Over 2 lakh Indian cases. Search powered by Google!

Case Details

M/S DURGARAI VIJAY KUMAR versus THE COMMISSIONER OF TRADE TAX U.P. LUCKNOW

High Court of Judicature at Allahabad

Case Law Search

Indian Supreme Court Cases / Judgements / Legislation

Judgement


M/S Durgarai Vijay Kumar v. The Commissioner Of Trade Tax U.P. Lucknow - SALES/TRADE TAX REVISION No. 38 of 2007 [2007] RD-AH 2076 (8 February 2007)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

Court no.22

TRADE TAX REVISION NO.38 of 2007.

M/S Durgarai Vijay Kumar, Samuar Bazar, Kushinagar    Applicant

Versus

The Commissioner, Trade Tax, U.P. Lucknow.                      Opp.Party.

Hon'ble Rajes Kumar, J.

Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 19th December, 2006 relating to the assessment year, 2006-2007 by which the Tribunal has sustained the demand of additional security to the extent of Rs.5 lacs under section 8 C of the Act.

Applicant was carrying on the business of fertilizer, cement, iron steel etc. It is claimed that at the time of grant of registration, applicant had deposited a sum of Rs.30,000/- towards security and subsequently a sum of Rs.50,000/- was furnished towards additional security of two registered dealers on 16.08.2001. When the applicant opened the Branch at Gaytree Complex, Station Road, Deoria w.e.f. 23.01.2003, applicant further submitted additional security of Rs. one lac in the form of NSC. Thus the total security furnished was to the extent of Rs. 1, 80,000/-. Assistant Commissioner, Trade Tax, Padrauna, Kushinagar issued notice under section 8 C of the Act on 5.9.2006 asking the applicant to show cause why a sum of Rs.50 lacs be not demanded as additional security in the form of bank guarantee. Reasons given in the show cause notice was; that the bills were not verifiable; the goods transported during the years, 2005-2006 and 2006-2007 were outside the books of account for which penalty was levied; On demand complete books of accounts have not been produced; purchases have not been got verified from the bills; the information received from various sources reveals that the applicant was involved in evasion of tax. The applicant filed reply to the aforesaid show cause notice. The assessing officer vide order dated 20th September, 2006 passed the order under section 8 C of the Act and asked the applicant to furnish the additional security of Rs. 50 lacs. Security was demanded on the ground that on enquiry, it was found that the carbon copy of the bill has not been maintained in violation of Section 8 A (4) of the Act; bills are non-verifiable and the purchase vouchers, rokar khata and stock register have not been produced; survey was made by the Trade Tax Officer (SIB) on 9.9.2006 and on the basis of which assessment order for the months of April, May, June and July, 2006 were passed levying the tax at Rs. 1lac, 1,50 lacs, 1.30 lacs and 3.40 lacs respectively. Being aggrieved by the order passed under section 8 C of the Act, applicant filed appeal before the Joint Commissioner (Appeals) who vide order dated 27.09.2006 allowed the appeal in part. Appellate authority reduced the demand of additional security to Rs. 5 lacs. Being aggrieved by the order of the Joint Commissioner (Appeals), applicant as well as Commissioner of Trade Tax filed appeals before the Tribunal. Tribunal by the impugned order, dismissed both the appeals and confirmed the demand of additional security of Rs. 5 lacs.

Heard learned counsel for the parties.

Learned counsel for the applicant submitted that the demand of additional security is patently illegal, arbitrary and in contravention to the Provisions of Section 8 C (3) of the Act. He submitted that the notice-dated 5.9.2006 issued under section 8 C of the Act was vague and the tax for the assessment year, 2006-2007 has not been estimated. He submitted that before the issue of the notice under section  8 C of the Act no exercise has been done for estimating the tax for the assessment year, 2006-2007 and the demand of additional security to the extent of Rs. 50 lacs is based on no material. He submitted that in the order passed under section 8 C of the Act, assessing authority has relied upon the provisional assessment orders for the months of April, May, June and July, 2006, while there was no reference of such provisional assessment orders in the show cause notice and, thus, the order passed by the assessing authority under section 8 C of the Act demanding additional security to the extent of Rs. 50 lacs was in violation of principle of natural justice and contrary to the provisions of Section 8 C of the Act. He submitted that even though the order passed by the assessing authority under section 8 C of the Act was wholly illegal the first appellate authority as well as Tribunal has illegally sustained the demand of security to the extent of Rs. 5 lacs.

Learned Standing Counsel relied upon the order of the Tribunal. He submitted that the demand of additional security to the extent of Rs. 5  lacs is wholly justified.

