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March 2012

(2011) 40 VST 240 (SC) Commissioner of Trade Tax, U.P. v. Varun Beverages Ltd.

By C. B. Thakar | Advocate
G. G. Goyal, Janak Vaghani | Chartered Accountants
Reading Time 2 mins
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Exemption certificate — Fixed capital investment — Essential apparatus, equipment or components — For establishing and running factory — Bottles are essential for manufacturer of soft drinks — But not crates — Sections 4A and 4B of U.P. Trade Tax Act (15 of 1948).

Facts:
The dealer was engaged in manufacture and sale of soft drinks and beverages, and applied for an eligibility certificate u/s.4A of the U.P. Trade Tax Act, 1948, in relation to inclusion in fixed capital investments also of amounts invested towards purchase of bottles and crates. The Department filed appeal before Supreme Court against judgment of the High Court allowing writ petition filed by the dealer to include purchase of bottles and crates in fixed capital investment.

Held:
So far as bottles were concerned, they were an essential part of the components and equipment necessary for the running of the factory. Therefore the value of such investment would form part of the fixed capital investment and would be entitled to the exemption.

Whereas crates were used by the dealer only for the purpose of marketing, as such the value of crates would not form part of ‘fixed capital investment’ as defined u/s.4A of the U.P. Trade Tax Act, 1948.

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