[UP Trade Tax Act] Because Of Refund Due From Assessment Proceedings, Can't Escape Liability Of Depositing Tax Realized: Allahabad High Court
The Allahabad High Court has held that a registered dealer cannot withhold the tax realised by him from a purchasing dealer only because he had deposited an excess amount of tax at the time of the transaction. The Court held that he cannot escape the liability of depositing the tax realized under the U.P. Trade Tax Act, 1948 because a refund is due to him from assessment...
The Allahabad High Court has held that a registered dealer cannot withhold the tax realised by him from a purchasing dealer only because he had deposited an excess amount of tax at the time of the transaction.
The Court held that he cannot escape the liability of depositing the tax realized under the U.P. Trade Tax Act, 1948 because a refund is due to him from assessment proceedings.
“The registered dealer after realizing the tax cannot withhold the same on the pretext that some excess amount of tax was deposited. The amount realized on the strength of Act, must be deposited and in case any amount found excess, the same will be refunded to the actual person from whom the same amount was realized as tax. The revisionist cannot get the benefit of any refund of amount while passing the assessment order,” held Justice Piyush Agrawal.
To briefly summarise the facts of the case, a penalty was imposed upon the revisionist/assessee under Section 15A(1)(a) of the U.P. Trade Tax Act. The Trade Tax Tribunal, Kanpur Bench -I, Kanpur rejected the second appeal filed by the assesee against the imposition of penalty. Thereafter, the revisionist approached the High Court.
For context, Section 15A of the UP Trade Tax Act empowers the assessing authority to impose penalty upon the assesee in certain cases. Section 15A(1)(qq) provides for a penalty where the assesee “realises any amount as trade tax on sale or purchase of goods or any amount in lieu of such tax by giving it any different name or colour in contravention of the provisions of sub-section (2) of section 8A.”
Counsel for the assessee argued that as per its assessment order, the assessee was entitled to a refund of Rs. 21,658.50/- and in lieu of the refund, the tax realised by the assessee UP State Spinning Mills Company Limited was not deposited.
Counsel for revenue submitted that the assessing authority of the UP State Spinning Mills Company Limited informed the revisionist-assesee's assessing authority about the separate charge of 4.4% of trade tax by the revisionist, which was duly paid by UP State Spinning Mills Company Limited.
It was argued that the revisionist did not deposit the tax realised from UP State Spinning Mills Company Limited. Therefore, the penalty proceedings were valid.
The Court observed that the finding of fact that the revisionist-assesee had realised trade tax at the rate of 4.4% from UP State Spinning Mills Company Limited was never challenged by the assesee at any stage.
The Court held that only because the refund was due to the assessee in assessment proceedings does not mean that the assessee was not obligated to deposit the trade tax it had realised from the purchasing dealer. It was held that the assesee should deposit the statutory tax collected by it. If the amount is found in excess, the same shall be returned to the person from whom it has been realised and not the person who has realised it, held the Court.
Accordingly, the trade tax revision was dismissed.
Case Title: M/S Kashi Ram Ved Prakash vs. Commissioner Of Commercial Tax U.P. Lucknow 2024 LiveLaw (AB) 428 [SALES/TRADE TAX REVISION No. - 782 of 2008]
Case Citation: 2024 LiveLaw (AB) 428