TaxTMI 
TaxTMI 
2006 (1) TMI 554
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....eferred to as "the Act"), he could not be permitted to turn around and contend that he was not liable to pay the amount, agreed to be paid by him, because his turnover turned out to be either nil or that it was not adequate on account of various factors, a division Bench had referred the matter to be considered by a larger Bench of this court. The Full Bench has, therefore, been constituted to reconsider the correctness of the aforesaid judgments rendered by the division Bench. 2. While referring the matter for reconsideration by the larger Bench, the division Bench has expressed its disagreement in the following words: "We have carefully perused the above decisions and we are in respectful disagreement with the same. In the aforesaid decisions it has been held that once the petitioner has opted for composition scheme he has to pay trade tax even if he has not made any sales. In our opinion sales tax (now known as trade tax) is payable when there is a sale. When there is no sale we cannot understand how sales tax (trade tax) can be charged. It may be mentioned that section 7-D mentions that 'assessing authority may agree to accept the composition money e....
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...., M/s. Bhadauria Gram Sewa Sansthan, Fatehpur, it is alleged, took over a brick kiln which was functioning in the name and style of Bhadauria Brick Field, for manufacturing bricks in the name and style of the petitioner. It applied for grant of registration with the Sales Tax Department on February 21, 1993. The Sales Tax Officer, Fatehpur, vide order dated March 21, 1993 registered the petitioner-society as a dealer under the Act with effect from April 1, 1993. The registration was effective for a period of three assessment years, i.e., 1993-94, 1994-95 and 1995-96. The Government of Uttar Pradesh announced a scheme, commonly known as Composition Scheme, under the provisions of section 7-D of the Act under which an option was given to all brick kiln owners to either pay the tax assessed on their actual sales or purchase or to give an option to pay the tax in one lump sum. Under the said Scheme, the brick season was from October 1, 1992 to September 30, 1993. The amount payable by the brick klin owners who have opted under the said Scheme, was known as Samadhan Dhanrashi or the composition amount. It was fixed according to the capacity determined in terms of paya or columns. The pe....
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....in respect of such goods or class of goods and for such period as may be agreed upon: Provided that any change in the rate of tax which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force. Explanation.-For the purposes of this section the assessing authority includes an officer not below the rank of Trade Tax Officer, Grade II, posted at a check-post." Law laid down in the cases referred for reconsideration: Jaya Bhatta Udyog's case [Civil Misc. Writ Petition No. 858 of 1990 decided on July 17, 1990-Allahabad High Court]: 6. In the case of Jaya Bhatta Udyog [Civil Misc. Writ Petition No. 858 of 1990 decided on July 17, 1990-Allahabad High Court], a division Bench of this court has held that section 7-D of the Act is very clear. It enables the dealer to pay the sales tax in lump sum in lieu of the tax. For that purpose, the dealer executes an agreement undertaking to pay the sales tax in lump sum and the liability arising under such agreement is not related to act....
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....its opinion, no trade tax can be demanded or realised from a dealer when he has not made any manufacture or sale. The division Bench had distinguished the decision of the apex court in the case of Venus Castings [2000] 4 JT SC 77, on the ground that the controversy involved therein as to whether once having opted for the composition scheme, a dealer can turn around and ask for a regular assessment, and it was held that he could not whereas, in the present case, the question is whether there can be demand of trade tax when there is no production or sale at all. 10. We have heard Sri Navin Sinha, learned Senior Counsel, assisted by Sri R. K. S. Chauhan, on behalf of the petitioner, Sri S. M. A. Qazmi, learned Chief Standing Counsel, assisted by Sri K.M. Sahai and Sri S. P. Kesarwani, learned Standing Counsel, appearing for the respondents. Rival submissions: 11. Sri Navin Sinha, learned Senior Counsel, has submitted that, under section 7-D of the Act, the amount to be paid is in lieu of the amount of tax that may be payable by a dealer in respect of such goods or class of goods and for such period, as may be agreed upon. Laying emphasis on the words "in lieu of", he s....
