Parsa Venkateshwar Rao Jr
In the Commissioner of Commercial Tax UP vs M/S Oswal Greentech Limited, delivered by the bench of Justice Dipak Mishra and Justice Shiva Kriti Singh, on October 28, 2016 said that the Oswal Greentech Ltd did not violate the tax concession law that it had availed under the UP Trade Tax Act by transferring stocks of urea it had produced in the state from the natural gas it had got from the state at a concessional rate of 5 percent from the original rate of 20 percent, thus benefiting by 15 percent outside of the state.
The Revenue Department as well as the Joint Commissioner Appeals – I, Commercial Tax, Bareilly, found the company to be at fault and liable to pay the penalty imposed by the Revenue Department in on March 28, 2009. The company went in a second appeal to Tribunal, Trade Tax, Uttar Pradesh. As there was a difference of opinion in the division bench of the tribunal, it was referred to the Chairman of the Tribunal, who then nominated a judicial member. The judicial member ruled in favour of the Oswal Greentech Ltd, and the penalty stood annulled. Revenue Department then filed an appeal in the High Court under Trade Tax Revision. The High Court upheld the decision of the Tribunal.
The lawyers for Oswal Greentech cited the central government’s Fertilizer Movement Control Order, 1973 issued by the Ministry of Chemical and Fertilizers, which allowed for transfer of stocks. They also contended that the state government did not object to the transfer of stocks. Two earlier cases have been cited to prove the point, where it was held that unless a false certificate was issued by the company in the use of material obtained under concessional tax rate, it cannot be penalized.
Justice Mishra observed: “ An issue may arise as to whether the stock transfer outside the State in terms of the directions issued by the Central Government can be considered as sale or transaction in the course of inter-State trade or commerce. In the case at hand, we would not decide the said issue or question, for it was not raised or argued before the authorities and can be examined in an appropriate case when raised and considered.”
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