Allahabad High Court
Ambika Steels Pvt. Ltd. Through Its ... vs State Of Uttar Pradesh Through ... on 28 September, 2007
Equivalent citations: (2008)12VST390(ALL)
Bench: Prakash Krishna, Bharati Sapru
JUDGMENT
Prakash Krishna and Bharati Sapru, JJ.
1. All the aforesaid writ petitions were heard together and are being disposed off by a common judgment as jointly agreed by the learned Counsel for the parties. A common question of law is involved in all these petitions with regard to the interpretation of words 'turnover of sales' occurring in notification nos. 1093 dated 27th of July, 1991: 780 dated 31st of March, 1995 and 640 dated 21st of February, 1997, all issued under Section 4-A of the U.P. Trade Tax Act (hereinafter referred to as the Act). Legality and validity of the Circular No. 279 dated 6.2.2003 whereby the Commissioner of Trade Tax has clarified the import and scope of notification dated 21.2.1997 has been questioned in all these writ petitions, as also the initiation of reassessment proceedings in pursuance thereof barring the writ petition No. 288 of 2003: M/s. Kajaria Ceramics Ltd. v. State of U.P. and Ors. In this writ petition the challenge is with regard to said circular alone.
2. For the sake of convenience, we are noticing the facts of the writ petition no.278 of 2004 only which was treated as leading petition by Shri Bharat Ji Agrawal, learned senior counsel for the petitioner. Learned Counsel for the parties advanced their arguments with reference to the facts of this writ petition and submitted that the decision shall govern the remaining petitions also.
3. The petitioner, Ambika Steels Pvt. Ltd., a company registered under the Companies Act is carrying on the business of manufacture and sale of stainless steel, ingots etc. It is registered as a 'dealer' under the U.P. Trade Tax Act and the Central Sales Tax Act as well.
4. Section 4-A of the Act provides exemption from trade tax in certain cases. This section broadly grants exemption from trade tax to 'new units' as also to such units manufacturing such goods which have undertaken 'expansion', 'diversification' and 'modernization' on or after April 1st, 1990. In the case on hand the petitioner has been granted eligibility certificate under Section 4-A as the petitioner has undertaken expansion and modernization which resulted additional production as result of such expansion and modernization as provided for under Section 4-A of the Act read with the notification dated 31st of March, 1995. Eligibility certificate has been granted to the petitioner w.e.f. 24th of January, 1997 from the date of filing of the eligibility certificate i.e. 12th of December, 1997 as the petitioner has made additional investment. In the eligibility certificate the base production of the petitioner has been specified in column - 3 (Ka) as 5600 M.T. The assessment of the petitioner unit for the Assessment Year 1996-97 under the U.P. and Central Sales Tax was completed on 22nd of December, 1998. In the said assessment the Assessing Officer granted exemption on the consignment sale amounting to Rs. 27,22,730/- and on stock transfer amounting to Rs. 17,00,38,442/-. Subsequent thereto, the Deputy Commissioner (Assessment) - I, Trade Tax, issued the impugned notice under Section 21(2) of the Act to reopen the assessment on the ground that the turnover of Rs. 22,47,08,545/- representing the stock transfer and consignment sale, have escaped assessment as these transfers prior to achievement of base production are not permissible. He opined that exemption on stock transfer or consignment sale before the base production is achieved, is not legally permissible. Impugning the said notice the present writ petition has been filed challenging the circular dated 25th of January, 2003 Annexure -5 to the writ petition also being contrary to the notifications dated 31st of March, 1995 and 21st of January, 1997, both issued under Section 4-A of the Act.
5. Heard Shri Bharat Ji Agrawal, learned senior counsel along with Sri Rakesh Ranjan Agrawal, Shri Piyush Agrawal, Shri Nikhil Agrawal, Shri Shubham Agrawal, learned Counsel for the petitioner and Sri S.P. Kesarwani, learned standing counsel for the respondents.
