2013 (4) TMI 405 - HC - VAT and Sales Tax

Dismissal of Writ Petition Challenging Tax Notice Due to Lack of Maintainability and Failure to Disclose Facts

The court dismissed the writ petition challenging a show cause notice issued under the U.P. Trade Tax Act, citing lack of maintainability and the ... Eligibility Certificate cancelled in view of the effect of the notification Nos. 1340 and 1341 by which cold drinks had been placed in negative list - Held that:- Inspite of the fact that the Assessing Authority/Deputy Commissioner (Assessment) Trade Tax, Nazibababd was/is not the competent authority to issue the eligibility certificate under the provisions of 4-A of the U.P. Trade Tax Act, 1948 and further the said authority has no power to amend the eligibility certificate but even then, the Divisional Level Committee had issued the eligibility certificate to the petitioner's unit on 22.1.2001 under Section 4-a of the U.P. Trade Tax Act in utter violation of the Notification No. 2008/2009 dated 29.9.1999. There is no dispute in the fact that on the date of grant of eligibility certificate by the Divisional Level Committee, the Cold Drinks were already placed in the negative list and this very vital fact was not taken into consideration. On coming to the notice of the said facts, the Joint Commissioner (Executive), Commercial Taxes, Nazibabad issued a notice dated 3.5.2008 to the petitioner under Section 10-B of the Act and revised the order dated 30.6.2004 passed by the Deputy Commissioner (Assessment) Trade Tax, to which the petitioner has submitted his reply. Thereafter, an order dated 29.5.2008 was passed by the Joint Commissioner (Executive), Commercial Taxes, excluding the amount of additional fixed capital investment as included by the Deputy Commissioner (Assessment), Trade Tax vide order dated 30.6.2004 to the eligibility certificate. Being aggrieved by the order dated 29.5.2008, the petitioner approached this Court at Allahabad by filing Civil Misc. Writ Petition No. 1265 of 2008, in which, a Division Bench of this Court at Allahabad, vide ad interim order dated 4.7.2008, stayed the order dated 29.5.2008. Counter affidavit was filed on behalf of the State in the above writ petition and the petitioner withdrew the writ petition on 13.11.2009. The petitioner, thereafter, preferred an Appeal, bearing No. 002/2009 before the Trade Tax Tribunal, Moradabad against the order dated 29.5.2008, without disclosing about filing and the pendency of writ petition No. 1265 of 2008. Thereafter, the petitioner has preferred the instant writ petition, challenging the power of Commissioner to cancel the Eligibility Certificate, while in paragraph 25 of the writ petition No. 1265 of 2008 filed by the petitioner before this Court at Allahabad, the petitioner itself had acknowledged the power of Commissioner to cancel/amend/modify the Eligibility Certificate under Section 4 A(3) of the U.P. Trade Tax Act. After hearing the parties' counsel, judgment was reserved. Prior to pronouncement of the order/opinion, the petitioner has preferred an application for stay (C.M.Application No. 107227 of 2012), inter alia on the grounds that the question involved in the instant writ petition is also related to the proceedings to the subsequent Assessment Year and the matter is pending before the Full Bench of Commercial Tax Tribunal, U.P. Accordingly, in order to meet the ends of justice and equity, this Court had stayed further proceedings in Second Appeal Nos. 11 of 2011 and 3 of 2010, till delivery of the judgment. Thus, from the facts averred above, it is crystal clear that the petitioner has not disclosed the above material and full facts while filing the instant writ petition, though the same was already in the knowledge of the petitioner and has approached this Court with unclean hands. Therefore, no hesitation to mention that the instant writ petition has been filed by the petitioner by suppressing and concealing the above vital facts, which go to the core of the matter involve. In view of the foregoing discussion, without delving into other grounds of challenge, no interference with the show cause notice or grant indulgence to the petitioner in exercise of discretionary writ jurisdiction under Article 226 of the Constitution of India. Thus leave it open to the petitioner to file its reply before the concerned authority raising all such points as may be available under law and if the petitioner approaches the concerned authority, it shall take appropriate decision in accordance with law. Issues Involved:1. Challenge to the show cause notice issued under Section 4-A (3) of the U.P. Trade Tax Act.2. Entitlement to tax exemption under the U.P. Trade Tax Act and the principle of promissory estoppel.3. Validity of the eligibility certificate issued to the petitioner.4. Jurisdiction and authority of the Deputy Commissioner (Assessment) Trade Tax.5. Maintainability of the writ petition against the show cause notice.Issue-wise Detailed Analysis:1. Challenge to the show cause notice issued under Section 4-A (3) of the U.P. Trade Tax Act:The petitioner challenged the notice dated 21.11.2008 issued by the Commissioner, Commercial Tax, U.P., under Section 4-A (3) of the U.P. Trade Tax Act. The notice required the petitioner to show cause why the eligibility certificate granted earlier should not be canceled. The grounds for the notice were the failure of the Divisional Level Committee to consider the effect of the notification denying the benefit of exemption to Cold Drink units and the order dated 29.5.2008 passed by the Joint Commissioner, Commercial Taxes, Bijnore, excluding additional fixed capital investment from the eligibility certificate.2. Entitlement to tax exemption under the U.P. Trade Tax Act and the principle of promissory estoppel:The petitioner argued that they had acted upon the promise made by the State Government in its incentive notification and invested over Rs. 100 Crores in establishing a new unit. Therefore, they were entitled to the tax exemption benefits as per the notification dated 21.2.1997. The petitioner contended that the State Government was bound by the principle of promissory estoppel, as the investment was made before the notifications dated 1.7.1999 and 29.9.1999, which placed cold drinks in the negative list.3. Validity of the eligibility certificate issued to the petitioner:The eligibility certificate was initially granted on 22.1.2001 but was later amended on 12.12.2003. The petitioner argued that the certificate should include the additional fixed capital investment made within five years from the commencement of production. However, the State contended that the eligibility certificate was issued in violation of the notification dated 29.9.1999, which placed cold drinks in the negative list, and thus, the petitioner was not entitled to the exemption.4. Jurisdiction and authority of the Deputy Commissioner (Assessment) Trade Tax:The State argued that the Deputy Commissioner (Assessment) Trade Tax, Nazibabad, was not competent to issue or amend the eligibility certificate. The Joint Commissioner (Executive), Commercial Taxes, Bijnore, revised the order dated 30.6.2004, excluding the additional fixed capital investment from the eligibility certificate. The petitioner challenged this revision but later withdrew the writ petition and filed an appeal before the Trade Tax Tribunal, which partly set aside the Joint Commissioner's order.5. Maintainability of the writ petition against the show cause notice:The court held that the writ petition against the show cause notice was not maintainable. The petitioner had ample opportunity to raise their grievances by submitting a reply to the show cause notice before the concerned authority. The court cited several precedents, emphasizing that writ jurisdiction under Article 226 should not be exercised in matters where alternative statutory remedies are available. The court also noted that the petitioner approached the court with unclean hands by suppressing material facts and filing multiple proceedings simultaneously.Conclusion:The writ petition was dismissed on the grounds of maintainability and the petitioner's conduct. The court left it open for the petitioner to file a reply to the show cause notice before the concerned authority, which would take an appropriate decision in accordance with the law. The interim order was discharged.