Allahabad High Court
M/S Kumar Rice Mill Private Limited, ... vs State Of U.P. Thru Secy. Institutional ... on 15 July, 2010
1
AFR
Court No. - 27
Case :- MISC. BENCH No. - 2072 of 2009
Petitioner :- M/S Kumar Rice Mill Private Limited, Kanpur
Through Director
Respondent :- State Of U.P. Through Secy. Institutional
Finance & Others
Petitioner Counsel :- Hari Om Singh
Respondent Counsel :- C.S.C.
AND
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Hon. Devi Prasad Singh,J.
Hon. Yogesh Chandra Gupta,J.
(delivered by Justice Devi Prasad Singh)
1. In these bunch, common question of law is involved, hence are being decided by this common judgment with the consent of the parties.
2. Heard Sri Hari Om Singh, learned counsel for the petitioners and Sri H.P. Srivastava, learned Additional Standing Counsel for the respondents.
4The petitioners are the rise millers and engaged in the business of rise from paddy. Both paddy and rice are declared commodity under Section 14 of the Central Sales Tax Act (hereinafter referred to as "Central Act") and are the goods of special importance and liable to tax at the point of first purchase under the notification issued under Section 3D(i) of the U.P. Trade Tax Act ( hereinafter referred to as the "Act"). The petitioners claimed to have purchased paddy after paying the tax under the Act on their purchases and procured/manufactured rice out of such paddy and such procured rice have been sold inside the State of U.P. and outside the State of U.P. in the course of inter- State sales. Under Section 8 of the Central Act, on inter-State sales of rice, tax is levied @ 4% against Form-C to the registered dealers and @ 8% on the unregistered dealers without Form-C.
3. The rice millers claim is that they were entitled for set off tax paid on paddy where tax payable on rice on the sales in course of inter-State sales in view of section 15(c) of the Central Act. The Assessing Authority passed the order under Section 9 of the Central Act thereafter accepted the claim of petitioners and allowed the set off of the tax paid on paddy with the tax payable on rice under the Central Act. However, later on notice under Section 21 of the Act purported to be issued to withdraw claim of such set off tax on the ground that under Section 15 (c) of the Central Act, the set off of the tax paid on the paddy with the tax payable on the procured rice under the Central Act is not contemplated. Since the limitation by which the proceedings under Section 21(1) of the Act could be initiated had been expired, therefore, notice for approval to initiate the proceedings beyond the period of limitation under the proviso to Section 21(2) of the Act were issued by Additional Commissioner of Trade Tax. Approval was granted by the Additional Commissioner and in pursuance thereof notices were issued under Section 21 of the Act. Action of the State was subject matter of dispute before a Divison Bench of this Court in the case reported in 2008 NTN (37) 231 M/s. Aryaverth Chawal Udyog and others Vs. State of U.P. and others.
5The writ petition was partly allowed and issuance of notice was found to be not correct by reopening of proceedings under Section 21(1) of the Act on account of change of opinion. The Division Bench held that proceeding under Section 21 could not have been initiated without any material available on record with regard to escaped assessment. However, the Division Bench further held that Section 15(c) does not provide any reduction of tax under Central Act by the tax paid on the paddy under the State law out of which rice was procured. Thus, writ petition was partly allowed. It should be appropriate to reproduce the operative portion of the aforesaid judgment (supra ) :
"75 (i) Section 15(c) of the Central Act provides reduction of tax leviable on the turnover of rice under the U.P. Trade Tax Act with the tax levied on the paddy out of which such rice was procured. It does not provide any reduction of tax under the Central Act by the tax paid on paddy under the State Law out of which such rice was procured.
(ii) The proceedings under Section 21 of the Act have been initiated without any material on the basis of which believe could be formed that there was escaped assessment, namely, that the tax levied on the inter-State sales of rice under the Central Act has been wrongly reduced by the tax levied on paddy under the U.P. Trade Tax Act out of which such rice was procured except on account of change of opinion.
