Central Electronics Ltd Vs Commissioner Commercial Tax U.P (Allahabad High Court)
The Allahabad High Court ruled in favor of Central Electronics Ltd., a company that trades in electronic goods and solar photo systems, by setting aside a tax reassessment order. The court’s decision, which addressed multiple connected revisions, centered on whether the company’s inter-state sales of electronic goods should be taxed at 2% or 2.5%. The dispute originated from a reassessment initiated by the Assessing Authority for the Assessment Year 1995-96, which claimed the company had underpaid tax by calculating it at 2% instead of 2.5%, a levy that also included a 0.5% surcharge.
Initially, the Assessing Authority had accepted the company’s books and tax liability at 2% under a notification from October 10, 1995. However, reassessment proceedings were later started based on a circular dated March 18, 2002, which specified that the 2% rate did not apply to inter-state electronic goods sales. Both the Deputy Commissioner (Appeals) and the Commercial Tax Tribunal upheld the reassessment, leading the company to file a revision with the Allahabad High Court.
Central Electronics Ltd. argued that the reassessment was invalid because it was based solely on the circular dated March 18, 2002. They contended that this circular had been previously quashed by the Allahabad High Court itself in the case of M/s Canon India Private Limited vs. State of U.P. & Others. The company’s legal counsel asserted that since the foundation of the reassessment was nullified, the entire proceeding against the company should also be set aside. The company also relied on another court decision in CTT vs. M/s Modi Pawn Limited to support its position and claimed that a precedent cited by the Tribunal was not applicable to its case.
