2009 (8) TMI 1230

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....roceeding for completing reassessment proceeding under section 21 of the U.P.Trade Tax Act for the assessment year 1999- 2000 (U.P/ Central) (iii) Any other and further writ, order or directions which this Hon'ble Court may deem fit and proper in the circumstances of the case be also issued in favour of the petitioner." The petitioner of Writ Petition no.604 of 2006 and the petitioner of Writ Petition No.605 of 2006 are hereinafter referred to as petitioner no.1 and petitioner no.2 respectively. 3. The background facts of the case in a nutshell essentially are as follows: 4. The petitioners are a registered dealers under the provisions of U.P.Trade Tax Act (hereinafter referred to as the "Act") as well as under Central Sales Tax Act ( in short "CST Act") and are carrying on the business of purchase and sale of Petroleum oil and petroleum products. The petitioner no.1 is owned by Jagarti Khetan and the petitioner no.2 is owned by his wife Smt. Mukta Khaitan. The assessment order for the assessment year 1999-2000 was passed by the assessing authority under rule 41(8) of U.P.Act and under section 9(2) of CST Act. 5. The petitioner no.1 had disclosed interstate sales of Rs.....

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.....00 3- 0951817 524160.00 4- 0951815 366600.00 5- 0951825 342160.00 6- 0951810 537680.00 7- 0951811 562120.00 8- 0248852 478400.00 9- 0248853 454480.00 10- 0248854 583700.00 11- 0248855 406640.00 12- 0248859 611520.00 13- 0248860 430560.00 14- 0248861 479960.00 15- 0248873 474240.00 16- 0248872 499200.00 17- 0248881 483860.00 18- 0248886 310960.00 19- 0248887 207480.00 20- 0248897 478400.00   (ii) Deputy Commissioner Excise and Taxation, Bhivani vide his letter no.823 dated 02-8-2005 following form- C found unverified:   Form-C Amount 1- 0996530 499200.00 2- 0996535 478400.00 3- 0996536 485940.00 4- 0996540 478400.00 5- 0996546 478400.00 6- 0996549 478400.00 7- 0996550 358800.00 8- 0996325 488800.00 9- 0996324 308256.00   The above Form- C are issued to M/s Mittal Sales Corporation, H.B.Bhivani R.C.No.6530 and not tyo Sai Nath Trader H.B.Bhivani R.C.No.6529 (iii) Deputy Commissioner Excise and Taxation Bhi....

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....nd the CST Act, by the respondent no.3. 10. The petitioners being aggrieved by the said notices have filed the present writ petitions. 11. Learned counsel for the petitioner has submitted that the books of account of the petitioner as well as their versions were accepted by the assessing authority after the proper scrutiny of record including the statutory forms and the assessment order was completed under Rule 41(8) of U.P.Trade Tax Rules and under section 9(2) of CST Act, and disclosed interstate sale which was covered by Form-C,was assessed @ 4%. The Form-C was issued by the purchasers of other States to whom sale during interstate sale was affected and at the time of assessment no defect or discrepancy in them was pointed out. It is further submitted that there was no material or reasons to believe that any turnover has escaped assessment under the Act and It is further contended that onus which lay upon the petitioner, has been discharged by submitting genuine Form-C in respect of interstate sale. It is the department to prove beyond doubt that the exemption allowed in the assessment year, was wrong. It is also submitted that the proceeding under section 21 have been ill....

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....letters to whom actually Form-C were issued. It also discussed the details of those firms whose registrations under the Sales Tax Act were cancelled even prior to the issuance of form- C by the purchasing dealers to the petitioner. The amount involved in the present matter is very huge amounting to several crores of rupees .It is evident from the aforesaid facts that concessional rate of tax was wrongly allowed to the petitioner and consequently the proceedings under section 21 of the Act were initiated and the impugned notices dated 24-2-2006 have been issued after seeking permission from respondent no.2. Before granting permission to respondent no.3 for initiating proceeding under section 21 of the Act, proper opportunity was given to the petitioner and the impugned orders have been passed after considering their reply and their submissions. Therefore, it cannot be said that the respondent no.2 has not considered the submissions of the petitioner and the impugned order has been passed without application of mind. 16. Provisions of Section 8(1) and Section 8(4) of the CST Act and Rule 12(8)(c)(1a) of the Rules clearly indicate that the dealer may be entitled to benefit of conce....

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....s follows: "9- The controversy between the parties has centered on the point as to whether the assessing authority in the present case had reason to believe that any part of the turnover of the respondent had escaped assessment to tax for the assessment year 12957-58. Question in the circumstances arises as to what is the import of the words " reason to believe, as used in the section. In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in the section. To put it differently, if there are, in fact, some reasonable grounds for the assessing authority to believe that the whole or any part of the turnover of a dealer has escaped assessment, it can take action under the section. Reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above s....