M/S Indo Gulf Fertilisers Lucknow vs Commissioner Of Commercial Taxes ...
2022 Latest Caselaw 2340 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

A.F.R.                                                                Reserved on 31.3.2022
 
                  Delivered on  9.5.2022              
 
Court No. - 18
 

 
Case :- SALES/TRADE Tax REVISION No. - 161 of 2013
 

 
Revisionist :- M/S Indo Gulf Fertilisers Lucknow
 
Opposite Party :- Commissioner Of Commercial Taxes U.P. Lucknow
 
Counsel for Revisionist :- Mudit Agarwal
 
Counsel for Opposite Party :- C.S.C.
 

 
Hon'ble Alok Mathur,J.

1. The controversy in the present revision is with regard to the rate of Trade Tax under the U. P. Trade Tax Act applicable for the Nitrogen component in the Chemical Fertilizer DAP (Di Ammonium Phosphate). The impugned Judgment of the Commercial Tax Tribunal, Lucknow Bench while rejecting the appeal preferred by the Revisionist held that the Nitrogen content in the DAP was rightly charged at the rate of Rs.1494.80 rather than Rs.1381.30 per metric ton in light of the fact that the Government of India had enhanced the rates of DAP with effect from 29/01/1999, which would be the relevant date for implementation of the enhanced rate of Trade Tax.

2. The revisionist is engaged in the business of manufacturing of Chemical Fertilizer at its unit at Jagdishpur.

3. During the financial year 1999 - 2000 the assessment of the revisionist was carried out and the Assessing Authority assessed the Tax on sale of DAP on the value of Nitrogen content at the rate of Rs. 1490.80 per metric ton, calculated the Tax @6.5% there on.

4. The Revisionist being aggrieved by the said assessment preferred an appeal before the Deputy Commissioner (Appeal), Trade Tax, Lucknow which was dismissed by order dated 29/09/2001, and similar was the fate of the second appeal at the hands of the Commercial Tax Tribunal, Lucknow.

5. The Assessing authority, 1st Appellate Authority as well as the Commercial Tax Tribunal came to a concurrent finding that the Trade Tax levied upon the component of Nitrogen in DAP would be assessed treating the value of Nitrogen at Rs.1381.30 per metric ton was applicable with effect from 27/05/1998 but as soon as the rate of DAP was enhanced by the Government of India with effect from 29/01/1999 the revised/enhanced rates of Tax would be deemed to have come into force and the Nitrogen component in DAP would be valued at Rs. 1 494.80 per metric ton, and hence did not agree with the submissions of the revisionist.

6. The question which arises for determination in the present revision is :-

Whether the revision in the rate of Nitrogen content in DAP would be applicable from the date of enhancement of the rate of DAP by the Government of India with effect from 29 January, 1999 or from 26 February, 2000 when the same was notified by the State Government ?

7. To address the aforesaid proposition it is necessary to go into the various notifications governing the field with regard to levying of Trade Tax on the Fertilizer where Nitrogen is one of the components. According to the notification dated 27th May, 1998 passed in exercise of Clause [a] of Section 4 read with Section 25 of the Uttar Pradesh Trade Tax Act 1948 it was provided that no Tax under the said Act shall be payable on the sale of Potash and Phosphatic component of the Chemical Fertilizers during the period 1st April, 1998 to 31st March, 2000. It was also provided that the percentage of the different components of the Chemical Fertilizers shall be determined according to the guidelines issued by Department of Agriculture, Uttar Pradesh from time to time. In the same notification it is mentioned that the Department of Agriculture has determined the value of the Nitrogen component in DAP to be Rs.1381.30 per metric ton.

8. Further, the above notification also provided that the value of Nitrogen in DAP is liable to be taxed and the value of Nitrogen will be determined by the Agriculture Department which according to the notification dated 27.5.1988 was determined to be Rs.1381.30 per metric ton. It is noticed that the value of Nitrogen is also notified by the Trade Tax Department and taxed @ 6.5 per cent. The value of Nitrogen is also notified by the Trade Tax Department on the recommendation of Agriculture Department, at par with their duty to determine the rate of Tax.

9. The revisionist started collecting Tax on the Nitrogen component of the DAP treating the value to be Rs.1381.30 and during the assessment years 1998-99, 1999-2000 and continued to charge and deposit the Tax at the said value. It is the proceedings for assessment for the assessment year 1999-2000 that the authority objected to the said determination and sought to assess the Nitrogen component @ Rs.1494.80 per metric ton.

