JUDGMENT
Prakash Krishna, J.
1. These two revisions relate to the assessment years 1985-86 and 1986-87 and have been filed against the common order of the Tribunal dated April 22, 1994. The common questions of fact and law are involved and, therefore, they were heard together and are being disposed of by a common judgment.
2. The applicant is a civil contractor and had taken construction of civil contract on contract basis. It also supplied building material including “reta” and “bajri”. In these two assessment years the assessing authority levied purchase tax under Section 3-AAAA on the purchase of “reta” and “bajri”, etc., from unregistered dealer. This levy of purchase tax at the hands of the applicant has been confirmed by all the three authorities below. Aggrieved against the aforesaid order present revision has been filed.
3. Heard learned Counsel for the parties and perused the record.
4. Sri Shubham Agarwal, learned Counsel for the applicant mainly submitted three points in support of the revision. Challenging the levy of purchase tax on the purchase of “reta” and “bajri” from unregistered dealer under Section 3-AAAA of the Act, it was submitted that sand and “bajri” having been used in the execution of works contract in the assessment year in question when no notification under Section 3-F of the Act had been issued, the Sales Tax Tribunal and the authorities below were not justified in law in imposing purchase tax on such purchases. Secondly, it was submitted that the Tribunal was not justified in deciding the question of interest and in confirming the imposition of interest under Section 8(1) of the Act. An argument that the Tribunal was not justified in law in including the amount of freight in the purchase price of “bajri” and sand was also raised. Elaborating the argument it was submitted that freight has been separately shown in the bill. Therefore, freight does not form part of the turnover.
5. In reply the learned Standing Counsel submitted that Section 3-AAAA of the Act is in the nature of residuary provision and it was enacted with an idea that no transaction of sale of goods, taxable at the point of sale to the consumers, should go untaxed. Either the seller pays the tax or the purchaser pays, it is for achieving that purpose the Section 3-AAAA has been enacted providing for several situations. With regard to the question of interest it was submitted that as the claim of the applicant has been found to be untenable on the question of taxability on purchase of sand and “reta”, the authorities below were fully justified in levying interest as it would amount admitted turnover of the applicant. On the question of freight it was submitted that the Tribunal has recorded a finding of fact that the amount of freight was incurred by the selling dealer of the applicant before sale and, as such, the amount of freight shall form part of the turnover.
6. Learned Counsel for the applicant in support of his first submission has placed reliance upon a judgment of the Supreme Court in the case of Deputy Commissioner of Sales Tax (Law) v. N. Kannan Nair . This was the case under the Kerala General Sales Tax Act, 1963. It has been held therein that the material purchased and used by the assessee, a contractor for repairing the road is not exigible to purchase tax under Section 5A(1)(a) of that Act as the user must be in the manufacture of another commodity and the expression “consumed otherwise” must be so construed. The said case has hardly any application to the controversy involved herein. Learned Counsel could not show that Section 3-AAAA of the Act is equivalent to Section 5A of the Kerala General Sales Tax Act, 1963. Section 3-AAAA has been interpreted by the Supreme Court in Hotel Balaji v. State of Andhra Pradesh of the said case is relevant and they are quoted below :
51. In short, the scheme of the section is this : (1) If a dealer purchases the goods liable to tax at the point of sale to the consumer from any registered dealer who is not liable to pay tax on such sale, the purchasing dealer shall pay such tax. If, however, the purchasing dealer establishes that the goods purchased by him have already been subjected to or may be subjected to tax under the U.P. Act or Central Sales Tax Act, he will get an exemption to that extent. (2) If the said goods are purchased from a person other than a registered dealer the purchasing dealer shall pay the tax payable on sale of such goods. If, however, he proves that tax payable has been paid, either wholly or partly, by the seller, the tax payable by the purchasing dealer shall be exempted to that extent. (3) Similar exemption will be available to the purchasing dealer in case he establishes any of the facts mentioned in Clauses (c) and (d) of Sub-section (2). The central idea is that no transaction of sale (of goods taxable at the point of sale to consumer) should go untaxed. Either the seller pays the tax or the purchaser pays. It is for achieving this central purpose that Section 3-AAAA has been enacted providing for several situations.
52. It would be immediately evident that Section 3-AAAA does not speak of and does not refer in any manner to the user of the goods purchased. It is immaterial whether the goods purchased are used in the manufacture of other goods or dealt with otherwise. Much less does it speak of the manner in which the goods manufactured out of such purchased goods, if any, are dealt with. The exemptions provided in Sub-section (2) are equally unrelated to the above aspects. Sub-section (1) is clear and simple. The tax becomes payable by the purchasing dealer in the two situations contemplated by Clauses (a) and (b) of the said Sub-section. If he can establish any of the facts mentioned in Clauses (a) to (d) of Sub-section (2), he gets an appropriate exemption. Otherwise not. We are, therefore, unable to see any room for contending that the tax imposed by the said section is in the nature of consignment tax or a use or consumption tax. Simply because the petitioner chooses to take the goods purchased by him out of the State, in the same form and condition or otherwise, for being used as raw material in his factory at Calcutta, makes no difference to the levy. The validity of the levy cannot depend upon what a particular dealer or person chooses to do with the goods.
