# Banda Tent House Association v. State of U.P. and others

- **Citation:** (2004) 1 ILRA 90
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2003-09-23
- **Case number:** Civil Misc.Writ Petition No. 1073 of 2003
- **Bench:** M. Katju, Umeshwar Pandey
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/banda-tent-house-association-v-state-of-u-p-and-others-40300
- **Pages:** 4

## Headnote

U.P. Trade Tax Act-Section 3 F and
Constitution of India Article 366 Clause
29 A-Petitioner a Tent House-business
relating supply of chair, tent, pillows,
bed sheets etc. in different partieswhether liable to pay Trade Tax U/S 3 F
read with Article 366 clause 29 A of the
Constitution?-Held 'yes'.

Held- Para 8

Thus section 3 F is clearly within the
ambit of Clause 29 A of Article 366 of the
Constitution and hence where there is a
transfer of a right of use of any goods for
cash or deferred payment or other
valuable consideration it is deemed to be
a sale within the meaning of the U.P.
Trade Tax Act. Thus section 3 F and
clause 29 A of Article 366 of the
Constitution have introduced a legal
fiction. Legal fiction are well known in
law and there can be no objection to the
same.
Case law discussed:
(2002) 3 SCC 314
2003 UPTC 404

## Text

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 INDIAN LAW REPORTS ALLAHABAD SERIES [2004
90

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 23.09.2003

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE UMESHWAR PANDEY, J.

Civil Misc.Writ Petition No. 1073 of 2003

Banda Tent House Association ...Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioner:
Sri Siddharth Srivastava
Sri Shashi Nandan

Counsel for the Respondents:
S.C.

U.P. Trade Tax Act-Section 3 F and
Constitution of India Article 366 Clause
29 A-Petitioner a Tent House-business
relating supply of chair, tent, pillows,
bed sheets etc. in different partieswhether liable to pay Trade Tax U/S 3 F
read with Article 366 clause 29 A of the
Constitution?-Held 'yes'.

Held- Para 8

Thus section 3 F is clearly within the
ambit of Clause 29 A of Article 366 of the
Constitution and hence where there is a
transfer of a right of use of any goods for
cash or deferred payment or other
valuable consideration it is deemed to be
a sale within the meaning of the U.P.
Trade Tax Act. Thus section 3 F and
clause 29 A of Article 366 of the
Constitution have introduced a legal
fiction. Legal fiction are well known in
law and there can be no objection to the
same.
Case law discussed:
(2002) 3 SCC 314
2003 UPTC 404

(Delivered by Hon'ble M. Katju, J.)

1. This writ petition has been filed
with a prayer for a mandamus directing
the respondent Trade Tax authorities not
to take any action against the petitioner
and its members under the provisions of
the U.P. Trade Tax Act as they are not
dealers covered by the Act.

2. Since the question involved in this
case is a purely legal one we did not deem
it necessary to call for a counter affidavit
and hence after hearing learned counsel
for the petitioner and learned standing
counsel we reserve judgement.

3. In paragraph 3 of the petition it is
alleged that the petitioner is a Association
of members involved in the activity of
giving articles such as chairs, tents,
pillows, bed sheet, crockery etc. to other
persons and other members of the
Association for the use of specific
purposes, but the effective control always
remains with the Tent House owner or
owner of the other articles and the person
using the same is not free to use it for any
purpose than the one for which it is given
e.g. Marriage, birthday party etc. It is
alleged in paragraph 4 of the petition that
all the above articles given for use always
remain in the custody of the owner
through its agents who have effective
control of the articles. The owner charges
hire charges from the users for the same.
By means of this petition the petitioner
has challenged the validity of the decision
taken by the respondents for imposing
Trade Tax from the members of the
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91
petitioner Association under section 3 F
of the U.P. Trade Tax Act.

