court against the order of the Tribunal dated November 12, 2002 passed in Second Appeal No. 611 of 2001 (assessment year 1997-98). The facts in short leading to the present revision are as follows:

The assessee before this court is stated to have purchased kora maal (brass ware) from the manufacturer and after engraving and polishing, etc., he sold the same to a dealer outside the State who is stated to have exported the same.

The assessing authority by means of an order dated August 23, 2000 raised demand of purchase tax against the assessee with reference to section 3AAAA of the Act on purchase of kora maal. Not being satisfied with the order so passed the assessee preferred first appeal No. 1240/2000 (97-98). The appeal was allowed by the Deputy Commissioner by means of order dated August 2, 2001. It was held that the goods after polishing and engraving continued to be the same as those purchased by the petitioner. The identity of the purchased goods had not changed. The sale after polishing and engraving was therefore covered by proviso (iii) to section 3AAAA(1) of the Trade Tax Act and exempt from purchase tax.

The Department not being satisfied with the order so passed preferred second appeal No. 611/01(97-98). The Tribunal after affirming the findings recorded by the first appellate authority dismissed the second appeal. Hence this revision.

The Tribunal has specifically recorded that the process of polishing and engraving carried out by the assessee on the kora maal did not change the identity of the goods after its purchase and therefore the goods as purchased by the assessee had been exported in the same form and condition. Hence the assessee was not liable to pay purchase tax in view of the proviso (iii) to section 3AAAA(1) of the Act. Accordingly the second appeal has been dismissed.

Challenging the order so passed by the Tribunal counsel for the Department vehemently contended that in the fact of the case the sale of the goods by the assessee to the alleged exporter outside the State had not been demonstrated to be inextricably linked with the export of the goods so as to be covered by section 5(3) of the Central Sales Tax Act. He refers to the judgment of the Supreme Court in the case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd. and Another, .

He further contended that in the facts of the case the Tribunal was not justified in recording a finding that there was no change in character and identity of the goods, i.e., "kora maal" after polishing and engraving, etc. The processed brass ware is altogether a different commodity, viz-a-viz "kora maal" having different commercial value.

Sri. Gupta in reply submits that pure findings of facts have been recorded by the Tribunal with regard to the identity of the goods after they have been polished and engraved. Such finding has not been shown by the Department to be perverse or based on no evidence. He specifically refers to the Notification No. 3468 dated November 1, 2000 issued by the Department itself wherein it is clarified that kora maal after polishing and engraving continues to be the same commodity and there is no change in the identity of the goods.

Having heard counsel for the parties and examined the record of the present case this court may record that the issue as to whether in the fact of the case the required condition for export: as contemplated u/s 5(3) of the Act had been established or not is wholly immaterial for the purposes of examining the legality or otherwise of the order impugned. The issue with regard to levy of purchase tax u/s 3AAAA of the Act has only to be examined.

Suffice is to record that section 3AAAA(1), proviso (iii), exempts the levy of purchase tax on the goods which the purchasing dealer resells in the same form and condition within the State or in the course of inter-State trade or exports the same. For ready reference section 3AAAA(1) of the Act is being quoted hereinbelow:

3AAAA. Liability to tax on purchase of goods in certain circumstances.--(1) Subject to the provision of section 3, every dealer who purchases any goods liable to tax under this Act-

(a) from any registered dealer in circumstances in which no tax is payable by such registered dealer, shall be liable to pay tax on the purchase price of such goods at the same rate at which, but for such circumstances, tax would have been payable on the sale of such goods;

(b) from any person other than a registered dealer whether or not tax is payable by such person, shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods:

Provided that no tax shall be leviable on the purchase price of such goods in the circumstances mentioned in clauses (a) and (b), if--

(i) such goods purchased from a registered dealer have already been subjected to tax or may be subjected to tax *under this Act;

(ii) tax has already been paid in respect of such goods purchased from any person other than a registered dealer;

(iii) the purchasing dealer resells such goods within the State or in the course of inter-State trade or commerce or exports out of the territory of India, in the same form and condition in which he had purchased them;

(iv) such goods are liable to be exempted u/s 4A of this Act.

There are concurrent finding of fact by both the first appellate authority and the second appellate authority, authorities in the facts of the present case that the goods sold by the assessee to the exporter were in same form and condition; mere polishing and engraving of the same does not alter its identity. Such finding of fact recorded by the tax authorities is based on appreciation of evidence on record as also on the reading of Notification No. 3468 dated November 1, 2000 wherein it has been clarified that the identity of kora maal is not altered after polishing and engraving.

Sri. B.K. Pandey, counsel for the Department however, submits that since purchase and sale of kora maal by the assessee was not made as part of one common transaction of export the assessee would be liable for payment of purchase tax. As the Tribunal has not recorded any finding on the said issue, the matter be remanded, for enquiry for recording a finding as to whether the purchases were made by the assessee as part of export order or not as has been laid down by Supreme Court in the case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd. and Another, .

This court may record that in the fact of the case no purpose would be served by remanding the matter to the Tribunal for examining as to whether the purchase of "kora maal" was inextricably linked with the export or not as has been held in the case of State of Karnataka Vs. Azad Coach Builders Pvt. Ltd. and Another, . Even if it is held that the sale was not inextricably linked to export and the sale of polished "kora maal" was an independent sale of goods to a dealer out of the State the same would be covered by proviso (iii) to section 3AAAA of the Act. This court may clarify that the sale to a dealer outside U.P. would be a sale in the course of inter-State sale or commerce covered by section 3AAAA(1), proviso (iii).

There is a categorical finding of fact by both the appellate authorities below that the identity of the goods had not been altered after polishing and engraving. This finding of fact could not be demonstrated to be perverse or based on no evidence.

Accordingly this court finds that there is no illegality in the order of the Tribunal so as to warrant interference by this court. Accordingly all the above-mentioned trade tax revision is dismissed.