2005 (11) TMI 442 - HC - VAT and Sales Tax

Court clarifies distinction between sections 21 & 10-B of Trade Tax Act

The court concluded that sections 21 and 10-B of the U.P. Trade Tax Act serve different purposes and can be invoked under different circumstances. The ... - Issues Involved:1. Legality of the proceedings under section 10-B of the U.P. Trade Tax Act, 1948.2. Relationship between proceedings under sections 10-B and 21 of the Act.3. Discrepancies in the assessment order and their handling by the Tribunal and Deputy Commissioner (Executive).Detailed Analysis:1. Legality of the proceedings under section 10-B of the U.P. Trade Tax Act, 1948:The revision was filed against the Tribunal's order which had set aside the Deputy Commissioner (Executive)'s order under section 10-B of the Act. The Tribunal held that the initiation of proceedings under section 21 of the Act precluded action under section 10-B. The Tribunal observed that the order under section 10-B was passed hastily and without proper consideration of the details verified in the proceedings under section 21. The Tribunal concluded that the objections raised in the notice under section 10-B had already been examined in the order passed under section 21, and therefore, the proceeding under section 10-B was not justified.2. Relationship between proceedings under sections 10-B and 21 of the Act:The Standing Counsel argued that sections 21 and 10-B operate on different footings. Section 21 deals with escaped assessment based on new material, while section 10-B allows the revising authority to examine the legality or propriety of an order based on the existing record. It was contended that the Tribunal erred in holding that the initiation of proceedings under section 21 precluded action under section 10-B. The Tribunal's view that the Deputy Commissioner should have considered the order under section 21 before passing the order under section 10-B was also challenged.3. Discrepancies in the assessment order and their handling by the Tribunal and Deputy Commissioner (Executive):The Deputy Commissioner (Executive) issued a notice under section 10-B based on discrepancies found in the dealer's records, including the selling rate of diesel engines and the closing balance. The dealer's counsel argued that the notice under section 10-B was unjustified as the discrepancies were already addressed in the proceedings under section 21. The Tribunal accepted this argument, noting that the assessing authority had verified the details and concluded that the objections were explained. However, the court held that the Tribunal should have either examined the objections independently or remanded the matter back to the Deputy Commissioner for reconsideration.Conclusion:The court concluded that both sections 21 and 10-B of the Act serve different purposes and can be invoked under different circumstances. The Deputy Commissioner (Executive) is not barred from examining the existing record to determine if the order was improper or illegal, even if a notice under section 21 was issued. The Tribunal's decision that the initiation of proceedings under section 21 precluded action under section 10-B was incorrect. The matter was remanded back to the Deputy Commissioner (Executive) to provide the dealer an opportunity to explain the discrepancies and to pass a fresh order in accordance with the law. The revision was allowed, and the Tribunal's order was set aside.