4. It is alleged in paragraph 6 of the
writ petition that no written contract is
executed between the parties as that is the
normal practice in the Trade. The
members of the petitioner Association
carry on the above activities but they
received notice dated 5.8.2003 issued by
the
respondent
no.3
the
Assistant
Commissioner of Trade Tax, Banda copy
of which is Annexure-1 to the writ
petition. In this notice it is mentioned that
the members of the petitioner Association
are carrying on the business without
registration and hence they were called
upon to get themselves registered by
8.8.2003 and file the relevant documents
otherwise action will be taken against
them.

5. It is alleged in paragraph 15 of the
writ petition that before receiving notice
dated 5.8.2003 no notice or demand
regarding tax liabilities was issued against
the members of the petitioner Association
. On enquiry the petitioner learnt that on
19.5.2003 a circular has been issued by
the respondent no.2, the Commissioner of
Trade Tax, U.P. Copy of which is
Annexure-2 to the petition. This circular
formulated a compounding scheme under
section 7 D of the Act. The petitioner
received a letter dated 23.8.2003 from the
office of respondent no.3 requiring it to
get registered and get the benefits of the
compounding schemes vide Annexure-3
to the writ petition. It is alleged in
paragraph 20 of the petition that the Tent
House and other owners give different
articles for use for hire for specific
purposes, but the effective control always
remains with the Tent House or other
owner over all the aforesaid articles, and
the person using the same is not free to
use them for any purpose other than that
for which it was given.

The user is also not free to take away the
articles out of the place specified for this
purpose e.g. house, marriage hall etc. It is
alleged that there is no transfer of right to
use such goods and hence there is no
taxable event. It is alleged that petitioners'
members cannot be treated as dealers and
hence no Trade Tax can be imposed on its
members.

6. It may be mentioned that by the
Constitution (46th Amendment )Act 1982
Clause 29 A was inserted in Article 366
of the Constitution which states:-

"29-A "tax on the sale or purchase
of goods" includes-
(a) a tax on the transfer, otherwise than
in pursuance of a contract, a property
in any goods for cash, deferred
payment
or
other
valuable
consideration;
(b) a tax on the transfer of property in
goods (whether as goods or in some
other form) involved in the execution
of works contract;
(c) a tax on the delivery of goods on hire
purchase or any system of payment of
instalments;
(d) a tax on the transfer of the right to
use any goods for any purpose
(whether or not for a specific period )
for cash, deferred payment or other
valuable consideration;
(e) a tax on the supply of good by any
unincorporated association or body
of persons to a member thereof for
cash, deferred payment or other
valuable consideration;
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92
(f) a tax on the supply, by way of or as
part of any service or in any other
manner whatsoever, of goods, being
food or any other article for human
consumption or any drink (whether or
not intoxication), where such supply
or service, is for cash, deferred
payment
or
other
valuable
consideration;
and such transfer, delivery or supply of
any goods shall be deemed to be a sale of
those goods by the person making the
transfer, delivery or supply and a
purchase of those goods by the person to
whom such transfer, delivery or supply
is made.

7. Section 3 F was inserted in the
U.P. Trade Tax Act by the U.P. Act No.
31 of 1995 which reads as follows:-

"Section 3 F. Tax on the right of use
any goods or goods involved in the
execution
of
work
contract
-(1)
Notwithstanding anything contained in
Section 3-A or Section 3-AAA or Section
3-D but subject to the provisions of
Sections 14 and 15 of the Central Sales
Tax Act, 1956 every dealer shall, for each
assessment year, pay a tax on the net
turnover of :-
(a) transfer of the right to use any
goods for any purpose (whether or
not for a specific period) for cash,
deferred payment or other valuable
consideration; or
(b)
transfer of property in goods
(whether as goods or in some other
form) involved in the execution of a
works contract;
(c)
at such rate not exceeding (twenty
per cent) as the State Government
may, by notification, declare and
different rates may be declared for
different goods or different classes
of dealers."

