TaxTMI 
TaxTMI 
2013 (3) TMI 425
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....red out of tax paid paddy was sold within and outside the State of U.P. The disclosed inter-state-sales of rice amounts to Rs. 60,51,075/-. During the course of the assessment proceeding, the petitioner admitted its liability of tax on aforesaid inter-state-sales @ 4 % but also claimed adjustment of tax paid in the State of U.P on the purchases of paddy, under Section 15(c) of the Central Sales Tax Act. The said claim was allowed by the Assessing Officer by its order dated 2.1.2005. The Assessing Officer gave an adjustment of Rs. 12,2245.00 in respect of tax already paid on purchases of paddy. Subsequently, a notice under proviso to Section 21(2) of U.P Trade Tax Act was issued to the petitioner on the ground that he was not entitled to adjustment in tax on inter-state-sales of rice by an amount already paid on purchases of paddy under provisions of Section 15(c) of Central Sales Tax Act. The Assessing Officer sought permission which was granted from the Additional Commissioner (1), Commissioner Tax Allahabad Zone, Allahabad as required under section 21(2) of the Act to re-open the case and initiate reassessment proceeding as the tax has escaped assessment. The present petition ha....
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....th regard to the Section 15(c) of the Central Sales Tax Act was formed by him while framing the original assessment order, therefore, it is not correct to say that the reassessment notice is based on change of opinion. Considered the respective submissions of the learned counsel for the parties. At the very out set, it is desirable to have a look to the pleadings of the parties. In the writ petition, after narrating the facts of the case in paragraphs no. 1 to 11, it has been stated thereafter that under Section 14 of the Central Sales Tax Act (hereinafter referred to as 'the Act'), paddy and rice amongst others are goods of special importance within a State. Section 15 of the Act has placed certain restrictions and conditions in regard to sale or purchase of declared goods. Thereafter, the petitioner has placed its own interpretation of Section 15(c) of the Act to justify that the tax paid on the purchases of paddy in the State of U.P. is liable for adjustment under Section 15 (c) of the Act, the assessment order in this regard is justified. In para-19, it has been stated that the impugned notice has been issued under Section 21(2) of U.P. Trade Tax Act and it is based upon circ....
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....e also administrative officers under the direct control of the State Government and the Commissioner of Sales Tax. No statutory provision has been pointed to us authorising the Commissioner of Sales Tax to issue directions of such a nature. The State Counsel contended that the assessment order does not indicate that the Sales Tax Officer relied on that notification while making the assessment, and as such even if such a circular is there, that should not be sufficient ground for entertaining the petition. We are not impressed by this argument. In a case where the State Government or the immediate officer, who has supervisory control over its subordinate officer, issues directions which are not warranted by law wants them to comply with it faithfully, we do not feel that the officer concerned would be able to decide the matter dispassionately ... " In M/s Mercury Laboratories Pvt. Ltd. Versus State of U.P. and others, 2000 UPTC 82, the decision of this Court in M/s Hindustan Aluminium (supra) has been referred. Para-43 which has been relied upon is reproduced below: "43. On the strength of the authorities cited from both sides we proceed to decide the controversy in the following ....
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.... (supra) and the fact that there is no pleading in the writ petition and there being no such relief challenging the legality and validity of the circular, we are of the opinion that the petitioner cannot be permitted to take a plea not raised in the writ petition, for the first time in the arguments. Even otherwise also, in view of the judgment of this Court in the case of M/s Aryaverth Chawal Udyog (supra) holding that the circular is valid, we are of the view that the challenge made by the petitioner is unsustainable. A bare perusal of the circular would show that it has only invited the attention of the Assessing Authorities to the fact that the decision given by the Andhra Pradesh High Court in the case of Aitha Narasaiah & Co. (supra) is not applicable due to different statutory set up in U.P. Trade Tax Act. The said view has been found legally correct by the Division Bench of this Court in the case of M/s Aryaverth Chawal Udyog (supra). Thus, it cannot be said by any stretch of imagination that it amount to interference in the quasi judicial function of the authorities of trade tax. Drawing the attention of the authorities discharging quasi judicial function, to a correct ex....
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.... 21 of the Act. The Court noticed that on earlier three occasions, the proceedings were taken under Section 21 of the Act and the petitioners therein were again reassessed. In view of the pendency of proceedings under Section 21 of the Act, it opined that initiation of proceedings under Section 10-B was not called for and unsustainable. The said case was decided on its own peculiar facts where the validity of proceedings under Section 10-B of U.P. Trade Tax Act was in issue, which is not so here. It does not lay down as a rule of universal application that the proceedings under Section 21 of the Act cannot be initiated. The relied upon decision is distinguishable on the facts and has hardly any application here. As next limb of arguments, the learned counsel for the petitioner submits that this Court should follow the same course of action as was done in the case of M/s Aryaverth Chawal Udyog (supra) wherein this Court after holding that the circular is valid, has set aside the notice under Section 21 of the Act as it opined that it was issued on account of change of opinion on the basis of material available on record. Reference was made to para-59 of the judgment, which is repro....
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....ate lower than at which it is assessable under this Act, or (v) any deductions orexemptions have been wrongly allowed in respect thereof. (vi) the Assessing Authority may issue notice ...................... On a plain and simple reading of Section 21, it is crystal clear that any deduction or exemption which has been wrongly allowed in the case of an assessee is a case of escape assessment. Rider is that such Assessing Authority should have reason to believe that whole or part of turnover has escaped assessment. The condition precedent, namely, the formation of opinion on the part of Assessing Authority that there is reason to believe that the case in which the action is contemplated falls within the ambit of at least one of the several contingencies mentioned under Section 21. The reason to believe must have rational connection or life linked between the material coming in possession of Assessing Authority and the escapement of turnover of the assessee from assessment in a particular year. To put it differently, the Assessing Authority must form opinion objectionably on reasonable ground that the turnover has escaped assessment. [See: Kalpana Kala Kendra v. S.T.O. (1989) 75 STC....
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....ection 15(c) of the Central Sales Tax Act. The said order is bereft of any discussion with regard to the ambit and scope of Section 15(c) of the Central Sales Tax Act. In Rawalpindi Flour Mills versus State of U.P. & others, 1998 UPTC 192, a Division Bench of this Court has held as follows: "The validity of the notice under Section 21 depends on the question whether the petitioner had been allowed the exemption in the original assessment proceedings on a wrong premise to which it was not entitled under law. This question and the other related matters on which the petitioner may like to assail reassessment proceedings can legitimately be raised and canvassed before the assessing authority itself. If for some reason the decision goes against the petitioner, there is adequate forum provided under the Act where the aggrieved person can seek redressal of his grievances." (Emphasis supplied) Viewed as above, it is a case where the Assessing Authority has wrongly allowed deduction of tax paid on purchase of paddy while computing the payment of sales tax liability of central sales tax. The assessment order would show that the Assessing Officer did not satisfactorily deal with the point....