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....whatsoever. He further submitted that a writ petition is not an appropriate remedy for impeaching contractual obligation and it is not open to the petitioner to get over a contract by challenging some of the clauses of the contract as the petitioner had made the application with open eyes. 14. He further submitted that the method of taxation provided by section 7-D of the Act is optional and the person who has opted the said alternate method of taxation, cannot be permitted to complain against the said provision. According to him, where two alternate procedures have been made available and an assessee has opted for one, it cannot claim the benefit for the other. According to Sri Qazmi, once the petitioner had voluntarily made the application for payment of a lump sum amount in lieu of tax payable by it, it cannot resile or seek remission either in full or in particular or deny its liability for payment of the amount on any ground whatsoever, including the plea of non-production or no sale during the brick season. He, therefore, submitted that this court in the case of Jaya Bhatta Udyog [Civil Misc. W. P. No. 858 of 1990 decided on July 17, 1990] which has been reiterated subsequ....
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.... 17. In the case of Hindustan Construction Co. Ltd. [1965] 2 SCR 41 ; [1965] 56 ITR 241, the apex Court has referred to the meaning ascribed to the expression "in lieu of" in the case of Stubbs v. Director of Public Prosecutions [1890] 24 QBD 577, wherein it was held that where a liability has to be discharged by A in lieu of B, there must be a binding obligation on B to do it, before A can be charged with it. Considering the provision of section 49E of the Indian Income-tax Act, 1922, which provided for set-off of the amount to be refunded in lieu of the payment of refund, the apex court has held that the expression "in lieu of" connotes that the payment is outstanding, i.e., there is a subsisting obligation on the Income-tax Officer to pay and if a claim of refund is barred by a final order, it cannot be said that there is a subsisting obligation to make the payment. 18. In the case of Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353 (SC) ; AIR 1958 SC 560, the apex Court has held that the expression "sale of goods" in entry 48 is a nomen juris, the essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that....
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....f tax, just as the system of levy of entertainment tax on the gross collection capacity of the cinema theatre and by opting to this alternate method, the contractor saves himself the botheration of book-keeping, assessment, appeals and all that it means. It has also held that it is not necessary to enquire and determine the extent or value of goods which have been transferred in the course of execution of a works contract, the rate applicable to them and so on. It is only an alternative method of ascertaining the tax payable which may be availed of by a contractor if he thinks it advantageous to him. The Constitution does not preclude the Legislature from evolving such alternate, simplified and hasslefree method of assessment of tax payable, making it optional for the assessee. 22. Similar view has been taken by the apex court in the case of Mycon Construction Ltd. [2002] 127 STC 105 (SC) ; [2002] UPTC 585 (SC). The apex court has repelled the submission that while evolving a simplified method of payment of tax, such is the case in the instant case, the law cannot give an option to the assessee which is in the teeth of constitutional provision. It has held that this argument doe....
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....amed thereunder, has held that the said Act and the Rules do not contemplate exemption from the liability for payment of tax by the owner of a unit who has opted for the assumed basis merely because he has, either by choice or on account of some mechanical defect, been unable to work some of the crushers composing his unit for any length of time during a particular assessment year. 27. The decisions of this court in the cases of Jaya Bhatta Udyog [Civil Misc. W. P. No. 858 of 1990 decided on July 17, 1990], Sri Durga Brick Field [1991] UPTC 510 and Jai Sharma Int. Udyog [1999] 116 STC 357 (All), relied upon by the State-respondent, have already been dealt with under the heading law laid down in the cases referred for reconsideration and are not being discussed again. 28. In the case of Ahmedabad Urban Development Authority AIR 1992 SC 2038, the apex court has held that in the absence of an express provision, a delegated authority cannot impose tax or fee and the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental or ancilla....
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....n. In other words, the department as well as the dealer both know the amount payable and receivable by each other. The determination of lump sum amount in lieu of tax displaces the requirement of regular assessment proceedings and the quantification of tax liability is by agreement as per the term of the scheme which would bind both the parties. The object of introducing such a scheme under a taxing statute is well established as so many advantages are attached to such scheme besides being hassle-free to the dealer. It also avoids unnecessary litigation. The department in its turn receives a fixed amount of tax without undertaking the assessment work and, thus, saves a lot of time. It also facilitates the speedy recovery of tax. 31. In the case of Venkateswara Theatre v. State of Andhra Pradesh [1995] 96 STC 130 (SC); AIR 1993 SC 1947, the apex court while considering the scheme announced by the Government of Andhra Pradesh, providing that instead of payment of entertainment tax on the basis of actual number of cinema goers, the proprietor of a cinema hall may opt to pay a consolidated levy on the basis of gross collection capacity per show, has held that the compound payment of....