Food Corporation of India vs Commissioner of Commercial Tax, U.P., Lucknow and Others

Dr. Satish Chandra, J.—By both the writ petitions, the petitioner has assailed the approval orders dated March 18, 2011 and May 5, 2011 whereby the competent authority has allowed the initiation of reassessment proceedings for the assessment year 2004-05 (State and Central). Brief facts of the case are that the petitioner is a registered dealer under the U.P. Trade Tax Act, 1948 as well as under the Central Sales Tax Act, 1956. For the assessment year under consideration, the assessment was made on March 23, 2007 and exemption was allowed. Further, vide order dated July 10, 2009 an order u/s 22 of the Act was passed and the exemption was disallowed. Being aggrieved, the petitioner filed the appeals before the first appellate authority on August 11, 2009. The same were dismissed. The petitioner filed second appeals before the Tribunal which were also dismissed on August 26, 2010. Not being satisfied, the petitioner has filed T.T.R. Nos. 288 and 289 of 2010 before this court, whereupon the order passed by the Tribunal was set aside.

On March 8, 2011, the Department has issued notice for approval under sub-section (2) of section 21 of the Act for initiating reassessment proceedings. The petitioner preferred two writ petitions bearing Nos. 3159 and 3161 of 2011 on March 31, 2011 before this court challenging the approval granted by the Department. This court on April 4, 2011 directed the petitioner to make a fresh representation before opposite party No. 2 within a period of two weeks and the same was to be decided by a speaking and reasoned order. However, on April 13, 2011, assessing authority has completed the reassessment ex parte. On April 15, 2011, the petitioner filed representation before opposite party No. 2 as per direction given by this court on May 5, 2011. The said representation was rejected. Being aggrieved, the petitioner has again filed the present writ petitions.

With this background, Sri Pradeep Agarwal, learned counsel for the petitioner submits that the approval u/s 21(2) of the Act was wrongly granted by opposite party No. 2 as there was no reason to believe for the tax evasion. He further submits that form 3C(1) was issued by the U.P. State Food and Essential Commodities Corporation to the petitioner to establish that the issuing dealer accept the liability of tax on the purchase or sale of goods under rule 12B of the Act. According to him, the foodgrain so purchased is delivered by the U.P. State Food and Essential Commodities Corporation to the petitioner towards their contribution to the national pool, since the quantum of tax is reimbursed by the petitioner to the U.P. State Food and Essential Commodities Corporation, thus neither the proceedings u/s 22, nor u/s 21 of the Act could be initiated. At best, the order could have been revised u/s 10B of the Act by the revising authority. He also submits that for the purpose of initiating proceedings u/s 21 of the Act, it is incumbent upon the opposite parties to have a "reason to believe" that any part of the turnover has escaped assessment or has been under-assessed. According to him, the proceedings u/s 21 of the Act could not be initiated for correcting the mistake committed by the assessing authority, if any, during the course of assessment proceeding. Its legality and propriety can be examined by opposite party No. 1 u/s 10B of the Act. He also argued that the proceedings u/s 21 cannot be initiated before the period of limitation for initiation of proceedings u/s 10B has expired. For the purpose, he relied on the ratio laid down in the following cases :

Ganga Saran and Sons P. Ltd. Vs. Income Tax Officer and Others, ; and

Super Chemicals Agra & Apollo Tyres Ltd. v. Commissioner, Trade Tax [2010] NTN 42 (All).

On the other hand, Sri H.P. Srivasta, learned Additional, Standing Counsel, justified the order passed by the authorities on March 1, 2011 whereby the representation of the petitioner dated May 5, 2011 was rejected by the authority. He further submits that in the instant case, no proceeding can be initiated u/s 10B of the Act for the reasons as the period of four years has already expired. So, the authorities concerned have rightly initiated the proceedings u/s 21 of the Trade Tax Act. For this purpose, he relied on the ratio laid down in the following cases :

Kalpana Kala Kendra v. Sales Tax Officer, Circle 20, Kanpur [1989] 75 STC 198 (All); [1989] UPTC 597 (All).

Shyam Babu Vaishya and Co. and Another Vs. Assistant Commissioner, Trade Tax and Others, .

We have heard the counsel of parties and gone through the material available on record including written submissions. From the record, it appears that the Additional Commissioner, Grade I passed the impugned order dated May 5, 2011 and rejected the representation made by the petitioner after providing the reasonable opportunity as per the direction of this court. In the impugned order, it was mentioned that the assessee has not given any written or oral submission. It was stated in the impugned. order that the petitioner will have no objection if the reassessment proceedings starts u/s 21 of the Act. It was also stated that proceedings u/s 22 should be replaced u/s 21.

In view of above and also the peculiar circumstances of the case, we are not inclined to exercise our extraordinary jurisdiction under article 226 of the Constitution when the petitioner has got ample opportunity to defend his case before the first appellate authority. However, no appeal has yet been filed as we were told during the course of arguments. So, we allow the petitioner to file appeals before the appellate authority within a period of four weeks and if such appeals being filed, the concerned authority will decide the same expeditiously preferably within six months thereafter as per law without raising question of limitation. In the light of the above direction, both the writ petitions are disposed of accordingly.