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THE COMMISSIONER,TRADE,TAX U.P.LUCKNOW versus RAJSHREE ROLLER FLOUR MILL

High Court of Judicature at Allahabad

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The Commissioner,Trade,Tax U.P.Lucknow v. Rajshree Roller Flour Mill - SALES/TRADE TAX REVISION No. 749 of 1995 [2004] RD-AH 1747 (17 December 2004)

 

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

RESERVED

TRADE TAX REVISION NO.749 OF 1995

Commissioner of Trade Tax, U.P., Lucknow.      Applicant

Versus

M/S Rajshree Roller Flour Mill, Moradabad.                  Opp-party

---------------

Hon'ble Rajes Kumar, J.

Present revision under section 11 of the U.P. Trade Tax Act (hereinafter referred to as the "Act") is directed against the order of the Tribunal dated 13th March, 1995 relating to the assessment year, 1986-87.

Following question has been raised in the present revision.

"Whether on the facts and in the circumstances of the case is learned Tribunal legally justified to grant the exemption on the purchase of wheat made upto the 3.6.1986 from the open market on which the assessee has accepted his tax liability by issuing Form 3-C (1) also and even when the assessee has not followed the conditions as prescribed in the Notification no.ST-II-6467/X-6(29)-76 U.P. Act-XV-48 Order-79/18.07.79."

Brief facts of the case are that the dealer/opposite party (hereinafter referred to as "Dealer") was engaged in the business of manufacture of Atta, Maida and Suji. Wheat was raw-material for the manufacture of Atta, Maida and Suji. Dealer was granted recognition certificate under section 4-B of the Act for the purchase of wheat at the concessional rate for the manufacture of Atta, Maida and Suji on 10.12.1985 w.e.f.09.12.1985. In the said recognition certificate on 04.06.1986, assessing authority added, " wheat purchased from Food Corporation of India only ". During the year under consideration, dealer purchased wheat in an open market from the dealer other than Food Corporation of India against Form 3-C (1). The purchases of wheat was otherwise liable to tax in the hand of the dealer being first purchaser, but the dealer claimed exemption on such purchases being recognition holder under section 4-B of the Act. Assessing authority had not accepted the claim of the dealer on the ground that under the Notification ST-II-6467/X-6(29)-76 U.P. Act-XV-48 Order-79 dated 18.07.79 purchases of wheat from Food Corporation of India was only exempted. Dealer filed appeal before the Deputy Commissioner (appeals), which was allowed in part. Deputy Commissioner (appeals) held that the recognition certificate was amended w.e.f. 04.06.1986 restricting purchase of wheat from Food Corporation of India only, therefore, the purchases of wheat prior to 04.06.1986 made from the dealer other than Food Corporation of India was exempted from tax under the recognition certificate, and the purchases after 04.06.1986 was liable to tax. Dealer as well as Commissioner of Trade Tax filed appeals before the Tribunal. Tribunal by the impugned order rejected both the appeal.

Heard learned counsel for the parties.