6. Tracing the history of the notifications beginning with the notification No. 1093 dated 27.7.1991 the learned senior counsel for the petitioner submits that Section 4-A of the Act has been enacted with twin objects to increase production of the goods in the State of Uttar Pradesh as well to grant exemption or concessional rate of tax in respect of goods manufactured in unit which has undertaken expansion, modernization or diversification on or after April 1st, 1990. The State Government under Section 4-A of the Act has been empowered to grant exemption from, or reduction in rate of tax to new units and also to units which have undertaken expansion, diversification or modernization. The phrase 'base production' with which the present writ petitions concern has been statutorily defined under Section 4-A of the Act. The facility of exemption from, or reduction in rate of tax to units which have undertaken expansion, diversification or modernization, has been granted to such units which besides the other things have produced in excess of the 'base production'. The turnover upto the 'base production' shall be assessed to tax without taking into consideration that the unit has been granted eligibility certificate or exemption under Section 4-A of the Act. Only such turnover which is in excess of 'base production' would be entitled to exemption from, or reduction in rate of tax as specified in the eligibility certificate. The learned senior counsel, therefore, submits that the stock transfer and consignment sale which are not taxable either under the Act or under the Central Sales Tax Act being a normal incident of business shall not be excluded from the 'base production'. Substantially the same position exists in the subsequent notification No. 780 dated 31.3.1995 and notification No. 640 dated 21.7.1997. The impugned circular dated 25.1.2003 which provides that a dealer who has undertaken diversification or modernization shall be liable to pay the tax up to the 'base production' wherein the stock transfer or consignment sale shall not be included being against the spirit of Section 4-A of the Act, submits the learned Counsel for the petitioner.
7. In contra, Shri S.P. Kesarwani, learned standing counsel for the department submits that the notifications should be read as a whole without making any additions or alterations. On a plain reading of these notifications, he submits the stock transfer and consignment sale are liable to be excluded from the 'base production'. The intention of the legislature is crystal clear. In these notifications the phrase 'on the turnover of sales' have been used consciously. The word "turnover on sales" have fix and definite connotation under the sales tax statute. "Turnover" and "sale" have been defined under Section 2(i) and 2(h) under the Act. These words used in notifications should be understood as defined in the Act. Since these words are free from any ambiguity, no external aid of interpretation or any theory relating to the supposed intention of legislature can be imported into.
8. Considered the respective submissions of the counsel for the parties.
9. To begin with, it may be noted that since April, 1990 for the first time the State Government by amending Section 4-A provided exemption from or reduction in the rate of tax which can also be availed by such units which have undertaken expansion, diversification or modernization, by issuing a notification under Section 4-A of the Act. The first notification is notification No. 1093 dated 27th of July, 1991 granting certain exemption to such unit which has undertaken expansion, diversification or modernization on or after April 1st, 1990 but not later than March 31st, 1995. This was followed by notification No. 780 dated 31st of March, 1995. By this notification the benefit under Section 4-A of the Act was conferred on such units which have undertaken expansion, diversification or modernization on or after 1st of April, 1995 but not later than 31st of March, 2000 in the areas mentioned in column - 2 of Annexure -1 of the notification. The latest one is dated 21st of February, 1997 being notification No. 640. It provides besides other things that an unit making additional fixed capital investment of Rs. 50 crores or more in expansion, diversification or modernization, backward integration be entitled to exemption or reduction in rate of tax on the fulfilment of the conditions specified therein.
10. The 'base production' and 'turnover' of unit undertaking expansion, diversification or modernization have been defined in Clauses - 5 and 6 of the first notification dated 27.7.1991, the relevant portion of the notification read as follows:
Whereas the State Government is of the opinion that for promoting the development of certain industries in the State, it is necessary to grant exemption from or reduction in rate of tax to new units and also to units which have undertaken expansion, diversification or modernization.
Now, Therefore, in exercise of the powers under Section 4-A of the Uttar Pradesh Sales Tax Act, 1948 (UP Act NO. XV of 1948), hereinafter referred to as the 'Act' the Governor is pleased to declare that:
1(A)...
(B)(1). in respect of any goods manufactured in a unit other than the units of the type mentioned in Annexure II, which has undertaken expansion, diversification or modernization on or after April 1, 1990 but not later than March 31, 1995 in the areas mentioned in Column 2 of Annexure I, no tax shall be payable or, as the case may be, the tax shall be payable at the reduced rates specified in Column 4 of Annexure I, by the manufacturer thereof for the period in Column 3 of the said Annexure I, or till the maximum amount of tax relief by such exemption from or reduction in rate of tax as specified in Column 5 of Annexure I is achieved, whichever is earlier, on the turnover or of sales.
