SLP(C) No. 21275/2014 and SLP(C) No. 26967/2015
Delay condoned.
Digitally signed by Dr. Heard the learned counsel for the parties at some length.Mukesh Nasa As the issue raised in this appeal relates to
interpretation of Section 3-H of the U. P. Trade Tax Act, 1948,
inserted w.e.f. 01.05.2005, we deem it appropriate to reproduce
Sub-Sections (1) and (3) of Section 3-H, which read:
“3-H. State Development Tax- (1) There shall be levied a State Development Tax at the rate not exceeding one per cent of the taxable turnover as the State Government may by notification specify on the dealers whose aggregate turnover as referred to in subsection (2) of Section 3, exceeds fifty lakh rupees. The State Development Tax shall be realised in addition to the tax payable under any other provision of this Act. This tax shall cease to be levied after a period of five years from the date of publication of the notification issued by the State Government under this section.
(3) The State Development Tax shall be adjustable in the monetary limit specified in the eligibility certificate issued under Section 4-A.
Section 3-H applicable from 01.05.2005 levies a new tax,
namely the State Development Tax, payable as may be specified
by the State Government in a notification at the rate not
exceeding one per cent of the taxable turnover by the dealers
whose aggregate turnover exceeds Rs. 50 lakhs. The State
Development Tax is in addition to the tax payable under any
other provision of the said Act. The tax imposed would cease to
apply after five years from the date of publication of the
notification issued by the State Government under Section 3-H.
Sub-section (3) of Section 3-H states that the assessee is
entitled to adjustment of the State Development Tax within the
monetary limits specified in the exemption certificate issued
under Section 4-A of the 1948 Act. We would, therefore, like to
reproduce the relevant portion of sub-section (1) to Section 4-
A of the U.P. Trade Tax Act, 1948, which reads:
“Section 4-A. Exemption from trade tax in certain cases. - (1) Notwithstanding anything contained in any other provisions except the provisions of Section 3-H of this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any district or parts of district in particular, it may on application or otherwise, in any particular cases or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production, and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to tax at such reduced rate as it may fix:
Provided that in respect of goods manufactured in a new unit having a fixed capital investment of five crore rupees or more in an existing unit which may make fixed capital investment of five crore rupees or more in expansion, diversification, modernisation and backward integration or in any one of them, within such period not exceeding five years as may be specified in the notification, the exemption from or
reduction in the rate of tax may be granted.”
XX XX XX
The words “Notwithstanding anything contained in any other
provisions except the provisions of Section 3-H of this Act” in
Section 4-A were substituted for the words “Notwithstanding
anything contained in this Act” by the U.P. Act No. 9 of 2005
dated 24.03.2005 with effect from 01.05.2005, which is also
noted as the date from which the State Development Tax could be
levied.
The respondent assessees were issued eligibility
certificates under Section 4-A of the U. P. Trade Tax Act, 1948
before the enforcement of the State Development Tax vide
insertion of Section 3-H. The eligibility certificates issued
under Section 4-A mention the date of start of production, the
date of the first sale, and the period during which exemption
would be available. The maximum exemption limit is specified.
The eligibility certificate states that the exemption would not
apply after the specified period or the exemption limit,
whichever expires earlier.
The State of U.P. through the Governor, in exercise and to
effectuate the exemption under Section 4-A, had issued a
Notification No. TT-2-780/XI-9(226)/94-U.P.Act-15/48-Order-95,
dated 31.03.1995. Annexure-1 of the said notification is a table
which vide different columns specify and stipulate as per the
location of the unit the exemption from or reduction in the rate
of tax in Column 4 and the monetary limit up to which the benefit
of exemption/reduction can be granted in Column 5. For
convenience and understanding, we reproduce the headings of the
different columns:
Column Column 2 Column 3 Column 4 Column 5
Sl.No. Location Total Exemption from or Monetary limit of Unit period of reduction in the rate of upto which the exemption tax (denoted as benefit of /reduction percentage of the rate exemption from in the of tax normally or reduction in rate of applicable under the the rate of tax tax U.P. Act to the goods under the Act concerned) which, on any together with transaction of sale, the benefit of shall not exceed five exemption from percent of the sale or reduction in price the rate of tax under the Year In case of In Central Sales units with case Tax Act, 1956 a fixed of is admissible capital other investment units exceeding 50 crores
This Court in ‘State of Uttar Pradesh & Ors. v. M/s
Systematic Conscom Limited, (2014) 13 SCC 627’ had examined the
contours of the State Development Tax under Section 3-H imposed
w.e.f. 01.05.2005 and held that the provision imposes altogether
a new tax on certain dealers whose turnover exceeds the
prescribed limit. Section 3-H is a charging Section, which also
prescribes the taxable event, the person on whom the tax is
imposed and is obliged to pay the tax, the rate of tax and the
measure or value to which the rate will apply for computing the
tax in liability. Accordingly, the State Development Tax differs
from the tax imposed under Section 3 (‘Liability to tax under
the Act’) of the U.P. Trade Tax Act, 1948.
The Commissioner, Trade Tax, Uttar Pradesh vide circular
no. 723 dated 03.05.2005 had inter alia specified that the
adjustment under sub-section (3) of Section 3-H shall be
accepted in the same manner, as the adjustment of normal amount
of trade tax in eligibility certificate under Section 4-A. The
interpretative consequence of the circular was read by the
assessing authorities to mean that the adjustment in State
Development Tax was to be made on proportional basis, rather
than including it in the monetary limit specified in Column 5
of Annexure-1 and the limit in the eligibility certificate.
