M/s. Shri Hari Trading Company vs State of U.P. and Others

Ram Surat Ram Maurya, J.—Heard Sri Ashok Kumar, counsel for the petitioner and Sri C.B. Tripathi, Special Counsel for State of U.P., for the respondents. The aforementioned writ petition has been filed for quashing the assessment order dated 23.03.2007 for the Assessment Year 2004-05, under U.P. Trade Tax Act, 1948 (hereinafter referred to as the Act) by which it has held that the Inverter and UPSS (Uninterrupted Power Supply System) are the electrical implements and not electronic goods as such trade tax at the rate of 10% was payable on the sale of these goods and trade tax at the rate of 12% was payable on the sale of battery and as the petitioner has paid trade tax on these goods at the rate of 4% as such liability of differential amount has been assessed upon him. The petitioner has further prayed for mandamus directing the respondents not to realize the trade tax liability in pursuance of the aforesaid assessment order.

The facts giving rise to the present writ petition are that the petitioner was carrying on business of purchase and sale of Inverter, UPSS (Uninterrupted Power Supply System), it''s spare parts and batteries. The petitioner was registered under U.P. Trade Tax Act, 1948 and Central Sales Tax Act. It is stated that the petitioner had been paying trade tax on the sale of Inverters, UPSSs and batteries at the rate of 4%. For the Assessment Year 2002-03, the Assessing Officer by order dated 02.05.2005 has accepted the return of the petitioner. For the Assessment Year 2003-04, the Assessing Officer by order dated 29.03.2006 assessed the tax liability on the petitioner on these goods at the rate of 10%. The petitioner filed an appeal from the assessment order for the Assessment Year 2003-04, which was allowed by the Joint Commissioner (Appeals) and it was held that Inverters and UPSSs sold by the petitioner were electronic goods and trade tax at the rate of 4% was payable on it. But the Assessing Officer, again for the Assessment Year 2004-05, by the impugned order has assessed the trade tax liability on Inverters and UPSSs at the rate of 10%. It has stated that the Commissioner of Trade Tax U.P. has issued a Circular dated 02.09.2000 in which it has been held that Inverters, and UPSSs work as ''power supply devices'' and trade tax at the rate of 4% was payable on it. The controversy in this respect has been settled by the order of the appellate authority inter-partes in the previous year as well as by the orders of the Tribunal and judgments of this Court in various other cases and it has been finally decided that Inverters, and UPSSs are ''power supply devices'' and trade tax at the rate of 4% was payable on it. The impugned order, being contrary to the appellate order inter-partes for the Assessment Year 2003-04 as well as judgments of this Court, is liable to be set aside.

The respondents have filed Counter Affidavit in which it has been stated that Inverters, and UPSs are electrical goods and trade tax at the rate of 10% was payable on it. The Commissioner of Trade Tax U.P. has issued a Circular dated 03.11.2003 clarifying the legal position that trade tax at the rate of 10% was payable on sale of Inverters, and UPSs. The impugned Assessment order does not suffer from any illegality.

The learned Special Counsel for State of U.P. raised a preliminary objection that statutory appeal is provided under the Act from the impugned assessment order as such the writ petition is liable to be dismissed on the ground on alternative remedy. He relied upon the judgment of Supreme Court in United Bank of India Vs. Satyawati Tondon and Others, . On the other hand counsel for the petitioner submitted that alternative remedy is not an absolute bar in entertaining the writ petition. The writ petition was filed in the year 2007 and after hearing Standing Counsel for the respondents, the writ petition was admitted and interim order was granted. Now the pleadings have been exchanged between the parties and the writ petition has come up for hearing after about six years as such dismissing the writ petition on the ground of alternative remedy is not proper; particularly when the controversy has already been decided by this Court, Trade Tax Tribunal as well as by the appellate authority inter partes for the Assessment Year 2003-04. Supreme Court in the case of Durga Enterprises (P) Ltd. vs. Principal Secretary and others, (2004) 13 SCC 665 and this Court in the case of Roashan Lal vs. State of U.P. 2010 (1) UPLBEC 202 (DB) have held that if pleadings are exchanged then the case may be decided on merits irrespective of alternative remedy being available. In view of the above, we propose to examine the arguments of the counsel for the parties as to whether the controversy involved in the writ petition has been finally settled in his favour of the petitioner by this Court or the issue still requires to be decided by the fact finding authority.