(a) of the quantity of goods manufactured in excess of the base production in the case of units undertaking expansion or modernization; and
(b) of goods manufactured by the unit which are of a nature different from those manufactured earlier by such unit in the case of units undertaking diversification.
2...
3...
4...
5. Base production of unit undertaking expansion or modernization shall be deemed to, be
(a) maximum production achieved during any one of the preceding five consecutive assessment years, or
(b) 80 per cent of the installed annual production capacity, whichever is higher.
6. (a) Turnover of sale of goods in any assessment year to the extent of the quantity covered by production of that year and the stock of base production of previous years shall be deemed to be the turnover of base production.
(b) Only the turnover of goods in any assessment year in excess of the quantity referred to in Clause (a) shall be entitled to the facility of exemption from or reduction in the rate of tax.
11. The relevant portion of the second notification dated 31st of March, 1995 which defines turnover of sale, reads as follows:
Now, therefore, in exercise of the powers under Section 4-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. XV of 1948), hereinafter referred to as the Act, the Governor is pleased to declare that:
1 (A)...
1 (B) in respect of any goods manufactured in a unit, other thanthe units of the type mentioned in Annexure II, which has undertaken'expansion, diversification or modernisation' on or after April 1, 1995 but not later than March 31, 2000 in the areas mentioned in column 2 of Annexure I, no tax shall be payable or, as the case may be, the tax shall be payable at the reduced rates specified in Column 4 ofAnnexure I, by the manufacturer thereof for the period specified in Column 3 of the Annexure I, or till the maximum amount of tax reliefby such exemption from or reduction in rate of tax as specified incolumn 5 of Annexure I is achieved whichever is earlier, on the turnover of sales:
(a) of the quantity of goods manufactured in excess of the base production in the case of units undertaking expansion or modernisation; and
(b) of goods manufactured by the unit which are of a nature different from those manufactured earlier by such unit in the case of units undertaking diversification.
2...
3...
4...
5...
5...
6. In determining the fixed capital-investment in case of 'new units' or 'Additional Fixed Capital Investment' referred to in Clause (d) of Explanation (5) or Clause (ii) of Explanation (7) of Section 4-A in case of units which have undertaken expansion, diversification or modernization or backward integration, the investment in only such land, building, plant, machinery, equipment, apparatus, components, moulds, dyes, jigs and fixtures shall be taken into account as were acquired on or before the relevant date of commencement of the period of facility notified under Sub-section (1) of Section 4-A of the Act.
7. (a) turnover of sale of goods in any assessment year to the extent of the quantity covered by base production of that year and the stock of base production of previous years shall be deemed to be the turnover of base production;
(b) only the turnover of goods in any assessment year in excess of the quantity referred to in Clause (a) shall be entitled to the facility of exemption from or reduction i the rate of tax.
12. The same language has been used in Clause 7 of the subsequent notification dated 21st of February, 1997 except that in place of 7 (a) and 7 (b) it has been numbered as 7(1) and 7(2) in the subsequent notification,
13. The learned senior counsel for the petitioner has laid emphasis on the words 'quantity of goods, goods manufactured in excess of 'base production' used in the above notifications to support his contention that irrespective of stock transfer and consignment sale, 'base production' is the fixed figure as mentioned in the eligibility certificate and that the 'base production' will include the stock transfer and consignment sale also. Referring to the facts of the present case the submission is that up to 5600 M.T. which is the 'base production' as specified in the eligibility certificate, the assessment of theturnover of the petitioner shall be made and was actually madenotwithstanding the fact that the petitioner unit has undertakenexpansion, diversification or modernisation etc. In other words, theconsignment sale and stock transfer being not covered within thedefinition of word 'sale' would remain exempted from trade tax. Thesaid turnover of stock transfer and consignment sale if is not liable totrade tax shall not be liable to trade tax otherwise, the petitioner maybe an eligibility certificate holder. Elaborating the argument, hesubmits that purpose of notifications being to promote thedevelopment of certain industries in the State of U.P. and to increase production in the State, the phrase 'turnover of sale' should be liberally construed so as to advance the object of the Act. Reliance has been placed on the following decisions to buttress the arguments:
14. In CIT v. Straw Board Manufacturing Co. Ltd. 1989 UPTC 1300 the Apex Court has observed that it is necessary to remember that when a provision is made in context of law providing for concessional rate of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon language of the Statute. The question involved was whether the term 'paper and pulp' appearing in particular Entry of Income Tax Act will include "Straw Board" or not. In this connection the Apex Court observed that the circumstance that process of manufacturing straw board is identical with that of manufacturing paper opined that the words 'paper and pulp' have been used in a generic sense and will include straw board also. The Apex Court held that a liberal construction should be put upon the language of the Statute.
