TaxTMI 
TaxTMI 
2014 (11) TMI 80
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....nd bullion, is a registered dealer under the U.P. Trade Tax Act as also under the U.P. VAT Act. In exercise of powers conferred under section 7-D of the U.P. Trade Tax Act, the State of U.P. on 8th of August, 2005 issued a compounding scheme no. Vidhi-1(3)- Sarafa-Sama.Yo.2005-2006-977/Vyapar Kar under Section 7D of the U.P. Trade Tax Act enabling a dealer to pay an ascertained amount in lieu of tax. On 17th of September, 2005 the Commissioner of Trade Tax issued an amendment to the said scheme which is not very relevant for the purposes of the present writ petition. 3. Under the said compounding scheme dated 8th of August, 2005, it was provided that a dealer opting the scheme would pay a lump-sum amount in lieu of tax. The relevant terms and conditions of the scheme will be noted in the later part of the judgment. Suffice it to say that the petitioner indisputably opted the payment of tax under the aforesaid Copy Right: P and M Technologies: Email.: [email protected] composition scheme and deposited the prescribed amounts on various dates such as on 13th September, 2005, 14th September, 2005, 8th December, 2005 and 10th of January, 2006 in pursuance of his application dated 2....
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.... petitioner as the entire amount which was payable under the compounding scheme in lieu of tax stood paid as per and/or under the scheme. 8. Heard Sri Rahul Agrawal, learned counsel for the petitioner and Sri C.B. Tripathi, special standing counsel for the respondents. 9. Considered the respective submissions of the learned counsel for the parties and perused the record. 10. Section 3 of the U.P. Trade Tax Act is the charging section and it provides that every dealer shall, for each assessment year pay a tax at the rates provided for or under section 3-A or section 3-D on his turnover of sale or purchase of goods or declared goods, as the case may be, which shall be determined in such a manner as may be prescribed. Section- 7 of the Act deals with the determination of turnover and assessment of tax. It requires every dealer who is liable to pay tax to submit return of his turnover at the prescribed interval and shall deposit the tax along with return or before the amount of tax due on the turnover shown in such return. Section-8 provides that the admitted tax shall be deposited within the prescribed time failing which the dealer shall pay simple interest at the rate of 2 p....
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....der the scheme. The said clause-10 is reproduced below:- 13. The other relevant fact of the case is that the Commissioner of Trade Tax by his letter dated 14th of May, 2008 informed its officials about the cancellation of the aforesaid composition scheme dated 5th of August, 2005 on the ground that the applicants were very less in comparison to the expected number of thirty thousand dealers who opted for the scheme and the State Government after consideration of the matter through its letter dated 1st of May, 2008 has annulled the composition scheme dated 5th of August, 2005 by providing that the said scheme is no more effective and is cancelled. 14. The case of the petitioner is that thereafter, the petitioner deposited the balance amount of admitted tax through challan dated 5th of August, 2008 for Rs. 8,90,000/-. The Assessing Copy Right: P and M Technologies: Email.: [email protected] Officer of the petitioner on 3rd of September, 2008 has issued the impugned notice/order directing the petitioner to pay the interest thereon as the said amount of Rs. 8,90,000/- deposited on 5th of August, 2008 represents the admitted tax as envisaged under section 8(1) of the Act. The sa....
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....Government and as such the petitioner cannot claim any advantage thereunder? 19. Taking the first point first, it may be noted that so far as the factual aspect of the case is concerned, there is practically no dispute between the parties. The impugned order would show that liability to interest has been fastened having regard to Section 8(1) of the Act. The dispute centres round the meaning of phrase "the tax admittedly payable" used in the Explanation to section 8(1). Explanation to section 8(1) defines the tax admittedly payable. The said Explanation is reproduced below:- "Explanation:- For the purpose of this sub-section, the tax admittedly payable means the tax which is payable under this Act on the turnover of sales or, as the case may be, turnover of purchases, or of both, as disclosed in the accounts mentioned by the dealer or admitted by him in any return or proceeding under this Act, whichever is greater, or, if no accounts are maintained, then accordance to the estimate of the dealer [and includes the amount payable 2[under Section 3-B or sub-section (6) of Section 4-B.]" 20. Although it is not mentioned in so many words that the petitioner ha....
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....e arose as to whether the dealer is liable to pay interest on the tax amount payable on freight. It was submitted that if at a later date on the basis of a different interpretation put on the language of relevant provisions of law, the dealer becomes liable to pay tax in respect of that already paid, he may be called upon to make good the difference but he cannot be visited by penalty under section 7- AA or the interest. In that connection, the Apex Court interpreted the expressions "tax payable" and "payable". It has been held that the expression "tax payable" is the full amount of tax due and 'tax due' is that the amount which becomes due ex-hypothesises on the turnover and taxable turnover shown in or based in the return. The word "payable" is a descriptive word which means "that which must be paid or is due or may be paid." Emphasis has been laid that its correct meaning can only be determined if the context in which it is used is kept in view. For the sake of convenience paragraph-17 which is relevant for our purposes is reproduced below:- "17. Let us look at the question from a slightly different angle. Section 7(1) enjoins on every dealer that h....