76. The initiation of proceedings under Section 21(1) of the Act on account of change of opinion are not permissible and, therefore, the initiation of proceedings under Section 21 of the Act in the cases of the petitioners are bad in law.
77. In the result, all the writ petitions are allowed in part.
Reassessment proceedings and orders passed under Section 21 of the Act are hereby quashed."
64. It is brought to the notice of this Court that judgment of Division Bench of this Court is subject matter of appeal before the Hon'ble Supreme Court,however, Hon'ble Supreme Court has not granted any interim relief. Both the parties have filed Special Leave Petition in the Hon'ble Supreme Court.
5. Keeping in view the Division Bench judgement of this Court, the impugned Circular of November 2008 has been issued by the Joint Commissioner, Trade Tax, Lucknow providing that after doing necessary enquiry under Section 10B of the Trade Tax, appropriate action may be taken. In pursuance to Circular, the impugned notice has been issued to petitioners.
6. Sri Hari Om Singh, learned counsel appearing for the petitiuoner vehemently argued that trade tax has been repealed and substituted by U.P. Value Added Tax (hereinafter referred to as 'VAT') 2008 came into force on 1st January 2008. Since assessment has been finalized and attains finality, no proceeding could have been taken place under Section 10B of the Act. Further submission of the learned counsel for the petitioner is that no such order may be passed by higher authorities compelling the Taxing Officer to proceed under Section 10B of the Act. Revisional power under Section 10B of the Act cannot be invoked merely on the direction of the higher authorities. He relied upon the provision contained in Section 81 of the VAT Act. His submission is that since no matter was pending under the Act with regard to tax of the assessment year in question and things were finalized in terms of order passed by assessing authority, no proceeding could be taken place. It has been submitted that the case does not fall under sub-section (2) of section 81 of the Act.
7. On the other hand, learned Additional Chief Standing Counsel relied upon a recent Division Bench judgment of this Court reported in 2010 (13) VLJ 41, Dharma Rice Mill Vs. State of U.P. and others, where Division Bench after considering the relevant provisions of the VAT Act coupled with General Clauses Act held that even after repeal 7 of U.P. Trade Tax Act by U.P. VAT Act, the old rights, liabilities and remedies under the repealed enactment may be invoked.
8. So far as notice is concerned, it has been issued as a consequential measure in pursuance to Circular issued by the Commissioner on 11.11.2008. The impugned Circular has been issued in pursuance to Division Bench judgment of this Court (supra)referred hereinabove. The Division Bench upheld the right and liabilities flowing from Section 15(c) of the Central Act. Accordingly by the Circular, the Commissioner opined that Tax Officer may proceed under Section 10B of the Act.
9. So far as the submission of learned counsel for the petitioner that higher authority cannot direct the competent authority under taxing law to proceed in a particular manner, seems to be correct. No authority whosoever he may be, direct the competent or statutory authority to move in a particular manner. It is always necessary for the statutory authority/assessing authority to apply its mind independently without being influenced by the observation made by the higher authorities. Needless to say that Taxing Officer/statutory authority under the Act are quasi judicial authorities and decide the dispute after inviting objection in response to statutory notices issued. Accordingly no inference can be drawn by the Taxing Officer to proceed compulsarily under Section 10B of the Act in pursuance to impugned Circular. While filing the writ petition, no material has been placed on record which may show that notices were issued on unfounded ground and without screening the material in mechanical manner. Accordingly, so far as the validity of the notice is concerned, it involve disputed questions of law fact, which may not be looked into by this Court.
10. In the case reported in 2010 (6) JT 41, Manohar Lal (D) by Lrs. Vs. Ugrasen (D) by Lrs. And others their Lordship of Hon'ble Supreme Court observed as under:-
8"Para 22. Therefore, the law on the question can be summarised to the effect that no higher authority in the hierarchy or an appellate or revisional authority can exercise the power of the statutory authority nor the superior authority can mortgage its wisdom and direct the statutory authority to act in a particular manner. If the appellate or revisional Authority takes upon itself the task of the statutory authority and passes an order, it remains unenforceable for the reason that it cannot be termed to be an order passed under the Act."