The counsel for the petitioner relied upon the judgments of Single Judge of this Court in Commissioner of Trade Tax Vs. Luminous Electronics Ltd., (2010) 44 NTN 162 which has been followed in Trade Tax Revision No. 3232 of 2004 The Commissioner of Trade Tax Vs. M/S. Sindoze Electronics, decided on 19.12.2012 and judgment dated 05.08.2008 passed in Trade Tax Revision No. 1560 of 2000, The Commissioner of Trade Tax U.P. Vs. M/S. Astrol Power System and argued that in these cases, this Court has held that the Inverters are electronic components. We have examined these judgments, in which it was found that as the Tribunal had discussed the matter at length and had come to the conclusion that an Inverter was also covered under Entry 75 (ii) of the Notification dated 29.01.2000 relating to electronic components as such the Court has refused to interfere with the order of the Tribunal in exercise of revisional jurisdiction. In fact, these judgments are of dismissal in limine. This Court has not given its own findings but has refused to interfere with the order of the Tribunal in exercise of the revisional jurisdiction as such these judgments do not lay down any ratio decidendi and cannot be regarded as an authoritative pronouncement in respect of the controversy involved in the writ petition. At this stage, the counsel for the petitioner wanted that he may be permitted to produce the orders of the Tribunal in the aforementioned cases but we did not find it proper, in view of the admission of the petitioner in paragraph-3 (iii) of the Rejoinder Affidavit, that his own case was decided by the Division Bench of this Court along with M/S. Microtek International Pvt. Ltd. Vs. State of U.P. and others, (2010) 44 NTN 59, in which this Court has remanded the matter to the Assessing Officer for decision afresh. The judgment of the Tribunal (filed as Annexure-10 to the writ petition) is under the provisions of Central Excise Act, 1944 as such are not relevant for cases under U.P. Trade Tax Act, 1948. We do not find that by any pronouncement of this Court or of the Apex Court it has been decided that Inverters and UPSSs are electronic components.

In the impugned assessment order, the controversy was in respect of Inverters, UPSSs, and Batteries. On these goods the petitioner has paid trade tax at the rate of 4% while the Assessing Officer has assessed the trade tax liability on Inverters and UPSSs at the rate of 10% and on batteries at the rate of 12%. The assessment order so far as it is related to the batteries, is not challenged before us and the counsel for the petitioner has not argued in this respect. The counsel for the petitioner has disputed tax liability on Inverters and UPSSs as such we confine this judgment in that respect only.

In exercise of powers u/s 3-A of U.P. Trade Tax Act, State of U.P. has issued Government KN. NI.-2-100/XI-9(231)/94-U.P. Act-15-48-Order-2000 dated 15.01.2000 specifying the various goods in different entries and rate of trade tax chargeable on it. This Government Order has been amended time to time. The Government Order, as amended on 29.01.2001, are relevant for this case. Entry 3, and Entry-75 (ii) are quoted below:

Entry-3 specify the electrical goods on which trade tax at the rate of 10% is payable, and Entry-75 (ii) specify amongst other electronic goods the ''power supply devices'' on which trade tax at the rate of 4% is payable. Battery is used in Inverter and UPSS both and both of them are operated by electrical energy. Function of Inverter is to generate alternative current of electricity during power cut while UPSS used to generate alternative current of electricity during power cut as well as it controls voltage during power supply.

Whether the Inverter and UPSS are "electrical equipments" or "electronic components" and in which of the above two entries, these items are falling can only be decided by detail inquiry by the fact findings authority on the basis of the report of Electronic Commission as well as considering the fact that how these goods are regarded in common parlance. We find that in various items mentioned in the two entries, the manufacturing components are the electronic components and these items cannot be used without the aid of electricity. Thus intricate question of fact is involved in the writ petition which cannot be decided in the summary proceedings of the writ petition.

The Circular of the Commissioner Trade Tax dated 02.09.2000 has been superseded by the Circular dated 03.09.2003. A bare perusal of the Circular dated 03.09.2003 does not show that the Commissioner Trade Tax U.P. has considered the various factors before deciding that Inverter and UPSS are electrical goods. This Court, in M/S. Microtek International Pvt. Ltd. Vs. State of U.P. and others, (2010) 44 NTN 59 (D.B.), relying upon the judgments of Apex Court in State of Goa and others Vs. Leukoplast (India) Ltd. etc., and Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Another, has remanded the matter to the Assessing Officer, in stead of relegating the petitioner for filing the appeal, to decide the controversy as to whether the Inverters and UPSs are electronic component or electrical implement. This judgment has been followed by this Bench in Writ Tax No. 813 of 2007 M/S. P.C.I. Ltd. Vs. State of U.P. and others decided on 18.03.2013. We also respectfully follow the aforesaid judgments. In the result the writ petition is disposed off and the matter is remanded to the Assessing Officer to decide the controversy afresh in respect of Inverters and UPSSs in the light of the aforesaid observations. The Assessment order dated 23.03.2007 so far as it relates goods other than Inverters and UPSSs is confirmed. The Assessing Officer shall reframe the assessment in respect of Inverters and UPSSs and the petitioner will not raise objection relating to limitation in this respect.