Allahabad High Court
B.S.A. Corporation vs Commissioner Of Trade Tax, U.P. ... on 28 November, 2013
Bench: Pankaj Mithal
HIGH COURT OF JUDICATURE AT ALLAHABAD
?A.F.R.
Court No. - 59
Case :- SALES/TRADE TAX REVISION No. - 1499 of 2007
Applicant :- B.S.A. Corporation
Opposite Party :- Commissioner Of Trade Tax, U.P. Lucknow
Counsel for Applicant :- Kunwar Saksena
Counsel for Opposite Party :- S.C.
And
Case :- SALES/TRADE TAX REVISION No. - 1500 of 2007
Applicant :- B.S.A. Corporation
Opposite Party :- Commissioner Of Trade Tax, U.P. Lucknow
Counsel for Applicant :- Kunwar Saksena
Counsel for Opposite Party :- S.C.
Hon'ble Pankaj Mithal,J.
Heard Sri Kunwar Saksena, learned counsel for the assessee/revisionist and Sri U.K.Pandey, Standing Counsel for the respondent/department.
The two revisions relates to assessment years 1997-98 and 1998-99.
The assessee is carrying on business of buying and selling of arms and ammunitions and is registered under the provisions of Section 8-A of the U.P. Trade Tax Act (for shot 'Act').
It is not disputed that the tax liability on arms and ammunitions has been prescribed at the stage of manufacture and import only. The assessee had imported arms and ammunitions and made sale thereof. In addition to that the assessee had also purchased used/second hand arms from the licensees and made sale thereof. As far as the import of arms and ammunitions and their sale is concern there is no dispute. However, with regard to purchase of used/second hand arms from licensees and their sale tax liability has been created by treating the assessee a manufacturer within the meaning of Section 2(ee) of the Act.
The order of the assessing authority has been upheld up to the tribunal by holding the assessee a manufacture in respect of the used/second hand arms purchased by it from the licensees.
The orders of tribunal dated 11.10.2002 and 19.2.2003 are under challenge in these revisions.
The question which has been raised in these revisions is as under:
Whether the assessee can be recognized as a manufacturer in respect of used/second hand arms purchased by him from the licensees?
Section 2(ee) of the Act defines manufacturer as follows:
"2(ee) 'Manufacturer' in relation to any goods means the dealer who makes the first sale of such goods in the State after their manufacture and includes -
(i) a dealer who sells bicycles in completely knocked down form;
(ii) a dealer who makes purchases from any other dealer not liable to tax on his sale under the Act other than sales exempted under Sections 4, 4-A and 4-AAA."
The relevant part of the above definition provides that manufacturer in relation to any goods must be a dealer who makes the first sale of goods in the State after their manufacture and includes a dealer who makes purchases from any other dealer not liable to tax on his sale under the Act, other than sales exempted.
So to be a manufacturer, the dealer has to make purchase from another dealer or has to make first sale of the goods in the State after their manufacture.
The assessment order dated 30.12.2000 itself recites that the assessee had made purchases of old arms from unregistered persons. It does not state that the purchases have been made from other registered or unregistered dealer.
The assessee is said to have supplied the list of the persons/licensees from whom the old arms were purchased along with their complete details. The supply of said list is not disputed and none of the authorities have found or recorded finding that the assessee had not purchased old arms from the said persons. The said persons are mere licensees of arms and there is no finding that any of them ever indulged in sale and purchase of arms or carried the said business. In absence of any such finding the persons or licensees from whom the assessee purchased old arms cannot be recognized as dealer.
The word 'dealer' has been defined in section 2(c) of the Act and it means any person who carries on business of buying, selling, suppling or distributing goods directly or indirectly for cash or deferred payment or for commission, remuneration and includes certain other persons as enumerated therein.
Since the licensees from whom the assessee purchased old arms are not said to be carrying any of the above activities, the assessee cannot be said to have made purchases from any dealer.
The assessee is also not the person or the dealer who made the first sale of goods in the State after their manufacture, inasmuch, he makes the sale after purchase of the old arms from licensees who may be first or second purchasers after the goods were manufactured. The sale to the licensees of U.P. from whom the assessee had purchased old arms would actually be the first sale and not the one made by the assessee.
Accordingly, the assessee cannot be treated to be a manufacturer in respect of of the old arms purchased by him from the licensees within the meaning of Section 2(ee) of the Act.
Since the tax liability accrues at the point of manufacture or import only and the assessee is not a manufacturer the assessing authority as well as the tribunal erred in levying tax at the rate of 15% on the purchases of old arms by the assessee from the licensees.
Accordingly, the impugned assessment orders dated 30.12.2000 and 12.3.2001 and the impugned orders of the tribunal dated 11.10.2002 and 19.2.2003 are set aside to the extent they create tax liability on purchase and sale of old arms by the assessee treating it manufacturer.
Both the revisions are allowed accordingly.
Order Date :- 28.11.2013
brizesh