Learned Standing Counsel submitted that the recognition certificate was issued on 10.12.1985 w.e.f. 09.10.1985 granting exemption on the purchase of wheat for the manufacture of Atta, Maida and Suji and in Form 19 the recognition certificate was made subject to the provision of the Act, Rule and orders, therefore, exemption was subject to the notification. He further submitted that the exemption under the recognition certificate was on the purchase of wheat, but if the notification contemplated the exemption on the purchase of wheat only from the Food Corporation of India, recognition certificate is to be read along with the notification. He submitted that it is the notification which grant exemption and not recognition certificate and the recognition certificate granted under the notification has to be read along with the notification. He submitted that since the Notification No.ST-II-6467/X-6(29)-76 U.P. Act-XV-48-Order-79 dated 18.07.1979 relevant for the year under consideration granted exemption on the purchases of wheat made from Food Corporation of India, the purchases made from other sources were liable to tax. In support of his contention he relied upon the Division Bench decision of this Court in the case of Mentha & Allied Products Versus State of U.P. reported in 1996 (30) ATJ page 151. Sri R.R. Agarwal, appearing on behalf of the dealer filed supplementary affidavit and submitted that after the order of the Tribunal under the Scheme introduced by the State Government dated 22nd March, 2003, dealer has deposited the tax which was outstanding after the order of the Tribunal and dealer deposited 10 percent amount towards interest and claimed waiver for the balance amount of interest which was allowed by the Assistant Commissioner, Trade Tax, Sector-IV, Moradabad vide its order dated 30.06.2003. In view of this fact, submission is that the issue stood settled after the Scheme of the State Government and vide order dated 30.06.2003 passed by the Assistant Commissioner, Trade Tax, Sector-IV, Moradabad. Therefore, revision filed by the Commissioner of Trade Tax is not maintainable. In support of his contention, he relied upon the decision of the Delhi High Court in the case of  All India Federation of Tax Practitioners Versus Union of India reported in 236 ITR page 1 and the decision of the Apex Court in the case of Hira Lal Hari Lal Bhagwati Versus C.B.I., New Delhi reported in 2003 (5) SCC page 257. On merit, he submitted that prior to the Notification No.ST-II-6889/X-6(29)-76 U.P. Act No. XV/48-Order 78 dated 31.08.1978, there was no condition in the notification granting exemption on the purchases of wheat purchased from Food Corporation of India, and exemption was available on all the purchases made from all sources. He submitted that since in the recognition certificate, there was no condition that the purchases of wheat be made from Food Corporation of India was only eligible for exemption, dealer claimed exemption on the purchases made from various dealers other than Food Corporation of India and was legally entitled for said exemption, in view of the recognition certificate. He submitted that the exemption could be allowed upto 03.06.1986 till the date of amendment. He further submitted that in any view of the matter the tax assessed should not be treated as admitted tax under section 8 (1) of the Act and the interest should not be demanded.

I have perused the order of the Tribunal and the authorities below.

I find force in the argument of the learned Standings Counsel and on the facts and circumstances of the case, order of the Tribunal cannot be sustained.

Relevant notifications reads as follows:

Notification No.ST-II-6889/X-6 (29)-76 U.P. Act No. XV/48-Order 78 dated 31.08.1978

" In exercise of the powers under section 4-B of the U.P. Sales Tax Act, 1948 (U.P. Act no. XV of 1948), the Governor is pleased to declare atta, maida and suji manufactured by the Roller Flour Mills, to be notified goods, for the purposes of the said section.

The Governor is further pleased to exempt with effect from September 1, 1978, subject to the conditions and restrictions specified in the said section, a Roller Flour Mill holding a recognition certificate, from payment of tax on the purchase of wheat required by it for use as raw material in the manufacture of the said notified goods."

Notification No.ST-II-6467/X-6(29)-76 U.P. Act-XV-48-Order-79 dated 18.07.1979.

" In exercise of the powers under section 4-B of the U.P. Sales Tax Act, 1948 (U.P. Act No. XV of 1948), read with section 21 of the U.P. General Clauses Act, 1904 (U.P. Act No. 1 of 1904), and in supersession of Government Notification No. ST-II-6889/X-6 (29)-76-U.P. Act XV-48-Order-78, dated August 31, 1978, the Governor is pleased to declare " atta, maida, and suji manufactured by the Roller Flour Mills", to be "notified goods" of the purposes of the said section.

The Governor is further pleased to exempt, with immediate effect, subject to the conditions and restrictions specified in the said section, a Roller Flour Mill holding a recognition certificate, from payment of tax on the purchase of wheat required by it for use as raw material in the manufacture of the said notified goods provided such wheat is purchased from the Food Corporation of India".