15. In Bajaj Tempo Ltd. v. CIT 1992 UPTC 857 it was held by the Apex Court that a provision in taxing Statute granting incentives for promoting growth and development should be construed liberally. A provision intending for promoting economic growth has to be interpreted liberally.
16. CST v. Industrial Coal Enterprises 1999 UPTC 250 is a case under Section 4-A of the Act. In this case the Apex Court has held that the provision granting exemption from tax for the purposes of encouraging production of goods and promoting development of industry should be liberally construed. Construction should be reasonable and purposive. It has followed its earlier decision of Bajaja Tempo Ltd. (supra). It has also noted that if the construction sought to be placed by the department therein is accepted, the very purpose and object of the grant of exemption will be defeated. This appears to be the vital factor which weighed heavily. The other factor that the dealer of that case had only shifted the unit to its own premises being more convenient and easier to carry on the production of the goods undisturbed by the baggeries of the lessor and to save the liability of payment of rent, was also taken into consideration by the court.
17. The learned standing counsel, on the other hand, submits that where language of a provision is clear, the provision should be interpreted on its simple language. A Statute should be interpreted strictly. Nothing should be added and nothing should be substracted.
18. In Innamurl v. State of Andhra Pradesh 1963 (2) SCR 868 it was held as follows:
If the tax payer is within the plain terms of the exemption he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the statute or rule or by necessary implication therefrom, the matter is different, but that is not the position here.
The Court held that the State was possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but the operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent.
19. This was reaffirmed in Hansraj Gordhandas v. H.H. Dave and Ords (1969) 2 SCR 260 where it was said that:
...the operation of the notification has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative intent.
20. The aforesaid cases have been quoted and followed by the Apex Court in ITC Ltd. v. Commissioner of Central Excise New Delhi .
21. In State of Punjab v. Punjab Fibres Ltd. 2004 AIR SCW 6988, dealing with the notification issued under the Punjab General Sles Tax Act, it has been held as follows:
It is settled law that to avail of the benefits of a Notification the party must strictly comply with the conditions of the Notification. It is also settled law that the Notification has to be interpreted in terms of its wording. Where the language is very clear and unambiguous, benefit cannot be granted merely on the ground of sympathy.
22. In ITC Ltd. v. Commissioner of Central Excise New Delhi has said that, words have to be construed strictly according to their ordinary and natural meaning, particularly when the statute is a fiscal one irrespective of the object with which the provision was introduced. Of course if there is ambiguity in the statutory language, reference may be made to the legislative intent to resolve the ambiguity. But if the statutory language is unambiguous then that must be given effect to. The legislature is deemed to intend and mean what it says. The need for interpretation arises only when the words used in the statutes are, on their own terms ambivalent and do not manifest the intention of the legislature. Keshavji Ravji and Co. and Ors. v. Commissioner of Income Tax: .
23. Exceptions to the above rule of strict interpretation have also been noted therein. They are (1) the rule of strict construction does not apply to a provision which merely lays down the machinery for the calculation or procedure for the collection of tax.
(2) if two constructions are possible and a strict construction would lead to an absurd result then the construction which is in keeping with the object of the statutory provision or in keeping with equity could be accepted.
