Sangam Structurals Ltd. vs Commissioner, Trade Tax, U.P., Lucknow

Pankaj Mithal, J.—Sri M.M. Rai, learned counsel for the assessee/revisionist and Sri U.K. Pandey, learned counsel for the respondent. The revision relates to the assessment year 2003-04. The turnover of sales disclosed by the assessee for the relevant year was accepted by the assessing authority vide order dated February 28, 2006. However, subsequently, the matter was reassessed u/s 21 of the Trade Tax Act (in short, "''the Act") and an additional demand of Rs. 11,24,218 along with interest thereon was raised on the ground that the assessee was not entitled to concessional rate of tax oh the material supplied to the U.P. Power Corporation Ltd. for the reason that there, was no contract between the two for supply of the steel structure. The revised assessment was upheld in appeal as well as in second appeal by the Tribunal.

The order of the Tribunal dated May 29, 2007 has been impugned in the present revision and the following question of law has been raised:

Whether existence of a contract between the assessee and the Government Department or a Corporation is essential for granting a concession rate of tax u/s 3G of the Act when it is not disputed that the goods were supplied to the Government Department/Corporation and were covered by form IIID issued by such Government Department/Corporation?

It is not in dispute that the assessee is a fabricator and had supplied steel structure to the U.P. Power Corporation Ltd. who in turn has issued form IIID on the basis of which concession tax at the rate of four per cent was leviable on the goods so supplied. The issuance of form IIID and the fact that the goods supplied by the assessee were covered by the said form IIID of the Act is not in dispute.

The concessional rate of tax has been denied to the assessee solely on the ground that there was no contract for the supply of steel structure between the U.P. Power Corporation Ltd. and the assessee.

In this connection the assessee has brought on record the agreements under which the steel structures were supplied to the U.P. Power Corporation Ltd. The basic agreement is between U.P. Power Corporation Ltd. and M/s. Ranjeet Singh and Company dated December 3, 2002 which permits supply of steel structures to U.P. Power Corporation Ltd. by the said contractor or its associates. The said agreement further provides that all structures fabricated and galvanized can be supplied by the firm''s collaborator M/s. Triveni Structurals Ltd. Naini, Allahabad and it shall have right to correspond/communicate directly with the U.P. Power Corporation Ltd. to avoid delay. The base agreement was subsequently amended on June 4, 2003 and it was provided that in the agreement referred to above, wherever the words M/s. Triveni Structurals Ltd. Naini, Allahabad are appearing that would be read as M/s. Triveni Structurals Ltd., Naini, Allahabad/M/s. Sangam Structurals Ltd., Naini, meaning thereby the assessee was added in-the said agreement as an collaborator along with M/s. Triveni Structurals Ltd., Naini, Allahabad.

Thus, on the face of the above agreement and the amendment carried out therein which is not in dispute the assessee was authorised to supply the fabricated and galvanized steel structures to, the U.P. Power Corporation Ltd. Accordingly, supplies were made and forms IIID were issued by the U.P. Power Corporation Ltd. covering the supply so made by the assessee.

This apart, section 3G of the Act provides that the State Government by notification, may prescribe special rates of tax on sale of certain specified goods provided sales are made to a Department of the Central Government or a State Government or to a Corporation or undertaking or to a Government Company as defined u/s 617 of the Companies Act, on furnishing to the assessing authority a certificate obtained from Department or declaration obtained from such Corporation, undertaking or company in such form and manner within such period as may be prescribed unless the goods are taxable under any other section of this Act at a rate lower than the said rate.

In view of the above provision, the turnover of sale to any Corporation including the U.P. Power Corporation Ltd. is taxable at a concessional rate specified by the State Government provided the transaction is covered by the prescribed form/declaration which under rule 12C of the Rules framed under the Act is form IIID.

The aforesaid provision does not prescribe any other condition except for the above two conditions for availing of the benefit of concessional rate of tax on the sale made to the Corporation, namely, the sale is made to the Government, Corporation, undertaking or company and secondly dealer furnishes a certificate or declaration as may be prescribed from such Government, Corporation, undertaking or the company.

The assessee fulfils both the above conditions. It has supplied steel structures to the Corporation and has produced form IIID from the Corporation covering the said transactions. There is no requirement of production of any agreement relating to the supply of any material by the assessee to the Corporation.

In view of the aforesaid facts and circumstances, the authorities below exceeded their jurisdiction in refusing concessional rate of tax to the assessee for the reason that there was no contract of supply between the U.P. Power Corporation Ltd. and the assessee. Accordingly, the question framed above is answered in favour of the assessee and against the Revenue and it is held that for availing the benefit of concessional rate of tax u/s 3D of the Act there is no requirement to produce any agreement of sale with the Government, Corporation, undertaking or the company, as the case may be.

The impugned orders dated September 22, 2006 and September 25, 2006 passed by the Deputy Commissioner (Assessment) II, Trade Tax, Allahabad, dated January 15, 2007 passed by the Joint Commissioner (Appeal)-3, Trade Tax, Allahabad and dated May 29, 2007 passed by the Trade Tax Tribunal Bench, Allahabad are set aside. The revision is allowed.