Case: M/S. Chhotabhai Jethabhai Patel &amp; Co Vs. State Of Uttar Pradesh

dismissed.6. The appeal which the petitioner firm had filed before the Judge (Appeals) was dismissed and a revision taken against that order was also dismissed but these orders have not been challenged in any proceedings so far.7. The appellant firms contention in the appeal was that the order of the Sales Tax Officer limiting the exemption of Sales tax to biris on which excess Central Excise Duty had been paid was erroneous. It will be apposite at this state to truce the history of the exemption which is claimed by the appellant firm. Because of the difficulty experienced in regard to inter-State sales on a large scale of certain articles the Central Government with the concurrence of the State Governments imposed an enhanced Central Excise Duty on the sale of those articles which was to be equivalent to and substitute for the sales tax levied upon them, and the sum so collected by the imposition of the enhanced Central Excise Duty on those articles was to be distributed by the Central Government to the State Governments concerned and they (the State Governments) agreed to exempt those articles from sales tax. As a result of this arrangement The Additional Duties of Excise (Goods of Special Importance) Act (Act 58 of 1957) was passed by Parliament. In this judgment it will be called Central Act 58 of 1957. By this Act additional Central Excise duty was levied on tobacco but no such duty was levied on biris. Even under the Central Excise and Salt Act (Act 1 of 1944), hereinafter called Central Act 1 of 1944, no Central Excise Duty was imposed on handmade biris although excise duty was levied on machine made biris but the object of imposing that duty was to protect the Handmade Biris industry. In pursuance of the above mentioned arrangement for the exemption from sales tax of certain articles the U. P. Government issued notification No. ST 4485/X dated December 14, 1957 under S. 4 (i)(b) of the Act which will be quoted at another place in this judgment. Liability to sales tax arises under S. 3 (1) of the Act which provides:-S. 3(1) "Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of (two naye paise per rupee) on his turnover of such year, which shall be determined in such manner as may be prescribed".and provision for exemption for sales tax is made in S. 4(1)(a) and (b) which provides:-S. 4(1) "No tax shall be payable on-(a) the sale of water, milk, salt, newspapers and motor spirit as defined in the U. P. Sales of Motor Spirit (Taxation). Act, 1939, and of any other goods which the State Government may by notification in the official gazette exempt:(b) the sale of any goods by the All India Spinners Association or Gandhi Ashram Meerut, and their branches or such other persons, or class of persons as the State Government may from time to time exempt on such conditions and on payment of such fees, if any not exceeding (eight thousand rupees) annually as may specified by notification in the Official Gazette". The U. P. Government on December 14, 1957, issued the following notification under S. 4(1)(b) of the Act :-"No-ST-4485/X dated Lucknow December 14, 1957 (Published in U. P. Gazette Extraordinary, dated December 14, 1957).In partial modification of notifications No. ST-905/X dated March 31, 1956 and ST-418/X 902(9)-52 dated January 31, 1957 and in exercise of the powers conferred by clause (b) of sub-section (1) of sec. 4 of the U. P. Sales Tax Act, 1948 (U. P. Act No. XV of 1948) as amended upto date, the Governor of Uttar Pradesh is pleased to order that no tax shall be payable under the aforesaid Act with effect from December 14, 1957 by the dealers in respect of the following classes of goods provided that the Additional Central Excise Duties leviable thereon from the closing of business on December 13, 1957 have been paid on such goods and that the dealers thereof furnish proof to the satisfaction of the assessing authority that such duties have been paid.(1) ..... .... ..... ...... ..... .... .... .... .... :.........(2) ...... .... ...... ...... ....... .... .... .... ..., ......(3) Cigars, cigarettes, biris and tobacco, that is to say any form of tobacco, whether cured or uncured and whether manufactured or not and includes the leaf, stalks and stems of the tubacco plant but does not include any part of a tobacco plant while still attached to the earth".This is the notification, which, it is submitted, by the petitioner, has been misconstrued and misapplied and has resulted in the infringement of the petitioners right under Art. 19(1) (g) of the Constitution.8. It was contended that under the Central Act 58 of 1957 additional Central Duty of Excise had been paid on tobacco as defined in the Central Act 1 of 1944. In the 4th item in the 1 st Schedule of Central Act 1 of 1944 tobacco is defined as follows:-"Tobacco" means any form of tobacco, whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth".The notification expressly states that it is made under S. 4(1)(b) of the Act and therefore the exemption was conditional and properly read it applies only to those goods on which additional Central Excise Duty was leviable and had been paid. No such duty was leviable on handmade biris and it was not paid. The condition of the exemption therefore cannot be said to have been fulfilled and the sales of the petitioners did not fall within the exemption covered and given by the notification. In our opinion therefore the Sales Tax Officer correctly interpreted the notification and it has not been shown that his determination was in any way erroneous. On this ground also the petition must fail.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6. The appeal which the petitioner firm had filed before the Judge (Appeals) was dismissed and a revision taken against that order was also dismissed but these orders have not been challenged in any proceedings sowill be apposite at this state to truce the history of the exemption which is claimed by the appellant firm. Because of the difficulty experienced in regard tosales on a large scale of certain articles the Central Government with the concurrence of the State Governments imposed an enhanced Central Excise Duty on the sale of those articles which was to be equivalent to and substitute for the sales tax levied upon them, and the sum so collected by the imposition of the enhanced Central Excise Duty on those articles was to be distributed by the Central Government to the State Governments concerned and they (the State Governments) agreed to exempt those articles from sales tax. As a result of this arrangement The Additional Duties of Excise (Goods of Special Importance) Act (Act 58 of 1957) was passed by Parliament. In this judgment it will be called Central Act 58 of 1957. By this Act additional Central Excise duty was levied on tobacco but no such duty was levied on biris. Even under the Central Excise and Salt Act (Act 1 of 1944), hereinafter called Central Act 1 of 1944, no Central Excise Duty was imposed on handmade biris although excise duty was levied on machine made biris but the object of imposing that duty was to protect the Handmade Biris industry. In pursuance of the above mentioned arrangement for the exemption from sales tax of certain articles the U. P. Government issued notification No. ST 4485/X dated December 14, 1957 under S. 4 (i)(b) of the Act which will be quoted at another place in thisnotification expressly states that it is made under S. 4(1)(b) of the Act and therefore the exemption was conditional and properly read it applies only to those goods on which additional Central Excise Duty was leviable and had been paid. No such duty was leviable on handmade biris and it was not paid. The condition of the exemption therefore cannot be said to have been fulfilled and the sales of the petitioners did not fall within the exemption covered and given by the notification. In our opinion therefore the Sales Tax Officer correctly interpreted the notification and it has not been shown that his determination was in any way erroneous. On this ground also the petition must fail.