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M/S Rai Bareili Flour Pvt. Ltd v. The Commissioner Of Trade Tax Up Lko - SALES/TRADE TAX REVISION DEFECTIVE No. 77 of 1997  RD-AH 1120 (25 April 2005)
TRADE TAX REVISION NO.(77) OF 1997
M/S Rai Bareli Flour Mill Pvt. Ltd, Bulandshahr. Applicant
Commissioner of Trade Tax, U.P, Lucknow. Opp-party
TRADE TAX REVISION No. 1249 OF 1997.
Commissioner of Trade Tax, U.P, Lucknow. Applicant.
S/S Rai Bareli Flour Mills, Bulandshahr. Opp-Party
Hon'ble Rajes Kumar, J.
These two revisions under section 11 of the U.P. Trade Tax Act (hereinafter referred to as the "Act") are directed against the order of the Tribunal dated 9th July, 1997 relating to the assessment year, 1992-93.
Revision No. (77) of 1997 filed by the applicant and revision no.1249 of 1997 filed by the Commissioner of Trade Tax.
Applicant is engaged in the business of manufacture and sale of Ata, Maida and Suji. Applicant claimed that it had used tax paid wheat in the manufacturing of Ata, Maida and Suji. Applicant admitted and paid the tax on the turnover of Ata, Maida and Suji for the period 01.04.1992 to 25.10.1992. Thereafter, applicant stopped paying tax on Ata, Maida and Suji manufactured out of tax paid wheat in view of the decision of this Court in the case M/S Cheetarmal Ram Dayal, Agra Versus Commissioner of Sales Tax reported in 1992 UPTC 1338 decided on 15th September, 1992 in which following the decision of Karnataka High Court in the case of New Swastic Flour Mills Versus State of Karnataka, it has been held that Ata, Maida and Suji and wheat produce by crushing are not liable to tax again since wheat has already been subjected to tax. It appears that at the instance of the Roller Flour Mills Association, a circular has been issued on 21st April, 1993 on the basis of the decision in the case of M/S Cheetarmal Ram Dayal (supra). Arising with the similar controversy, the Apex Court in the case of Rajasthan Roller Flour Mills Association and another Versus State of Rajasthan and others reported in 1993 UPTC 1297 decided on 1st September, 1993 held that Flour, Maida and Suji derived from wheat are not wheat within the meaning of Section 14 (1) (3) of the Central Sales Tax Act and are different and distinct from wheat. In view of the aforesaid decision of the Apex Court, the operation of the decision of this Court in the case of M/S Cheetarmal Ram Dayal (Supra) has been stayed by the Apex Court on 13.08.1993 and, therefore, the Additional Commissioner (Legal) Trade Tax vide circular dated 25th November, 1993 has declared the earlier circular dated 21.04.1993 and 08.07.1993 as ineffective. The decision of this Court in the case of M/S Cheetarmal Ram Dayal (supra) has been subsequently overruled by the Apex Court. Assessing authority levied the tax on the sale of Ata, Maida and Suji in view of the decision of the Apex Court in the case of Rajasthan Roller Flour Mills Association and also demanded the interest under section 8 (1) of the Act treating the tax assessed as an admitted tax. First appeal filed by the applicant was rejected. Applicant filed second appeal before the Tribunal which was allowed in part. Tribunal upheld the levy of tax, but held that the interest under section 8 (1) of the Act should be charged from 01.12.1993 and not from the earlier date. Tribunal was of the view that the decision of the Apex Court, in the case of Rajasthan Roller Flour Mills Association was dated 01.09.1993 which was published in the various generals in the month of November or December, 1993.
Heard learned counsel for the parties.