24. The Apex Court in Binani Industries Limited v. Assistant Commissioner of Commercial Taxes JT. 2007 (5) S.C. 311 following its earlier decision in Ahmedabad Manufacturing & Calico Printing Co. Ltd. v. S.G. Mehta ITO and Biswamath Jhunjhunwalla has held that, ...it is the language of the provision that matters and when the meaning is clear, it has to be given full effect. In both these cases, this Court held that the proviso which amended the existing provision gave it retrospectivity. When the provision of law is explicit, it has to operate fully and there could not be any limits to its operation, This Court in Biswanath Jhunjhunwalla case said that if the language expressly so states or clearly implies, retrospectivity must be given to the provision.
25. Keeping the aforesaid principles of interpretation of notification in the background of the mind the question now arises as to whether the principle of strict interpretation should or should not be invoked in the present case. In other words, whether there is any ambiguity in the notifications under consideration or they are free from ambiguity. As already noted, the controversy revolves on the expression "on the turnover of sales".
26. The words "turnover" and "sales" have been defined in Section 2(i) and 2 (h) of the U.P. Trade Tax Act. These words should be interpreted accordingly. Section 2(i) of the Act defines turnover which means the aggregate amount for which goods are supplied or distributed by way of sale or are sold, by a dealer, either directly or through another, on his account or on account of others, whether for cash or defer payment or for other valuable consideration. The notifications under consideration were issued under the Act by the State Government in exercise of power conferred on it under Section 4-A of the Act and we see no reason not to interpret the turnover as defined in the Act. If it is so, it is but obvious that the " turnover" within its sweep will not include consignment sale or transfer of goods by a dealer from head office to branch or from one branch to another. The notification on its simple and plain reading is quite clear, unambiguous and do not admit any doubt. The principle of strict interpretation, with regard to interpretation of Statute as noticed above, is clearly attracted and the case does not fall in either of the exceptions to the principle.
27. Much emphasis was laid by the learned senior counsel for the petitioner that the words 'on the turnover of sales', should be interpreted liberally and a wider meaning should be given so as to include the consignment sale and branch transfer in it. He submits that the very object of the notification as well as of Section 4-A of the Act is to increase production of goods in the State. Elaborating the argument, he submits that the words "of the quantity of goods manufactured in excess of 'base production' in Clause (a) of (1)(b) of the notification dated 31st of March, 1995 should also be taken into consideration while assigning the meaning to the words "on the turnover of sales".
28. 'Base Production' has been defined in Clause - 7 of the said notification of the year 1995 which has been reiterated in the subsequent notification dated 21st of February, 1997. 'Base production' is also defined in almost the same language in section 4- A (6) Explanation (6), which reads as follows:
(6) For the purposes of this section the expression 'base production' means
(a) maximum production achieved during any one of the preceding five consecutive assessment years; or
(b) 80% of the installed annual production capacity; whichever is higher.
29. The 'base production' has been defined as a measure to the point with reference to production of unit beyond which the unit would be entitled for exemption from, or reduction in rate of tax. ' Base production' has nothing to do with the turnover of sales.
30. It is said - Tax has two elements: first, the person, thing or activity on which the tax is imposed, and second, the amount of tax. We are presently dealing with tax exemption/reduced rate of tax notification. So, to measure the starting point from which such exemption or reduced rate of tax will be available, as a measure, base production, is the point, fixed under the notification.
31. The three notifications referred to above, show a pattern. 'Base Production' is the qualifying limit, to be attained by a unit, beyond which it would be entitled to claim exemption for or reduction in tax. These notifications cannot, therefore, be read in isolation but in the contxt and within the parameters of Section 4-A of the Act under which they were issued. The object of the State Government by issuing these notifications is to tax the 'base production' and realise Trade Tax and the Central Sales Tax thereon as the case may be and by way of incentive grant exemption from or rate of reduction in tax on the excess production beyond the 'base production'. At this place the observation of the Apex Court made in CTT v. Kajaria Ceramics is apt. Case of Kajariya Ceramics was also a case under Section 4-A of the Act and the unit had undergone expansion. For the purposes of determination of entitlement of relief to such unit under Section 4-A of the Act it was observed as follows:
Apart from the fact that a new unit would have to face competition from an old established unit, a new unit would be additionally handicapped by the greater benefits being granted to the old established business.
