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2010 DIGILAW 1376 (ALL)

MODI INDUSTRIES LIMITED v. STATE OF U. P.

2010-04-27

PANKAJ MITHAL, RAJESH KUMAR

body2010
JUDGMENT Rajes Kumar, J. - By means of the present writ petition, the petitioner seeks the following reliefs : (i) To issue a suitable writ, order or direction in the nature of certiorari, quashing the reassessment proceedings under section 21 of the U.P. Trade Tax Act for the assessment years 1997-98 to 1999-2000 in pursuance of notices dated March 15, 2004 (annexure 4 to the writ petition). (ii) To issue a writ order or direction in the nature of certiorari quashing the circular dated September 30, 2003 directing for the imposition of tax on poly pouches in which the country liquor was packed and sold (annexure 6 to the writ petition). (iii) To issue a writ, order or direction in the nature of mandamus or prohibition restraining/prohibiting respondent No. 2 from taking any proceedings for imposition of tax on poly pouches for the assessment years 1997-98 to 1999-2000 under the U.P. Trade Tax Act. (iv) To issue any other suitable writ, order or direction as this honourable court may deem fit and proper in the circumstances of the case in favour of the petitioner and against the respondents. (v) To award the costs of the petition to the petitioner throughout. The brief facts of the case are that the petitioner is a public limited company incorporated under the Indian Companies Act, 1956. In one of the units, named Modi Distillery, it manufactures country liquor as well as Indian-made foreign liquor. The country liquor is exempted from tax under the notification issued in exercise of power under section 4 of the U.P. Trade Tax Act (hereinafter referred to as, "the Act"). The petitioner had sold the country liquor in a packed form. In the bills, the value of the country liquor and the packing materials has been separately charged. In the original assessment orders, for the assessment years 1997-98 to 1999-2000, the assessing authority had not levied the tax on the Value of the packing materials. The notices dated March 15, 2004 were issued under section 21 of the Act for the assessment years 1997-98 to 1999-2000 under the U.P. Trade Tax Act with a view to levy the tax on the value of the packing materials on the ground that the value of the country liquor and value of the packing materials have been separately charged. Heard Sri Bharat Ji Agrawal, learned senior advocate, assisted by Sri Piyush Agrawal, learned counsel for the petitioner and Sri S. P. Kesarwani, learned Additional Chief Standing Counsel. He submitted that vide circular dated April 28, 2000 it has been clarified by the Government that even if the prices of country liquor and packing materials were separately charged, the value of packing material was not liable to tax. He submitted that the subsequent circular dated September 30, 2003 issued by the Commissioner of Trade Tax, U.P., Lucknow in which it has been opined that in case the separate sales are made for the country liquor and poly pouches, etc., the benefit of section 3AB is not available; and the benefit of section 3AB is only available in a case where composite price for the goods and the packing materials have been charged, is manifestly erroneous. Sri S. P. Kesarwani, learned Additional Chief Standing Counsel, submitted that the issue involved in the present writ petition came up for consideration before the Division Bench of this court in Writ Petition No. 317 of 2004 (Majhola Distillery & Chemical Works, Majhola, District Pilibhit v. State of U.P. [2010] 34 VST 292 (All) [App]) decided on October 4, 2007 wherein after considering the various decisions of the apex court and the aims and objects of introducing section 3AB of the Act, it has been held that section 3AB of the Act applies only in a case where a composite price for the goods and packing materials has been charged and it does not apply to a case where the prices of the goods and the packing materials have been separately charged. On the similar facts in the case of sale of country liquor where the prices of country liquor and the packing materials have been separately charged, it has been held that the provision of section 3AB does not apply and the packing materials are liable to tax. He submitted that special leave petition filed against the said order has been dismissed by the apex court. Sri Bharat Ji Agrawal, learned counsel for the petitioner submitted that the Division Bench decision of this court in the case of Majhola Distillery & Chemical Works, Majhola, District Pilibhit v. State of U.P. [2010] 34 VST 292 (All) [App] requires reconsideration. He submitted that special leave petition filed against the said order has been dismissed by the apex court. Sri Bharat Ji Agrawal, learned counsel for the petitioner submitted that the Division Bench decision of this court in the case of Majhola Distillery & Chemical Works, Majhola, District Pilibhit v. State of U.P. [2010] 34 VST 292 (All) [App] requires reconsideration. We have heard learned counsel for the parties and perused the records and given our anxious consideration to the rival submissions. The question on the merits, namely, where the prices for the country liquor and packing materials are separately charged whether the provision of section 3AB applies or not is squarely covered by the Division Bench decision of this court in the case of Majhola Distillery & Chemical Works, Majhola, District Pilibhit v. State of U.P. [2010] 34 VST 292 (All) [App] wherein it has been held that where the prices of the goods and the packing materials are separately charged, section 3AB does not apply and accordingly it has been held that if the prices for the country liquor and the packing materials are separately charged, the value of the packing materials would not be exempted under section 3AB of the Act. The Division Bench of this court has considered in detail the decisions of the apex court in the case of Premier Breweries v. State of Kerala reported in [1998] 108 STC 598; [1998] 1 SCC 641, Associated Cement Companies Ltd. v. Government of Andhra Pradesh reported in [2006] 144 STC 342 (SC); JT [2006] 1 SC 107, Raj Sheel v. State of Andhra Pradesh reported in [1989] 74 STC 379 (SC); JT [1989] Supp. SC 226 and Co-operative Company Ltd. v. Commissioner of Trade Tax, U.P. reported in [2007] 7 VST 174 (SC); [2007] 4 SCC 480 and aims and objects of introducing section 3AB of the Act. The Division Bench decision of this court is a well considered decision. The special leave petition against the said order has also been dismissed by the apex court. In this view of the matter, we do not see any reason to reconsider the issue and we respectfully agree with the view taken by the Division Bench. Accordingly, we are of the view that the view expressed in circular dated September 30, 2003 is legally correct and in accordance with the provisions of the Act. In this view of the matter, we do not see any reason to reconsider the issue and we respectfully agree with the view taken by the Division Bench. Accordingly, we are of the view that the view expressed in circular dated September 30, 2003 is legally correct and in accordance with the provisions of the Act. No other point has been raised. In the result, the writ petition fails and is dismissed.