- (1.) The petitioner, a unit of Cooperative Sugar Factory Federation, Lucknow is licensee for manufacture of liquor/country spirit at Majhola Distillery, District Pilibhit and is registered as a dealer under the U.P. Trade Tax Act.
(2.) The provisions of U.P. Excise Act and Rules are applicable on the manufacturing and selling of country liquor. The petitioner is a licensee under Section 407 of the U.P. Excise Rules and is supplying/selling country liquor at the rate fixed and approved by the State Government from time to time. Country liquor is being sold in duly packed bottles or poly pouches. The assessments for the Assessment Years 1997-98 to 2000-01 under the U.P. Trade Tax Act as well under the Central Sales Tax Act, after scrutiny and verification from account books were completed by the Assessing Authority. The turnover of country liquor being an exempted item was exempted. No trade tax was levied on the packing material of the country liquor i.e. on poly pouches. Thereafter notices under Section 21(2) of the U.P. Trade Tax Act of dated 23rd of February, 2004 for the Assessment Years 1997-98 to 2000-01 were issued by the Deputy Commissioner (Assessment), Trade Tax, Pilibhit filed as Annexure-8 to the petition to tax poly pouches (packing material) for reassessment on the ground that the country liquor has been sold in poly pouches on a fixed rate. The petitioner has added the price of the poly pouches/packing material in the price of the liquor and directly realised its price from purchasers. This has been termed as 'capsuling charges' in the account books. The department has sought to levy trade tax on the sale of the said packing material i.e. poly pouches charges as 'capsuling charges' by issuing reassessment notices impugned in the present petition.
(3.) A counter affidavit on behalf of the respondents has been filed by Shri Vijai Kumar, Deputy Commissioner (Assessment), trade tax. It is accepted that the country liquor is an exempted item under the U.P. Trade Tax Act. The country liquor has been sold on the price fixed through Excise Department and payments have also been received through Excise Department but the price of the packing material has been fixed separately and has been realised separately for which the petitioner is liable to pay trade tax in view of Section 3AB of the Act. It has been further stated that the petitioner was liable to pay trade tax on the sale of packing material but the same was not considered by the Assessing Authority for the assessment years involved herein with the result the turnover of the packing material has escaped the assessment. Reference to a circular dated 28th of April, 2000 amending the earlier circular dated 12th of August, 1999 was also made and it has been stated that the earlier circulars were not in conformity with the provisions of Section 3 AB of the Act. Emphasis in the counter affidavit is that since the sale of packing material has been made separately as the price of the same has been fixed and realised separately, the petitioner is liable to pay tax on the sale of packing material under Section 3AB of the Act. Plea of non maintainability of writ petition has been set up in para 17 of the counter affidavit on the ground that the petitioner has a right to file his reply to the impugned notices and as such the present writ petition is not maintainable.;