32. It would be doing violence to the language of notification if we accept the interpretation suggested by the learned senior counsel for the petitioner. In that event the unit will be entitled to exemption on branch transfer as well as on consignment sale without paying any trade tax either in State of U.P. or Central and would also at the same time be entitled to the exemption from, or reduction in trade tax on the production over and above the 'base production'.
33. This was surely not the intention or the purpose underlying the notification. The intention was clearly two fold. Firstly to benefit the industry by granting exemptions to new industry and projects as incentive. And secondly to ensure to the State a bare minimum, that is tax on 'base production', which was fixed by way of the eligibility certificates,
34. To our mind, the purpose was double fold and of mutual benefit. It was certainly not to give an opportunity to the tax payee to circumvent the payment of tax on base production by effecting with ingenuity stock transfers and the like.
35. It also was intended that the tax payer would fulfil the payment of tax on the achievement of base production first and thereafter, enjoy the exemption on excess production in the State of U.P. The concessions/exceptions generated by the State of U.P. were given in order to benefit the State of U.P. also.
36. Help was also sought to be taken from the form (iv) prescribed under Rule 41 to support the argument that the total turnover includes not only the taxable turnover but also the exempted turnover whether such exemption is permissible under any provisions of the Act or Central Sales Tax Act. Form (iv) is a prescribed form for filing return of turnover. On a perusal of the said form it is clear that column - 7 of it requires disclosure of (a) total turnover, (b) exempted turnover, (c ) taxable turnover. The words 'total turnover' have been used in contradiction of word 'turnover'. It explicitly demonstrates that 'total turnover' is not equivalent to 'turnover'. Total turnover means something in addition to "turnover". The use of word 'total turnover' in the said form instead of advancing the case of the petitioner supports the case of the respondents that wherever "turnover" has been used it is used as defined in the Act. The very use of words 'total turnover' in the said form itself shows that the other turnover (exempted turnover) is also included therein. Reverting back to the notifications under consideration we find that the words 'turnover of sales' have been used and not the total turnover.
37. "Turnover" is also defined under the Central Sales Tax Act which means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-state trade or commerce made during any prescribed period and determined in accordance with the provisions of the Central Sales Tax Act and Rules made thereunder.
38. A bare perusal of the definition of turnover both under the U.P. Trade Tax Act as well under the Central Sales Tax Act has made it clear that the dispatches of the goods outside the State of U.P. to its own depots or a consignee agent have not been included in the turnover of sales in any of the aforestated Statutes.
39. C.T.T. v. Modipon Fibres Company 2006 U.P.T.C. 945 (S.C.) was strongly relied upon by the petitioners. The reliance placed is misplaced one. No such controversy as in the present case was In issue therein, if at all it has any application, it runs counter to the petitioner's contention. It resolved the controversy with reference to the notification dated 27.7.1991, with the help of definition of "assessment year" as defined in the Act in Section 3(j) to mean the twelve months ending of March, 31.
40. We, therefore, in nutshell do not agree with the contention of the petitioner that "turnover of sales" used in the notifications do include stock transfer and transfer of goods from one branch to another. This being so, we find no illegality in the impugned circular dated 25.1.2003 it being in consonance with the provisions of Section 4-A of the Act and the notifications thereunder are valid and legal. It can be said with reasonable certainty that stock transfer and branch transfer is not included in "on turnover of sale" in the notifications under consideration. No other point was pressed.
41. There is no merit in the writ petition No. 288 of 2003 Kajaria Ceramics Limited v. State of U.P. and Ors. seeking quashing of the circular dated 25th of January, 2003 or challenging the notice dated 4th of February, 2003. The writ petition is dismissed. But no order as to costs.
42. Then the question arises whether on the basis of the aforestated circular dated 25.1.2003 reassessment proceeding under Section 21(2) of the Act could or could not be initiated. In all these writ petitions the challenge is to the reassessment proceedings also, on the ground of change of opinion. The reassessment proceeding relates to the assessment Year 1996-97 (Central) in writ petition No. 278 of 2004 the, assessment Year 1997-98 (Central) in writ petition No. 622 of 2004, assessment Year 1998-99 (U.P. and Central) in writ petition No. 838 of 2005, assessment Year 1999- 2000 (U.P, and Central) in writ petition No. 1334 of 2006, assessment Year 2000-01 (U.P. and Central) in writ petition No. 1217 of 2007 and assessment Year 2000-01 (U.P. and Central) in writ petition No. 1259 of 2000 (except writ petition No. 1259 of 2007 : Bhusan and Steels and Strips Ltd. v. State of Uttar Pradesh and others, all these writ petitions were filed on behalf of M/s. Ambika Steels Pvt. Ltd.)