It is useful to refer Section 8 C (1) (2) and (3) of the Act.

"8-C. Security in the interest of revenue: (1) Every person-

(a) who makes an application for the issue or, as the case may be, renewal of a recognition certificate or a certificate of registration or provisional registration under section 4-B, 8-A or 8-B on or after October 12, 1983, or

(b) whose application for issue or renewal of such recognition certificate or certificate of registration or provisional registration is pending on such dates: or

(c) who holds a recognition certificate or a certificate of registration or provisional registration from before such date,

shall for the proper realization of tax, penalty or other sums due or payable under this Act, furnish, in the prescribed manner and within three months from the date or, as the case may be, the date of making an application as aforesaid, a security of one thousand rupees in cash or in the form of National Saving Certificates pledged in favour of the Commissioner in case his actual or estimated turnover as referred to in sub-section (2) of Section 3 for the assessment year exceeds ten lakh rupees:

Provided that no security under this sub-section shall be required to be furnished by a dealer exclusively dealing in goods exempted from tax under Section 4 and not making use of any of the forms prescribed under this Act or under the Central Sales Tax Act, 1956.

(2) Where it appears necessary to the Assessing Authority so to do-

(a) for the proper realization of any tax, penalty or other sums due or payable under this Act; or

(b) for the proper custody of use of forms prescribed under this Act or the rules framed thereunder; or

(c) as a condition for the grant or, as the case may be, renewal or the continuance in effect of a recognition certificate or a certificate of registration or provisional registration,

it may by an order in writing and for reasons to be recorded therein, direct, before the grant or, as the case may be, renewal of such certificate or at any time while such certificate is in force, that the dealer or the person concerned shall, furnish in the prescribed manner and within such time as may be specified in the order, such security or, if the dealer or the person concerned has already furnished security, such additional security, of any nature other than those specified in sub-section (1), as may be specified, for all or any of the aforesaid purposes:

Provided that the dealer or the person concerned may, if he so likes, instead of furnishing security of the nature asked for, furnish security of the nature specified in sub-section (1).

(3) No dealer or the person concerned shall be required to furnish any security or additional security under sub-section (2) by the Assessing Authority unless he has been given an opportunity of being heard, and the amount of such security or additional security shall also in no case exceeds the tax payable, in accordance with the estimate of the Assessing Authority, on the turnover of the dealer for the assessment year in which such security is required to be furnished."

Section 8-C (3) of the Act provides that no dealer is required to furnish any additional security under sub-section (2) unless he has been given an opportunity of being heard, and the amount of such additional security required to be furnished shall also in no case exceeds the tax payable, in accordance with the estimate of the assessing authority on the turnover of the dealer for the assessment year in which such security is required to be furnished. Therefore, for the demand of additional security, it was necessary on the part of the assessing authority to estimate the tax payable on the turnover of the dealer for the assessment year under consideration and to demand of additional security after giving proper opportunity of hearing.

Perusal of the notice under section 8 C of the Act dated 5.9.2006, which is Annexure-2 to the revision petition reveals that vague allegations have been made about the suppression of the turnover but before issue of the notice no exercise has been done for estimating the tax payable on the basis of the turnover for the year under consideration. No basis whatsoever has been given for the demand of additional security of Rs.50 lacs. In the order passed under section 8-C of the Act, assessing authority has referred the provisional assessment orders passed for the months of April, May, June and July, 2006, but before relying upon the provisional assessment orders for the demand of additional security, no notice has been given. Thus, in the circumstances that before issue of the show cause notice demanding additional security at Rs. 50 lacs, no exercise has been made for estimating the tax payable for the year under consideration and no show cause notice was given in respect of the materials, referred and relied upon in the order passed under section 8-C of the Act, the order dated 20th September, 2006 under section 8 C is illegal being contrary to the provisions of Section 8-C (3) of the Act and is liable to be set aside. However, it is open to the assessing authority to initiate any proceeding in accordance to the law.

In the result, revision is allowed. The order of the Tribunal and the order under section 8-C of the Act are hereby set aside.

Dated.08.02.2007.

VS.


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

Advertisement

dwi Attorney | dui attorney | dwi | dui | austin attorney | san diego attorney | houston attorney | california attorney | washington attorney | minnesota attorney | dallas attorney | alaska attorney | los angeles attorney | dwi | dui | colorado attorney | new york attorney | new jersey attorney | san francisco attorney | seattle attorney | florida attorney | attorney | london lawyer | lawyer michigan | law firm |

Tip:
Double Click on any word for its dictionary meaning or to get reference material on it.