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The Commissioner, Trade Tax Lucknow v. S/S Mohd. Aslam Mohd. Akram Sambhal - SALES/TRADE TAX REVISION DEFECTIVE No. 441 of 1999 [2006] RD-AH 12239 (25 July 2006)


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Court no. 43

Trade Tax Revision no. (441) Of 1999.

The Commissioner, Trade Tax, U. P. Lucknow..... Revisionist.


S/S Mohd. Aslam , Mohd. Akram, Sambhal. ... Opp. Party.

Hon'ble Rajes Kumar, J.

Present revision under section 11 of U.P. Trade Tax Act (hereinafter referred to as the "Act") is directed against the order of Tribunal dated 11th  November,  1998 relating to the assessment year 1997-1998 under the U. P. Trade Tax Act.

Dealer/opposite party (hereinafter referred to as the "Dealer") was carrying on the business of manufacture and sales of Food-grains etc. with the view, that the dealer was involved in evasion of tax, vide order dated 18.3.1998, the Assessing Authority required the dealer to furnish additional security in the form of Bank guarantee at Rs.8 Lacs by 21.3.1998.  When such additional security could not be furnished, a notice under Section 8-A (1-B) of the Act was issued on 4.4.1998 for cancellation of the registration.  In pursuance of the said notice, dealer appeared before the Assessing Authority and sought short time, which was allowed up to 13.4.1998.  It appears that on 13.4.1998 time was again sought which was refused and on 15.4.1998, registration was cancelled.  First appeal filed by the dealer was rejected.  Dealer filed Second Appeal before the Tribunal, which has been allowed by the impugned order.  The Tribunal held that the additional security was demanded on 18.3.1998.  According to the Tribunal, under Section 8-A (1-B) of the Act order of cancellation could be passed only after expiry of three months while the order of cancellation was passed on 15.4.1998, hence, the order of cancellation of registration has been held unjustified.

Heard Sri B. K. Pandey, learned Standing Counsel.  Despite the service of notice, no one appears on behalf of dealer/opp. party.

Learned Standing Counsel submitted that Section 8-A (1-b) provides that if the dealer failed to pay the tax, penalty or other dues within three months of the date, such tax, penalty or other dues became payable the registration can be cancelled by the authority.  He submitted that the security demanded under Section 8-C does not come within the purview of tax, penalty or other dues, thus, the period of three months is not applicable to the additional security.  He submitted that vide order dated 18.3.1998, dealer was required to furnish additional security by 21.3.1998 and on non furnishing of security, registration could be cancelled immediately.  

Thus, the view taken by the Tribunal is erroneous.  

I find substance in the argument of learned Standing Counsel.  Section 8-A (1-B) reads as follows:-

Section 8.A (1-B)- A Certificate of registration granted under this section in a dealer, may be canceled by the authority empowered to grant it, either on the application of the dealer or on its  own motion, where such authority is satisfied that the dealer  to whom it was granted has ceased to carry on business or  has ceased to be subject to registration or has failed to pay the tax, penalty or other dues within three months of the  date such tax, penalty or other dues became payable or where for any other sufficient reasons such authority considers it proper so to do.

Explanation- The dissolution of a firm or association of persons or partition of Joint Hindu Family or transfer by a dealer of his business shall be deemed to be cessation of business within the meaning of this sub section.

Under Section 8-A (1-B) registration can be cancelled for any other sufficient reasons.  Non furnishing of additional security within the time specified may be one of the reasons on which registration can be cancelled.  Additional security does not come within the purview of tax, penalty or other dues, therefore, period of three months is not applicable to the additional security.  The Assessing Authority vide order dated 18.3.1998 required the dealer to furnish the additional security within the specified time, therefore, on the expiry of that time on non furnishing of additional security, the Assessing Authority can cancel the registration.  The view taken by the Tribunal that the registration could be cancelled only after expiry of three months is not sustainable and the order of Tribunal is accordingly liable to be set aside.  The Tribunal is directed to decide the appeal afresh on merits.

In the result, revision is allowed.  The order of Tribunal dated 11.11.1998 is set aside and the matter is remanded back to the Tribunal to decide the appeal afresh on merits.




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