7. In view of the authoritative pronouncement of the Supreme Court on Section 3-AAAA I find no merit in the aforesaid contention of the learned Counsel for the applicant.
8. He further placed reliance upon few other decisions, they being not relevant in view of above judgment of the Supreme Court in the case of Hotel Balaji , need not be considered.
9. Coming to the findings of fact as recorded by the authorities below it may be noted that the Tribunal has found that the applicant has failed to establish that it made purchases on which tax was already levied. “Bajri” and sand were not purchased from registered dealers and they were purchased from such persons who were not registered with the Trade Tax Department. It has also been found that the applicant besides making purchases from unregistered dealer could not produce purchase vouchers to show that these purchases were in respect of tax-paid goods. The further finding is that the applicant has not been able to establish that it made purchases from such Thekedar who have paid royalty to the State Government for mining sand and “bajri”. In this view of the factual situation I find no illegality in the order of the Tribunal confirming imposition of purchase tax on the purchase of sand and “bajri” from unregistered dealer under Section 3-AAAA of the Act.
10. The next point raised by the applicant is with regard to levy of interest under Section 8(1) of the Act. The assessing authority while framing assessment orders treated the tax assessed on the applicant as admitted turnover and levied interest on the tax assessed. The question of levy of interest has not been discussed in the order of the Tribunal. In the memo of revision it has been stated that the said question was argued before the Tribunal, but the Tribunal has omitted to consider the same. Since the imposition of levy of interest does not require any investigation of fact and is basically question of law, the counsel was permitted to urge the said point in support of the revision. The assessment order in the assessment year 1986-87 is dated April 24, 1992 and for the assessment year 1985-86 it is dated March 11, 1992. This court in the case of Pioneer Tanneries & Glue Works v. State of Uttar Pradesh [1991] 83 STC 1 : 1991 UPTC 585, had declared Section 3-AAAA of the Act as ultra vires. This decision was subsequently reversed by the Supreme Court in the case of Hotel Balaji , on October 22, 1992. Thus, the day on which assessment orders were framed under Section 3-AAAA was not on the statute book.
11. It may also be noted here that in order to get over the decision and to remove the defects as stated in Pioneer Tanneries & Glue Works [1991] 83 STC 1 (All) : 1991 UPTC 585, the Governor of Uttar Pradesh by issuing Ordinance No. 45 of 1991 substituted Section 3-AAAA in its entirety with effect from April 1, 1974 which was replaced by the U.P. Sales Tax (Amendment) Act No. 8 of 1992. The fact remains that neither the applicant admitted the turnover in the return nor had admitted any tax liability thereon. In such a situation learned Counsel has rightly relied upon the judgment of this Court in the case of Vijay Dal Mills v. Commissioner of Sales Tax 2000 UPTC 983, wherein it has been held following the judgment of the Supreme Court in the case of Commissioner of Sales Tax v. Hindustan Aluminium Corporation [2002] 127 STC 258 : 1999 UPTC 1, that no interest can be charged on the turnover which has not been admitted by the dealer. It was held by the Supreme Court that classification dispute is ordinarily resolved in assessment proceeding and if resolved against the assessee, the assessee has to make payment of differential amount of tax, as required by Sub-section (1-A) of Section 8 failing which provisions to Sub-section (1-B) will apply. It may be noted here that interest at the lesser rate and for lesser period is payable under Sub-sections (1-A) and (1-B) of Section 8 of the Act. The interest is payable on the tax assessed under the Act and within thirty days of service of the notice of assessment and demand and not from the date of immediately following last date prescribed of deposit of admitted tax, as prescribed under Section 8(1) of the Act.
12. In view of the above discussion levy of interest under Section 8(1) of the Act is not justified. However, the applicant would be liable to pay interest on the assessed tax in the light of Sub-sections (1-A) and (1-B) of Section 8 of the Act.
13. Lastly a feeble attempt was made to urge that freight would not form part of the turnover. Learned Standing Counsel was right in his submission that there is no evidence on record to show that freight was paid by the applicant. The finding of fact recorded by the authorities below is that there is no material on record to show that any amount towards freight was paid by the applicant. It could not produce receipt or vouchers in respect of its claim. The Tribunal has rightly come to the conclusion that freight was incurred by the selling dealer and was included in the sale price of “bajri” and sand. It having found that the applicant has not paid any amount towards freight, the submission of the learned Counsel for the applicant that freight shall not form part of the turnover is misconceived and is liable to be rejected.
14. The upshot of the above discussion is that there is no merit in the revision so far as it relates to the liability of the applicant to pay purchase tax under Section 3-AAAA and freight is concerned. There is no fault in the order of the Tribunal on these points and they are hereby confirmed. With regard to levy of interest is concerned it is held that the applicant is liable to pay interest under Section 8(1-A) and 8(1-B) of the Act. The applicant is not liable to pay tax under Section 8(1) of the Act.
15. In the result both the revisions are allowed in part, as indicated above. No order as to costs.