The Allahabad High Court in its recent judgement has held that no exemption from tax liability under the Uttar Pradesh ( UP ) Trade Tax Act, 1948 based on availability of a refund from assessment. Section 15A of the UP Trade Tax Act empowers the assessing authority to impose penalty upon the assesee in certain cases.
A penalty was imposed upon Kashi Ram Ved Prakash, 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 assessee against the imposition of penalty. Thereafter, the revisionists approached the High Court.
It was 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.
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.
A single bench of Justice Piyush Agrawal 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.
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