When the dealer applied for the recognition certificate under section 4-B of the Act in the year,1985, only relevant notification  available was Notification No.ST-II-6467/X-6(29)-76 U.P. Act-XV-48-Order-79 dated 18.07.1979. Apart from the above, notification under Section 4-B of the Act, exemption on the purchases of wheat to the roller flour mills involved in the manufacturing of Atta, Maida and Suji was not available. Notification clearly granted exemption on the wheat purchased from Food Corporation of India. Therefore, recognition certificate issued under section 4-B of the Act in Form 19  was under the aforesaid notification. Recognition certification granting exemption on the purchases of wheat has to be read granting exemption on the purchases from Food Corporation of India and there was no ambiguity in this regard. Subsequent amendment made in the recognition certificate on 04.06.1986 did not make any difference and has no relevance. Even prior to the amendment dated 04.06.1986, exemption was only to the wheat which according to the notification was on the purchases made from Food Corporation of India and, therefore, it cannot be said that the exemption on the purchases of wheat purchased from various dealers other than Food Corporation of India was available under the recognition certificate which has been taken away by the amendment made on 04.06.1986. The Division Bench of this Court in the case of Mentha & Allied Products Versus State of U.P. reported in 1996 (30) ATJ page 151 held that the exemption wholly or partly does not flow from the recognition certificate but from the notification published in the Gazette by the State Government in that behalf. It further held as follows.

"Sri Bharatji lost sight of the fact that exemption was granted to the petitioner by notification of August 29, 1987, and not by the recognition certificate (Annexure "3" to the writ petition). The recognition certificate not being the source of exemption, but merely one of the conditions to be fulfilled for qualifying for exemption, no amendment as a matter of fact, is needed in the recognition certificate. Once the notification of August 29, 1987 giving exemption to the petitioner is superseded by another notification, the petitioner will loose the exemption atonce, unless another notification giving full exemption is issued."

Therefore, it is clear that the exemption was available only under the notification and recognition certificate was procedural requirement. If the exemption is not permitted under the notification, it cannot be availed at the strength of the recognition certificate. Recognition certificate is always subject to the notification and, therefore, recognition certificate issued to the dealer granting exemption to the wheat was on the purchases of wheat made from Food Corporation of India as contemplated under the notification. Thus, view of the first appellate authority and the Tribunal allowing exemption for the period prior to 04.06.1986 is erroneous.

So far as submission of the learned counsel for the dealer that since the dealer has deposited the tax outstanding after the order of the Tribunal under the Government Order dated 21.03.2003, the issue stood finally settled with regard to the tax and the revision of the Commissioner of Sales Tax is not maintainable cannot be accepted. Perusal of the Government Order dated 21.03.2003 shows that it has allowed the waiver of the interest on the deposit of outstanding demand on the deposit of 10% towards interest.  The Government Order did not contemplate any final settlement of the dispute and the tax. There is no condition under the scheme, which contemplates that after the application under the scheme the department could not contest the matter with regard to those tax, which has been deleted by the first appellate authority.  The decision cited by learned counsel for the dealer of the Delhi High Court in the case of All India Federation of Tax Practitioners Versus Union of India reported in 236 ITR page 1 and the decision of Apex Court in the case of Hira Lal Hari Lal Bhagwati Versus C.B.I., New Delhi reported in 2003 (5) SCC page 257 are not relevant to the present case. They are the cases relating to the "Kar Samadhan Scheme" issued by the Central Government under the Finance Act to settle the dispute of tax finally under the Income Tax Act, Central Excise Act and the Customs Act.

So far as the interest under section 8 (1) of the Act is concerned, upto 04.06.1986 before the amendment in the recognition certificate, it can be said to be a case of bonafide believe and disputing the liability bonafidely but after 04.06.1986, there was no bonafide on the part of dealer in claiming exemption. Therefore, I am of the view that tax assessed upto 04.06.1986 cannot be treated as admitted tax for the purpose of demand of interest under section 8 (1) of the Act but on the tax assessed for the period after 04.06.1986 interest under section 8 (1) of the Act should be charged.

In the result, revision is allowed. Order of the Tribunal is set aside.

Dt. 17.12. 2004.

VS


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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

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