In our opinion, the High Court was correct in holding that
the respondent assessees would be entitled to the benefit of
sub-section (3) to Section 3-H by seeking adjustment of the
State Development Tax within the monetary limit specified in
the eligibility certificate issued under Section 4-A. The
monetary limit specified in the certificate issued under Section
4-A would refer to the monetary limits quantified in the
eligibility certificate itself as well as the monetary limit
set in Column 5 of Annexure-1. Sub-section (3) to Section 3-H
does not prescribe that Column 4 in Annexure-1, which relates
to exemption from or reduction in the rate of tax (denoted as
percentage of the rate of tax normally applicable under the U.P.
Act to the goods concerned), would be applicable in determining
the ‘monetary limit’. Sub-section (3) to Section 3-H does not
refer to the ‘rate of tax’, which is the subject matter of
Column 4 of Annexure-1.
The legislature, while enacting sub-section (3) to Section
3-H (w.e.f. 01.05.2005), was conscious and aware of the
different contours of the exemption/reduction in terms of
Annexure–1 (published in U.P. Gazette dated 31.03.1995).
However, while legislating, they had specified that the
adjustment would be up to the monetary limits set in the
eligibility certificate issued under Section 4-A which will
include the last column of Annexure-1 viz., “Monetary limit upto
which the benefit of exemption from or reduction in the rate of
tax under the Act together with the benefit of exemption from
or reduction in the rate of tax under the Central Sales Tax Act,
1956 is admissible.” Sub-section (3) to Section 3-H does not
stipulate that the assessees would be only entitled to an
adjustment/reduction to the extent specified in Column 4. This
is clear from the corresponding amendment, which was made to
Section 4-A (1) by inserting the words “notwithstanding anything
contained in any other provisions except the provisions of
Section 3-H of this Act.”1 The legislature, therefore, wanted
to insulate and protect the assessees from the effect of the
notification or exemption under Section 4-A except to the extent
stated in sub-section (3) to Section 3-H while imposing State
Development Tax. Benefit under sub-section (3) to Section 3-H
by adjustment is to be within the monetary limits. No other
clause or stipulation under the notification issued vide Section
4-A would apply. Section 3-H(3) prevails over Section 4-A to
the extent not saved by sub-section (3) to Section 3-H of the
1 Substituted by U.P. Act No. 9 of 2005, for the words “Notwithstanding anything contained in this Act”, dated 24.03.2005 (w.e.f. 01.05.2005)
U.P. Trade Tax Act,1948.
It is a general rule of interpretation of taxing statutes
that there is no room for any intendment and they are to be read
in the light of what is clearly expressed and enforced literatim
or ad verbum. There are no equitable considerations or
implications or assumptions or presumptions as to import
provisions to supply any assumed deficiency in taxing statutes.2
However, we clarify that in case any of the respondent
assessees or other assessees have availed the benefit of one-
time settlement schemes, the Trade Tax Department would not be
liable to refund any amount payable as the said assessees would
be bound by the declarations made and benefit granted under the
said settlement scheme.
In view of the aforesaid discussion, there is no merit in
the present appeals, and hence, the same are dismissed.
There would be no order as to costs.
Pending application(s) stands disposed of.
SLP(C) No. 24643/2012, SLP(C) No. 25543/2012, SLP(C) No. 20820/2014 AND SLP(C) No. 20819/2014
Delay condoned.
The issues raised in these appeals are covered by the
decision of this Court in ‘State of Uttar Pradesh & Ors. v. M/s
Systematic Conscom Limited, (2014) 13 SCC 627’. Consequently,
it is held that the State Development Tax levied under Section
2 Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and others, (2018) 9 SCC 1.
3-H of the U.P. Trade Tax Act, 1948 is an independent tax to
which the composition scheme under Section 7-D of the aforesaid
Act would not apply. However, the respondent assesses would be
liable to pay the State Development Tax under Section 3-H, even
if they were availing the benefits of the composition scheme
for other taxes.
The appeals are partly allowed and disposed of with the
aforesaid directions without any order as to costs.
MARCH 02, 2022
Petition(s) for Special Leave to Appeal (C) No(s). 21273/2014
(Arising out of impugned final judgment and order dated 08-05-2013 in WT No. 1740/2007 passed by the High Court of Judicature at Allahabad)
STATE OF UP & ORS. Petitioner(s)
M/S NIL KAMAL LTD (EARLIER KNOWN AS Respondent(s) NIL KAMAL PLASTIC LIMITED)
Date : 02-03-2022 These matters were called on for hearing today.
CORAM :
For Petitioner(s) Mr. R. K. Raizada, Sr. Adv.
Mr. Bhakti Vardhan Singh, AOR
For Respondent(s) Mr. Anish Kumar Gupta, AOR Mr. Archana Preeti Gupta, Adv.
Mr. Puneet Sheoran, Adv.
Mr. Venugopal Abhay, Adv.
Ms. Deepshikha Bharati, Adv.
Mr. Dhruv Agrawal, Sr. Adv.
Mr. Nishit Agrawal, AOR Mr. Harsh Mishra, Adv.
Mr. Jay Savla, Sr. Adv.
Mr. Akshay Sharma, Adv.
Mr. Rahul Gupta, AOR Mr. Jasdeep Singh Dhillon, Adv.
UPON hearing the counsel the Court made the following
SLP (C) Nos. 21273 and 21278 of 2014
List on 03.03.2022.
SLP(C) No. 21275/2014 and 26967/2015
The appeals are dismissed in terms of the signed order.
SLP(C) No. 24643/2012, SLP(C) No. 25543/2012, SLP(C) No. 20820/2014 AND SLP(C) No. 20819/2014
The appeals are partly allowed and disposed of in terms of the
signed order.
(BABITA PANDEY) (DIPTI KHURANA) COURT MASTER (SH) COURT MASTER (NSH) (Signed order is placed on the file)