43. It is argued that the Commissioner had issued a circular dated 15.9.1998 (annexure - 3 to the writ petition) clarifying the position in para -3 thereof in an express term disapproving the view taken by certain officials holding that the tax is payable on the entire 'base production' irrespective of the fact that the dealer has made consignment sale/stock transfer or export sale. The circular expresses the view of the department on the notifications. In other words how these circulars were understood by the Commissioner of Trade Tax, has been stated for guidance to the officials of the department. In the counter affidavit filed in writ petition No. 622 of 2004 in para 7 it has been stated that the circulars were not in conformity with the legal provisions, as such earlier circulars were revised by Government Order No. 437 dated 25.1.2003. The Commissioner of Trade Tax, U.P. has explained the statutory provision of the Act and various notifications issued by the government from time to time by the subsequent circular dated 25.1.03.
44. It is not in dispute that the assessments were completed by the Assessing Authority relying upon the earlier circulars issued by the Commissioner of Trade Tax. Subsequently, the Commissioner of Trade Tax has sought to revise his opinion and issued the impugned cireular dated 25th of January, 2003.
45. The question arises as to whether reassessment proceeding can take place on the basis of circular dated 25.1.2003? Does it amount to change of opinion? Undoubtedly, the circular dated 15.9.1998 was binding on the Revenue Authorities. Merely because the Commissioner changes his view/opinion and admittedly, according to him it was review of earlier decision that cannot have any effect on any assessment which has been completed on the basis of circular dated 15th of September, 1998. This controversy has been addressed very recently by the Apex Court in Binani Industries Ltd. v. Assistant Commissioner of Commercial Taxes JT 2007(5) S.C. 311. The relevant paragraphs 24 to 27 of the report are being reproduced here for ready reference:
24. The issues can be looked at from a different angle. undisputedly, the 1996 Circular was binding on the revenue authorities as is spelt out in the case of 12.4.1996 and 23.10.1999 Circulars. The assessments were completed on the basis of 12th April, 1996 Circular. Merely because the commissioner changes his view/opinion and according to him it was review of the earlier decision that cannot have any effect on any assessment which has been completed on the basis of the 1996 Circular.
25. That being so, the question of re-opening the assessment by mere change of opinion is entirely impermissible.
26. Though these aspects need not be taken not of in view of the conclusion that the proviso was clarificatory in nature and operated with effect from the date Section 5C was amended i.e.1.4.1986 yet this is an additional factor to set aside the High Court's Judgment.
It is stated by a long line of decisions that reopening of assessment is not permissible by mere change of the opinion in the assessing officer. Here it has not been disputed that the Circular dated 23.10.1999 was on account of change of opinion of the Commissioner that too while reviewing the earlier Circular. It could not be brought to our notice as to which provision permitted the view.
46. In view of the above, the very initiation of reassessment proceedings is without jurisdiction as it is based upon change of opinion. It is acknowledged legal position that reassessment cannot take place on mere change of opinion and in such circumstances the reassessment is impermissible.
47. The upshot of the above discussion is that the circular dated 25th of January, 2003 is legal and valid but on the basis of the said circular, the reassessment proceeding cannot be initiated provided the assessment was completed on the basis of the earlier circular dated 15th of September, 1998.
48. In the result, the Writ Petition No. 278 of 2004, Writ Petition No. 1217 of 2007, Writ Petition No. 622 of 2004, Writ Petition No.838 of 2005, Writ Petition No. 1334 of 2006 and Writ Petition No. 1259 of 2007 succeed and are allowed. The reassessment notices issued for the relevant assessment years are hereby quashed.
49. The Writ Petition No. 288 of 2003 : M/s. Kajaria Ceramics Limited is dismissed.
50. However, no order as to costs.