10. The circular dated 26/02/2000 issued by the Commissioner Trade Tax referred the order dated 14/10/99 issued by the State Government stating that as per the notification of the Commissioner of Trade Tax dated 6 May, 1998, the Director (Agriculture) vide his letter dated 19/08/1999 has informed that the value of the Nitrogen component has changed and, therefore, the revised rates of the Nitrogen component in the Potash and Phosphate fertilizers are enhanced to Rs.1494.80 per metric ton.

11. There is no dispute with regard to facts in issue inasmuch as vide notification dated 27th May, 1998 the value of Nitrogen component in DAP was fixed at ₹1381.30. Subsequently the value of DAP was enhanced by the Union of India on 29/1/1999. The notification of the Commissioner, Trade Tax dated 26/02/2000 referred to the said enhancement of rate of DAP and consequent enhancement of value of the Nitrogen component in the DAP vide circular issued by the Department of Agriculture which was given wide circulation. There is no dispute that prior to notification dated 26/02/2000 the notification dated 27th May, 1998 was in existence.

12. It has been contended by the counsel for the revisionist that the notification dated 27.5.1998 held field till it was amended/modified by the subsequent notification related 26.02.2000. It is, therefore, contended that in absence of any valid law / notification there was no occasion for the opposite parties to deduct trade Tax at the enhanced rate of Rs.1494.80, and in case the Tax is deemed to have enhanced with effect from 14/10/1999 i.e. is the date of enhancement of the rates of DAP, the Tax could not have been enhanced retrospectively and consequently submitted that the assessment order, the order passed in first appeal as well as the impugned order of the Commercial Tax Tribunal are illegal and arbitrary and deserve to be set aside.

13. The Revenue, on the other hand, has submitted that once the rate of DAP was enhanced by the Government of India and the revisionist having recovered the enhanced rate of DAP, was bound to pay Tax at the enhanced rate and should have himself found out about the enhanced rate of Nitrogen component in DAP and has, therefore, supported by orders of the authorities below.

14. The notification dated 6th May, 1998 itself provided the percentage of different components of the Chemical Fertilizer shall be determined according to the guidelines issued by the Department of Agriculture from time to time and the Department of Agriculture had informed the Commercial Tax Department vide letter dated 08/05/1998 that value of the Nitrogen component in DAP would be ₹1381.30. In the meanwhile, the rate of the DAP was enhanced by the Government of India by means of order dated 14/10/1999 but no order/notification was issued by the Commercial Tax Department or the Agricultural Department enhancing the rate of the Nitrogen component in DAP. The first appellate court as well as Commercial Tax Tribunal have both while disallowing the claim of the revisionist have held that at the moment the rate of DAP were enhanced by the Central Government vide its order dated 29.1.1999, the revisionist started collecting the enhanced rate.

15. It is also noticed that the controversy in the present case pertains only to enhanced rate of nitrogen component in DAP as distinguished from enhanced rate of tax on Nitrogen component which remained at 6.5 percent. It is not a case where there was any change in the rate of tax but only rate of nitrogen for the purpose of levying Trade Tax was enhanced by the Agriculture Department. Admittedly, the revisionist had collected the enhanced rate of DAP and consequently is liable to pay Tax on the enhanced rates which was so collected by him. The entire argument of the revisionist stating that the rate of tax would not have retrospective effect and relied upon the judgment of this Court in the case of M/S Ganesh International and Another vs Assistant Commissioner and others, 2001 (18) NTN DX 43. The said judgment would not be applicable to the facts of the present case as in the present case there was no change or enhancement in the rate of tax but only change in value of taxable goods.

16. No material has been placed by the revisionist before this Court to upset the concurrent finding of facts recorded by both the authorities below that the revisionist had collected the enhanced rate of DAP from the date of notification issued by Government of India. It is also noticed that vide its order dated 26.2.2000 the Commissioner, Trade Tax had circulated the letter of Government of India dated 14.10.1999 which fact was already within the knowledge of the revisionist, who is a dealer of DAP and the contention of the revisionist in this regard has not been accepted by the first appellate court as well as Commercial Tax Tribunal.

17. The revisionist having realized enhanced rate of DAP from 1999 when the rate was enhanced by the Government of India, he would be liable to pay Trade Tax at the enhanced rate of Nitrogen content in DAP. This finding recorded by the Tribunal has not been assailed by the revisionist. In case, the revisionist is allowed to pay Trade Tax the earlier rate of nitrogen component in DAP, it would amount to unjust enrichment and, therefore, even in this view of the matter the revision fails.

18. This Court in consideration of the aforesaid facts is of the considered opinion that no interference is required with the judgment of the Commercial Tax Tribunal that enhanced rate of nitrogen would be effective from 1999 itself rather than 26.2.2000. The question is answered in favour of the revenue as against the revisionist. Consequently, the revision is dismissed.

Dt.  9.5.2022                                                        (Alok Mathur, J.)
 
RKM.