8. Thus section 3 F is clearly within
the ambit of Clause 29 A of Article 366 of
the Constitution and hence where there is
a transfer of a right of use of any goods
for cash or deferred payment or other
valuable consideration it is deemed to be
a sale within the meaning of the U.P.
Trade Tax Act. Thus section 3 F and
clause 29 A of Article 366 of the
Constitution have introduced a legal
fiction. Legal fiction are well known in
law and there can be no objection to the
same. However, learned counsel for the
petitioner has relied on the decision of the
Supreme Court in State of A.P. And
Another v. Rashtriya Ispat Nigam Ltd.
(2002) 3 SCC 314 and has contended that
in view of the aforesaid decision the
transactions of the petitioners members do
not involve transfer of the right to use the
goods since effective control of the goods
even while they were being used by the
hirer was with the petitioners' members
and the hirer were not free to use the
goods for a purpose other than the one for
which it was given to him.

9. On the other hand, learned
standing counsel has relied on the
decision of the Supreme Court in State of
U.P. v. Union of India 2003 UPTC 404.
This decision has referred to the decision
in State of A.P. v. Rashtriya Ispat
Nigam Ltd. and it has not been passed in
ignorance of that decision hence we have
to be guided by the latest decision of the
Supreme Court i.e. State of U.P. v. Union
of India (supra). In that decision in
paragraph 30 it has been observed :-

"Thus the Supreme Court has clearly
held in the above case that handing over
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93
possession is not a sine qua non of
completing the transfer of the right to use
any goods."

10. In the above case of State of
U.P. v. Union of India the facts were that
the Department of Tele-communication,
Government of India supplied telephone
connections to subscribers and collected
rental on the same. The question was
whether
the
department
of
Telecommunication is a dealer and hence
liable to pay Trade Tax. The Supreme
Court held that the supply of telephone
connection satisfied requirement of the
transfer
of
the
right
to
use
for
consideration. The Tele-Phone and all
other accessories giving access to the
telephone exchange are goods, and hence
the requirement of Section 3 F are
satisfied and the department of Telecommunication is a dealer and is liable to
pay tax under the Act.

11. It has been clearly held in the
above decision that the fact that the goods
remain within the ultimate control of the
owner is irrelevant for deciding whether
there was a transfer of use, hence we have
to hold against the petitioner as we are
bound by the aforesaid decision of the
Supreme Court in State of U.P. v. Union
of India (supra).

12. For the reasons given above this
petition is dismissed.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.11.2003

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE UMESHWAR PANDEY, J.

Civil Misc. Writ Petition No. 18145 of 1996

Mukhtar Ahsan

...Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioner:
Sri K.P. Agrawal
Seema Singh
Mahima Mauria

Counsel for the Respondents:
S.C.

Constitution of India Article 226-Service
Law-reversion-order passed after full
fledged
Disciplinary
enquiries-against
sub
Registrar-who
without
proper
enquiry under section 379 of the stamp
Manual-imposed stamp duty on the
valuation of Rs.4,23,000/- while the
A.D.M. Finance found the valuation more
than 39 lacs-even in absence of the
allegation of corruption-the inference of
extraneous consideration can be drawnthe
order
of
reversion
from
Asstt.
Inspector
General
to
the
post
of
Registrar-held proper.

Held- Para 18

In the present case even though there
may not be any specific allegation of
corruption against the petitioner, in our
opinion he certainly acted in a manner
causing serious loss to the Government
exchequer by the manner he disposed of
the stamp cases. As found by the enquiry
officer the petitioner disposed of the
stamp cases in utter violation of the
provisions of the Stamp Act and Stamp
Manual. From this a reasonable inference
can be drawn that he passed such orders
for extraneous considerations.
Case law discussed:
2001 (91) FLR 105
2001 (91) FLR 409
AIR 1979 SC-1022

(B) Constitution of India Article 226-
Bonafide
mistake
and
deliberate