Assumed-purchase tax option for a khandsari unit applies to the whole unit despite intermittent shutdown of crushers.

Under the U.P. Sugarcane (Purchase Tax) Act, 1971 and the Rules, a khandsari unit that elected to pay tax on an assumed-purchase basis was required to be taxed for the assessment year on the unit as a whole, not by reference to whether individual crushers were intermittently out of commission. The statutory scheme treated the option as applying to the entire unit and found no basis for remission or exemption merely because some machinery was not working for part of the season. On the commission dispute, the pleadings did not clearly rebut the notice, and no relief was warranted on the material before the Court.

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Issues: (i) Whether, under the U.P. Sugarcane (Purchase Tax) Act, 1971 and the Rules, a khandsari manufacturing unit which had exercised the option to pay tax on the basis of assumed purchase could reduce its tax liability by showing that some crushers were out of commission during part of the assessment year; and (ii) whether the commission disclosed in the notice could be disputed at the writ stage on the facts pleaded.

Issue (i): Whether, under the U.P. Sugarcane (Purchase Tax) Act, 1971 and the Rules, a khandsari manufacturing unit which had exercised the option to pay tax on the basis of assumed purchase could reduce its tax liability by showing that some crushers were out of commission during part of the assessment year.

Analysis: The definition of a unit in Section 2(c) distinguished the unit from the crushers comprising it. The charging and option provisions in Section 3 treated the option as one relating to the whole unit for the entire assessment year and as irrevocable for that year. The Schedule to Rule 13-A also proceeded on the basis that a unit may consist of one or more crushers of different categories and prescribed assumed cane purchases for the unit as a whole. The licence and declaration forms likewise required disclosure of the composition of the unit, including the number and size of crushers. The Act and Rules contained no provision permitting remission or exemption merely because some component crushers were not worked for part of the season or were closed intermittently.

Conclusion: The tax liability had to be determined on the basis of the unit as a whole, and not by reference to the number of crushers actually worked during different periods. The contention of the petitioner failed and was rejected.

Issue (ii): Whether, on the materials pleaded, the petitioner was entitled to relief in respect of the commission shown in the notice.

Analysis: The notice did not show that the commission was computed on assumed purchases, and the writ petition contained no clear averment denying liability on the pleaded basis. The petitioner had not effectively challenged the commission in the earlier appeal, and recovery of commission under the relevant supply and purchase statute had to follow the statutory procedure before actual recovery. On the material before the Court, no basis was made out for grant of relief on this head.

Conclusion: The petitioner was not entitled to relief in respect of the commission claimed in the notice.

Final Conclusion: The writ petition was held to be devoid of merit, and the impugned notice and appellate order were left undisturbed.

Ratio Decidendi: Where a statutory option to pay tax is exercised in respect of a manufacturing unit as an integrated whole, the tax burden continues for the entire assessment year on the assumed-purchase basis notwithstanding intermittent non-working of some constituent machinery, in the absence of any statutory provision for remission or exemption.

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