Learned counsel for the applicant submitted that by circular dated 25thNovember, 1993, earlier circulars dated 21.04.1993 and 08.07.1993 can be withdrawn only prospectively and not retrospectively. He further submitted that the circulars are binding upon the revenue and once by the circular, it has been held that no tax was payable on Ata, Maida and Suji manufactured out of tax paid wheat, the tax cannot be levied. In support of his contention, he relied upon the various decisions of the Apex Court. He relied upon the decision of the Apex Court in the case of Commissioner of Customs, Calcutta and others Versus Indian Oil Corporation. Ltd and another reported in 2004 (3) SCC, 488, Commissioner of Sales Tax, U.P. Versus Indra Industries reported in 122 STC, 100 (SC), State Bank of Travarcore Versus Commissioner of Income Tax Kerala reported in 158 ITR, 102, UCO Bank Calcutta Versus Commissioner of Income Tax, West Bengal reported in 237 ITR, 889 and Collector of Central Excise, Patna Versus Usha Martin Industries reported in 111 STC 254(SC). He further submitted that since the applicant was bonafidely contesting the liability of tax on the sale of Ata, Maida and Suji and even contesting in the revision before this Court, the tax assessed cannot be treated as an admitted tax and the interest could not be charged under section 8 (1) of the Act. Learned Standing Counsel relied upon the order of the Tribunal.
I do not find any substance in the argument of the learned counsel for the applicant for the reason that the assessment year involved is 1992-1993 and the circular was issued on 21st April, 1993 on which reliance is placed was not available with the applicant, in the year 1992-1993, thus on the basis of this circular the applicant could not have any believe in not to deposit the tax. It appears that the applicant has not deposited the tax on the basis of the decision of this Court in the case of M/S Cheetarmal Ram Dayal (supra) the operation of which was stayed and has been subsequently set aside. It is a settled principle of law that the court declares the law and the decision of the court operates retrospectively, therefore, the decision of the Apex Court in the case of Rajasthan Roller Flour Mills Association is applicable to the assessment year under consideration also and in view of the decision of the Apex Court the turnover of Ata, Maida and Suji which has been held as different commodity to the wheat is liable to tax. Circular dated 21st April, 1993 was issued on the basis of the decision of this Court in the case of M/S Cheetarmal Ram Dayal (supra), therefore, once the decision of this court in the case of M/S Cheetarmal Ram Dayal (supra) has been set aside, circular issued on the basis of the said decision also stands vacated and cannot be relied upon. In the circumstances, order of the Tribunal levying the tax on the turnover of Ata, Maida and Suji is upheld.
So far as interest under section 8 (1) of the Act is concerned, I do not find any error in the order of the Tribunal. Tribunal rightly held that the interest is chargeable from 01.12.1993 in view of the fact that the Apex Court decision is dated 01.09.1993 in the case of Rajasthan Roller Flour Mills Association and having regard to its publication in the month of November, December. The argument of the learned counsel for the applicant has no force that since the applicant is contesting the liability of tax and has not admitted at any stage, thus, tax levied cannot be treated as admitted tax.
Section 8 (1) of the U.P. Trade Tax Act reads as follows:
"8. Payment and recovery of tax.- (1) The admittedly payment shall be deposited within the time prescribed or by thirty 1st day of August, 1975, whichever is later, failing which simple interest at the rate of two percent per mensem shall become due and be payable on the unpaid amount with effect from the day immediately following the last date prescribed till the date of payment of such amount whichever is later, and nothing contained in Section 7 shall prevent or have the effect of postponing the liability to pay such interest.
Explanation.-For the purpose of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, turnover of purchases, or of both, as disclosed in the accounts mentioned by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts are maintained, then accordance to the estimate of the dealer and includes the amount payable under Section 3-B."
Question is whether the applicant had bonafidely disputed the liability of tax after the decision of Apex Court when the Apex Court in the case of Rajasthan Roller Flour Mills Association has held that Ata, Maida and Suji are different product than wheat and Ata, Maida and Suji is liable to tax. In my opinion, merely because the applicant has not admitted the liability of tax and filed the appeal and contesting the liability of tax in revision, it cannot be said that the dispute is bonafide. After the decision of the Apex Court, there was no reason with the applicant to dispute the liability of tax, applicant should have deposited the tax at the very first instance before December, 1993. The applicant had chosen not to deposit tax even after the decision of the Apex Court, at its very risk and for such act no one even can be held responsible except the applicant. The tax on Ata, Maida and Suji was the tax due under the Act and was liable to be deposited immediately after the decision of the Apex Court and if in case, it has not been deposited, applicant is liable for interest under section 8 (1) of the Act. Order of the Tribunal in this regard is also upheld.
In the result, both the revisions fail and are accordingly, dismissed.
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