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2019 (7) TMI 1240 - HC - VAT and Sales TaxCompounding benefits - Section 7-D of the U.P. Trade Tax Act, 1948 - Whether in face of the entire tax liability of the assessee having been compounded and in absence of any material to establish sale of coal, the Assessing Officer could impose any tax liability on the assessee on the presumed sale of coal? HELD THAT:- Under Section 7-D of the Act, the alternative method of assessment of tax liability by way of composition is subject to the direction of the State Government. As to the directions that are applicable to the present case, clearly under Clause (1) of the composition scheme dated 08.03.2001 as circulated by communication dated 12.03.2001 issued by the Commissioner of the Trade Tax, U.P., the State Government had issued directions for composition of the entire liability of tax on purchase of bricks, tiles etc., manufactured in the brick kiln and also the entire liability of tax that may have otherwise existed on the purchase of sand, coal, wood and sawdust. It appears that the Assessing Authority had compounded the entire liability of tax on the purchase of entire quantities of coal without any stipulation of limitation as to the quantities which are required for running the brick kiln of the capacity disclosed by the assessee. The order under Section 7-D of the Act and composition of tax liability thereunder is in the nature of an alternative to regular assessment - Also, once accepted, it creates a binding contract between the assessee and the revenue. Therefore, the revenue cannot claim contrary to the order under Section 7-D of the Act. What remains to be considered is whether there was any material to draw an inference of sale of coal made by the assessee outside its books of accounts during A.Y. 2002-03. In this regard, a perusal of the three orders, in this case reveal, other than the circular of the Commissioner dated 19.04.1993, there is no material, whatsoever, to infer that the assessee had engaged in an activity of trading in coal. Thus, there is no evidence that the assessee violated the terms of the composition scheme - thus there is a complete absence of any evidence or material to reach a conclusion that the assessee had engaged in trading in coal and he was liable to tax on such quantities of coal sold by him. The question of law, framed above, is answered in negative i.e. in favour of the applicants-assessee and against the revenue - revision allowed.
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