- (1.) LEAVE granted.
(2.) APPELLANT manufactures Steel Ingots. It purchased iron scrap from the railways in public auction. Iron scrap is melted and converted into the finished products. Appellant had been accorded recognition under Section 4-B (2) of the U. P. Trade Tax Act (for short "the Act") in terms whereof it became entitled to purchase raw-materials for manufacturing purpose at a concessional rate of tax. In the year 1985-86, it purchased 2532. 989 M. T. of iron scrap. Allegedly, the lots contained various categories of iron scraps as it was purchased on "as is where is basis". Appellant allegedly was not allowed to sort out the scrap at the time of purchase as the conditions specified therein were : "1]. The material will be sold of "as IS WHERE IS" basis. 2]. No sorting, picking whatsoever under any circumstances will be allowed. 3]. The purchaser will be required to take delivery of the material from the lots. 4]. The purchaser should inspect the lots prior to the auction. " Appellants stated that about 9. 47% of the total amount of scrap purchased, i. e. , 239. 966 M. T. , could not be utilized by it. It sold the said goods to other dealers at a concessional rate of tax. Inter alia, on the plea that the appellant for the purpose of obtaining the tax concession in terms of Section 4-B (2) of the Act had furnished an undertaking whereby and whereunder it undertook to utilize the entire material for manufacturing purposes, which was breached by reason of the said transfer, a proceeding for levy of penalty was initiated against it whereupon a show-cause notice was issued. Cause was shown by the appellant on 5. 03. 1990 contending that the said quantity of scrap being not usable, it had no other option but to dispose of the same. By reason of an order dated 26. 03. 1990, the assessing officer rejected the said contention. It levied penalty of Rs. 85,619/- on the appellant.
(3.) AN appeal preferred thereagainst before the Deputy Commissioner (Appeals) was dismissed by an order dated 8. 02. 1991. An appeal to the tribunal preferred by the appellant was, however, allowed by an order dated 29. 04. 1993, stating: "6. Having given our deep consideration and anxious thoughts to the rival submissions and perused the relevant record, we feel that the ld. Authorities below have not appreciated the facts of the case in right perspective. It is not disputed that the scrap has been purchased by the Appellant in lots from the railway, in which there remains existence of several types of scrap. During the course of arguments, the ld. Counsel produced copy of tender invited by Railway Department. We have gone though this document and we find that in general conditions of the said document, there is specific mention in condition No. 1 that the material will be sold on "as IS WHERE IS" basis and in condition No. 2, no sorting, picking whatsoever under any circumstance will be allowed. It is worth consideration that no purchaser can violate the conditions of purchaser. The purchases have been made in lots, in which different types of scrap exists, out of which maximum usable strap has been consumed by the appellant in the manufacture and only that type of scrap was sold against the Form 3-B which was not usable in the unit of Appellant in any condition. In these circumstances, to our mind, there appears no malafide on the part of the appellant, hence no penalty could be initiated against the assessee U/s 4-B (6) of the Act" Respondent preferred a revision petition thereagainst before the High court which has been allowed by the impugned judgment dated 1. 04. 2004.;