TMI Blog1964 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1957-58. This petition came on for hearing before our brother Manchanda, J., who, being of the opinion that it raised questions of importance, referred the case to a larger Bench. Section 7-E was inserted in the U.P. Sales Tax Act by the U.P. Sales Tax (Third Amendment) Act, 1957 (published in the U.P. Gazette dated 28th January, 1958), with effect from 14th December, 1957. It provides: "7-E. (1) Notwithstanding anything to the contrary in this Act, the assessing authority may in respect of such goods or classes of goods as may be notified by the State Government in this behalf, permit a dealer to pay in lieu of the tax payable by him under the Act on his turnover of such goods during an assessment year or a portion thereof, a lump sum by way of composition subject to such conditions as may be notified in this behalf. (2) Where a notification under sub-section (1) of this section is issued, the State Government shall also notify the manner in which the amount by way of composition shall be determined and the manner in which it shall be paid." The State Government issued a Notification No. St. 349/X dated 28th January, 1958, stating that in respect of certain goods a dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers on account of certain circumstances to ascertain the true burden of tax liability within that period and therefore to determine whether they should opt for payment by way of composition and (4) upon a true interpretation of the provisions of section 7-E, the petitioner was entitled to apply for permission to pay the composition amount even after an assessment order for that period had been made. Consideration of the last contention would, it seems to us, clear the ground for dealing with the remaining contentions, and we are therefore disposed to examining this last contention first. Section 7-E provides for permission to a dealer to pay a sum by way of composition in lieu of "the tax payable by him under the Act on his turnover......." Now tax is payable on his turnover by a dealer under the U.P. Sales Tax Act by virtue of section 3, which declares: "Subject to the provisions of this Act, every dealer shall for each assessment year, pay a tax at the rate of two naye Paise per rupee on his turnover of such year..........." The liability to pay tax is created by section 3. The incidence of tax may be confined to a single point and the rate may be enhanced by a notification under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately." These decisions were followed by the Federal Court in Chatturam and Others v. Commissioner of Income-tax [1947] 15 I.T.R. 302. That the liability to tax arises by virtue of the charging section alone was stated by Lord Uthwatt, delivering the judgment of the Judicial Committee, in Wallace Brothers Co., Ltd. v. Commissioner of Income-tax [1948] 16 I.T.R. 240; 75 I.A. 86,97. in a case arising upon the provisions of the Indian Incometax Act, 1922. This dictum has been re-affirmed by the Supreme Court in Kalwa Devadattam v. Union of India [1963] 49 I.T.R. 165. From the language of section 7-E, it is plain that permission granted under that section to pay a sum by way of composition negatives the liability to pay tax under the Act which is created by the charging section. The argument for the petitioner is that the words in section 7-E, "the tax payable............under the Act", must refer to the tax as actually assessed. Reliance is placed upon In re Recols (India) Ltd. [1953] 4 S.T.C. 271. and Re Pratt: Ex parte: Inland Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly empowers the State Government to notify the manner in which the amount by way of composition shall be determined and the manner in which it shall be paid. The manner in which the amount shall be determined includes the procedure in accordance with which the amount must be computed and this procedure would include the making of an application within a specified period. Who shall determine the amount, the procedure for arriving at that determination and the principles upon which the amount would be determined are all matter left to the State Government. Section 7-E provides for the grant of permission to a dealer to pay an amount by was of composition. It is an alternative to the charging provisions of the Act. The permission must be sought by the dealer, as section 7-E is intended to be for the benefit of the dealer. Upon the omission of the dealer to invoke the provisions of section 7-E the Sales Tax Officer would be fully entitled to proceed to apply the charging provisions and to make an assessment consequent thereto. The option exercised by the dealer must be conveyed to the Sales Tax Officer and that, the notification declares, must be by an application. It is only if an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on hand-made bidis, and that therefore the sale of hand-made bidis was not exempt from the operation of the U.P. Sales Tax Act. It is said that this was another circumstance contributing to the uncertainty which could reasonably be said to have prevented a dealer from deciding whether or not to seek the benefit of section 7-E. It is urged that by the time the uncertainty was resolved by the decisions of the Supreme Court the period in the notification of 28th January, 1958, for applying for permission under section 7-E had already expired, and that therefore the period specified in the notification was arbitrary and unreasonable. We have no hesitation in rejecting this contention. It is true that the notification, as finally amended, required the making of the application by 15th April, 1958, but, as we have noticed above, it also included a provision empowering the Sales Tax Commissioner, or an officer authorised by him in this behalf, to extend the period beyond this date. If the petitioner had applied for extension of the period because of the peculiar circumstances to which he has adverted, we cannot presume that his prayer would not have been granted. A discretion to enla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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