11. Now next limb of argument advanced by the learned counsel for the petitioner relates to jurisdictional issue or competence of the Government to issue the impugned Circular. The provisions contained in Section 81(2) of the Act provides that any notification, rule regulation, order or notice issued or any appointment or declaration made or confiscation made, or any penalty or fine imposed, any forfeiture, cancellation or any other thing done or any action taken under repealed enactment and in force immediately before such commencement shall, so far as it is not inconsistent with the provisions of this Act, be deemed to have been issued, granted, done or taken under the corresponding provisions of VAT Act.
12. Now whether only because of assessment was made earlier to 1st January, 2008, the State has no right to issue notice under section 10B of the Act. The provision of Section 10B of the Act provides that the Commissioner or such other Officer not below the rank of Joint Commissioner as may be authorized in this behalf of the Government, may call for examination of record relating to any order passed by an Officer subordinate to him for the purpose of satisfying himself as legality or proprietary of such order with respect thereto. Needless to say that a plain reading of Section 10B of the Act reveals that even after finalization of assessment, the Commissioner or Officer not below the rank of Joint Commissioner may exercise revisional power within the parameter of Section 10B of the Act. It has been settled by catina of judgments of this Court that while 9 proceeding in Section 10B of the Act, the authorities have to record satisfaction on the basis of material on record.
13. Power conferred by Section 10B shall come into picture after the assessment order is passed. The revisional power does not seems to inoperative or extinguish after 1st January, 2008 with regard to earlier assessment. Sub-section (2) clearly provides that anything done or any action taken under the repeal enactment shall not become inoperative and shall be valid under the corresponding provisions. It further provides that right, privilege, obligation or liability acquired, accrued or incurred under the Repealed Act , shall not be affected. The privilege, obligation and liability co-relate with the taxing liability also, which can be looked into by the authorities under Section 10B of the Act.
14. In the case of Dharma Rice Mill (supra), the Division Bench of this Court has decided the provision of Section 81 (b) & (c) of of the U.P. General Clauses Act and observed that, " it is manifest that by virtue of Section 6 of the U.P. General Clauses Act, the rights, liabilities and remedies accrued under the repealed enactment stand protected unless a contrary intention is expressed or implied in the later enactment to obliterate the earlier state of law".
15. Though learned counsel for the petitioners tried to distinguished the judgment of Dharma Rice Mill(supra) stating that certain provisions has not been considered but being the judgment of coordinate Division Bench and keeping the finding recorded in the operative portion, it is open for this Bench to reconsider the matter on any other ground. The operative portion of the Dharma Rice Mill (supra) is reproduce as under:
" In view of the aforesaid facts and circumstances, we are of the considered opinion that the U.P. Value Added Tax Act while repealing the U.P. Trade Tax Act in its entirety keeps alive the old rights, liabilities and the remedies under the repealed enactment and, as such, the impugned notice for revising the order of assessment is not without jurisdiction. However, it will be open for the 10 petitioner to submit reply to the show cause notice and to contest the matter on merit before the authority concerned."
16. In view of the above, subject to validity of notice with regard to satisfaction recorded under Section 10B of the Act, the impugned Circular does not seems to suffer from any impropriety or irregularity moreso when it has been issued in compliance of the judgment of this Court, which has not been set aside till date and is pending in the Hon'ble Supreme Court.
17. No ground has been raised by the petitioners with regard to ingredients of Section 10B of the Act, hence it is not open for consideration being beyond the pleadings. However, we direct the respondents that while considering the petitioner's representation/objection in response to impugned notice, they shall keep in mind the observations made hereinabove and discharge their statutory obligation independently without being influenced by impugned Circular.
18. The State Government is directed to issue clarificatory Circular providing that circular dated 11.11.2008 is merely advisory in nature.
The petitioner may avail statutory remedy available under the Act with regard to notice/order. Interim order stands discharged. It shall further be open for the petitioner to file a reply/objection to notice/order.
Subject to the aforesaid observations, the writ petition is disposed of finally.
Dt.15.7.2010 NS/2072/09 11