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....he section to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." 24. It has been laid down in the context of Rajasthan Sales Tax Act that 'tax payable' would not mean as "tax is not paid" to visit upon him the liability to pay interest under the statutory provision. Similar provisions for filing the monthly or quarterly returns of turnover and deposit of tax on the basis of those returns are there in the U.P. Trade Tax Act also. Section 7 of the Act casts an obligation on every dealer to file return of turnover and deposit of tax on the basis of such return. Rule-41 of the Rules framed under the Act has laid down the procedure for submission of return and assessment of tax. It also contains Explanation-I which is similarly worded to Explanation to section 8(1). For the sake of convenience the said Explanation is reproduced below:- "Explanation I:-" "Admitted tax liability" means the tax which is payable under this Act on the turnover or, as the case may be, the turnover of purchases or both,....
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.... the monthly return filed by him and levy of interest was held unjustified. Para-9 is the relevant paragraph which is reproduced below:- "The question then arises whether interest under Section 24(3) can be charged on the clause 5-A price or on the advance and if so, from what date. As has been noted hereinabove, the price fixed under clause 5-A can only be decided on the basis of a formula set out hereinabove. It therefore cannot be decided at least till the end of the sugar year. In practice it is however decided much later. As the price would be unknown, neither the assessee could predict what the price would be nor could the assessing officer, even on the basis of his best judgment, predict what that price would be. Therefore till the price under clause 5-A is fixed there would be no question of an assessee including it in the monthly returns filed by him. A monthly return filed not showing the price fixed under clause 5-A would neither be incorrect nor incomplete. It is only after the price under clause 5-A is fixed that the assessee would be required to file a revised return showing the price fixed under clause 5-A as part of turnover... ." 27. The Co....
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....reshi Cruchible Center, AIR 1994 SC 25, and Pepsico Co. Ltd. vs. Commissioner of Trade Tax, U. P. Lucknow, [2011] 45 NTN DX 275; (2011) 40 VST 220 to support the stand of the department. These two cases are under the U.P. Trade Tax Act, therefore, require consideration in depth. In the case of Qureshi Cruchible Center (supra), the dealer did not dispute the rate of tax applicable to the commodity with which he was dealing. The commodity fell under the category of nonspecified goods and the rate of tax was enhanced even prior to two years of the relevant assessment year but in the return, the tax was deposited at the old rate which was lesser. In this fact situation, the Apex Court held that it was a case where the dealer calculated the tax at an inapplicable rate and therefore, was liable to pay the interest. The question of bonafide or malafide was not at all germane. The ratio laid down therein has no application to the facts of the case on hand as the factual matrix therein was quite distinct and different. The said decision has been followed by the Apex Court in a subsequent decision in the case of Pepsico Co. Ltd. (supra). In the latter case, the dealer disputed its liability ....
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.... the differential amount. 32. Now, we take up the point no.2. 33. The learned standing counsel for the department referred various clauses of the scheme to impress upon the Court that the said scheme never became effective. The relevant clauses are produced below:- 34. Emphasis was laid on condition No. Tha and Ta thereof. At first flash, the argument of the learned standing counsel appears to be attractive but on deeper scrutiny we find that they have no merit. A perusal of the scheme would show that it provides a time frame within which a dealer has to opt for the scheme and deposit the amount in lieu of tax as per the time table given in the scheme. Fifty per cent of the estimated amount is required to be deposited along with an application opting for the scheme and the remaining 50% in five equal instalments. 04th of November, 2005 appears to be cut off date fixed in the scheme. It provides that if 30000 dealers do not opt for scheme and/or the requisite amount is not received within that period, the State Government may discontinue the scheme. There appears to be no dispute with regard to the aforesaid terms of the scheme but the fact remains that the scheme does not ....
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.... scheme is totally attributable to the State Government. It may be true, as was submitted by the learned standing counsel that the scheme was still born but it is an accomplished fact that the scheme was floated like other schemes in the exercise of powers under section 7-D of the Act and unfortunately, the response to the present scheme was lukewarm. The State Government was required to evaluate the response of the scheme from time to time but it failed to do so. The petitioner is not asking either for continuance of the scheme or his liability to pay the tax at the normal rate. The only dispute raised is with regard to its liability for payment of interest amount for no fault of his. 36. In view of the fact that the State Government failed to adhere the cut off date and to review the scheme periodically, which resulted such lapse of time solely on account of inaction at the end of the State Government, the petitioner who has changed his position by opting the scheme cannot be asked to pay the interest on the differential amount even if the scheme is held to be still born. There can hardly be any dispute with the right of the State Government either to withdraw any such scheme ....