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M/S Kwality Zippers Private Ltd. v. Commissioner Of Trade Tax, U.P. Lucknow - SALES/TRADE TAX REVISION DEFECTIVE No. 1126 of 1998  RD-AH 12283 (26 July 2006)
Court no. 43
Trade Tax Revision no. (1126) Of 1998.
Trade Tax Revision no. (1127) Of 1998.
M/S Kwality Zippers Pvt. Ltd., Kanpur. ... Revisionist.
The Commissioner, Trade Tax, U. P. Lucknow..... Opp. Party.
Hon'ble Rajes Kumar, J.
These two revisions under section 11 of U.P. Trade Tax Act (hereinafter referred to as the "Act") are directed against the order of Tribunal dated 28th May, 1998 relating to the assessment year 1991-1992 both under the U. P. Trade Tax Act as well as under the Central Sales Tax Act arising from the assessment proceedings under Section 21 of the Act.
The applicant is a Public Limited Company incorporated under the provisions of Indian Companies Act, 1956 having its registered office at 39-B Dada Nagar, Industrial Estate, Kanpur. The applicant is engaged in the business of manufacture of Polyester Zip Fasteners and Narrow Woven Fabrics. The Unit was exempted from tax under Section 4-A of the Act. During the year under consideration, exemption under Section 4-A of the Act was expired on 16.11.1991, thus for the subsequent period in respect of manufactured goods, applicant was liable to tax, if they are not exempted otherwise.
In the present revisions, dispute relates to the taxability of Polyester Narrow Woven Fabrics. During the year under consideration, applicant has disclosed the turnover of Polyester Narrow Woven Fabrics amounting to Rs.2,11,295/- under the U. P. Trade Tax Act and a sum of Rs.5,18,990/- under the Central Sales Tax Act. In the original assessment proceedings, exemption on the aforesaid turnover, has been sought on the ground that the Polyester Narrow Woven Fabrics was a Fabrics and exempted under the Notification no.ST-II-3714/X-6 (1)-72-U.P. Act-15-48-Order-85, dated 5.6.1985. The Assessing Authority in the assessment order passed under rule 41 (8) of the U. P. Trade Tax Rules and under Section 9 of the Central Sales Tax Act, exempted the turnover of Polyester Narrow Woven Fabrics. Subsequently, the proceedings under Section 21 of the Act were initiated both under the U. P. Trade Tax Act as well as under the Central Sales Tax Act with a view that the exemption on the Polyester Narrow Woven Fabrics was wrongly allowed under Section 4 of the Act. According to the Assessing Authority, Polyester Narrow Woven Fabrics was 2.65 M.M. wide, therefore, it was tape and liable to tax under the entry of "Tapes Laces----" of Notification no.ST-II-7036/X-938 (2)-72-U.P. Act-15-48-Order-84, dated 29.9.1984. After the explanation from the applicant, Assessing authority levied tax on the turnover of Polyester Narrow Woven Fabrics treating it as a Tape vide order dated 9.9.1996. Order of the Assessing Authority has been confirmed by the Deputy Commissioner (Appeals). Applicant filed second appeal before the Tribunal. Apart from the submission, that the Polyester Narrow Woven Fabrics was exempted from tax being Fabrics under the said Notification, another submission was that initiation of proceedings under Section 21 was only on account of change of opinion. The Tribunal vide impugned order, rejected both the appeals. The Tribunal held that Polyester Narrow Woven Fabrics was a Tape and liable to tax accordingly.
Heard Sri Bharat Ji Agarwal, learned Senior Advocate assisted by Sri P. Agarwal, Advocate and Sri U. K. Pandey, learned Standing Counsel.
Learned Counsel for the applicant submitted that though, the Tribunal in the earlier part of its order mentioned the submissions of the applicant that the initiation of proceedings under Section 21 of the Act was illegal on account of change of opinion, but the said submission has not been adjudicated. Thus, the order of the Tribunal is vitiated.
I have perused the order of Tribunal and the authorities below. I find substance in the argument of learned Counsel for the applicant. The Tribunal has in its earlier part of the order mentioned the submission of learned Counsel for the applicant challenging the assessment order on the ground that the initiation of proceedings under Section 21 of the Act was illegal being initiated on account of change of opinion, but the said question has not been adjudicated. The question raised namely that initiation of proceedings under Section 21 of the Act was only on account of change of opinion goes to the root of the matter and in case if this submission of the assessee is accepted, the entire order passed under Section 21 of the Act would become illegal, therefore, it was obligatory on the part of the Tribunal to decide the said question. Since the Tribunal has not addressed the aforesaid question, the order of the Tribunal, is vitiated and is liable to be set aside.
In the result, both the revisions are allowed. The order dated 28.5.1998 so far as it relates to the assessment year 1991-92 and 1992-93 under the U. P. Trade Tax Act and under the Central Sales Tax Act in Appeal nos. 608 of 1997 and 609 of 1997 is set aside and the matter is remanded back to the Tribunal to decide the appeal afresh in the light of observations made above.
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