TMI Blog2010 (12) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of reading down the provision in the manner suggested by him. It has to be read as such and nothing can be added and nothing can be substracted from it. Appeal dismissed. - Civil misc. Writ petition No. 1791 (Tax) of 2004 - - - Dated:- 16-12-2010 - Rajes Kumar And Bharati Sapru, JJ. ORDER (Delivered by Hon'ble Rajes Kumar, J.) In the aforesaid writ petitions, the petitioners have challenged the validity of Rules 12A(5), 12B(4), 12C(3) and 25B(3) of the U.P. Trade Tax Rules (called the 'Rules' for short) as amended by the U.P. Trade Tax (Amendment) Rules, 2001and further seeking a direction in the nature of mandamus reading down the aforesaid Rules insofar as it provides that the forms issued in particular financial year shall be valid for the transactions of purchase and sale made during two financial years immediately preceding to that year, as not applicable to the transactions of sale or purchase which are not disputed by the Department. All the aforesaid amended Rules provide that the form issued by the Trade Tax Officer in a financial year shall be valid for the transactions of purchase or sale made during that financial year as also made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority initiated assessment proceeding and passed the ex parte order on 24.3.2004, which was re-opened under Section 30 of the Act. Before the assessing authority the petitioner submitted few forms 3-B dated 6.5.2004 along with the certificate dated 6.5.2004, issued by the assessing authority of M/s. Modi Rubber Ltd., certifying that the turnover of M/s. Modi Rubber Ltd. was more than ₹ 25 crores. The assessing authority has rejected such forms 3-B and denied the benefit of concessional rate of tax, vide its order dated 11.11.2004. The forms have been rejected on the ground that the said forms were issued by the Department on 1.3.2004, which are not admissible in view of the amended Rule 25-B. Heard Sri Bharat Ji Agrawal, Senior Advocate, assisted by S/Sri Nishant Mishra, Shubam Agarwal, S.D. Singh, Piyush Agrawal, Rakesh Ranjan Agrawal, Suyash Agrawal, Kunwar Saksena, Gaurav Mahajan, Rishi Raj Kapoor and D.K. Gandhi for the petitioner, and Sri S.P. Kesarwani, learned Additional Chief Standing Counsel, appearing on behalf of the respondents. Learned counsel for the petitioner submitted as follows :- (i) Under Section 4-B of the Act the manufacturer is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that in the case of K.B. Hides v. State of U.P. others reported in 2004 UPTC 292 the Division Bench has taken the note that there was no specific allegation in the writ petition that the petitioner applied to the issuing authority for the forms and the same were not issued to the petitioner and in the absence of any such allegation the petitioner cannot be said to have any grievance at all and the cases can not be decided on hypothetical basis but on concrete evidence. While, in the present case, the petitioner is able to show that despite effort being made by the purchasing dealer the forms could not be issued by the Department. In support of the above submissions, learned counsel for the petitioner relied upon the following decisions : 1. The Cochin State Power and Light Corporation Ltd. v. The State of Kerala reported in AIR 1965 SC 1688. 2. Supdt. Of Taxes, Dhubri v. M/s. Onkarmal Nathmal Trust reported in 1976 (1) SCC 766. 3. Land Acquisition Officer v. M/s. B.V. Reddy reported in AIR 2002 SC 1045. 4. Eicher Motors Ltd. v. Union of India reported in 1996 (106) ELT 3. 5. Collector of Central Excise v. Vazir Sultan Tobacco Co. Ltd. reported in 1996 (83) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to check the misuse of the forms and the evasion of the tax. Sufficient time has been provided in the rule to obtain the forms from the respective parties. Even six months' time has been allowed, after commencement of the amended rule, to furnish the forms. Therefore, the rule cannot be said to be arbitrary and unreasonable. DETERMINATION Rules 12-A, 12-B, 12-C and 25-B of the Rules have been amended by the U.P. Trade Tax (Amendment) Rules, 2001. The amended Rules 12-A, 12-B, 12-C and 25-B of the Rules reads as follows :- 2. Amendment of Rule 12-A. - In Rule 12-A of the Uttar Pradesh Trade Rules, 1948, hereinafter referred as the said rules, for existing sub-rules (5) and (7), the following sub-rules shall be substituted, namely :- (5) If the Trade Tax Officer is satisfied that the requisition of the dealer for blank forms referred to in sub-rule (1) is genuine and reasonable, he may issue the same in such number as he deems fit. If the fee paid is more than the fee payable for the number of forms issued, the balance shall be credited to the account of the dealer to be adjusted against any future issue of the forms. A blank form issued by the Trade Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned therein. (9)No single certificate shall cover the transactions of purchase or sale of more than one assessment year and of value more than Rupees five lakhs. . 4. Amendment of Rule 12-C. - In Rule 12-C of the said rules for existing sub-rules (3), the following sub-rule shall be substituted, namely. - (3) Each certificate or declaration referred to in sub-rule (1) shall have printed serial number. No single certificate or declaration shall cover the transactions of purchase or sale of more than one assessment year and of value exceeding Rupees five lakh. A form issued by the Trade Tax Officer in a financial year shall be valid for the transactions of purchase or sale made during that financial year as also made during two financial years immediately preceding that financial year : Provided that the form issued by the Trade Tax Officer before the commencement of the Uttar Pradesh Trade Tax (Amendment) Rules, 2001, shall also be valid for transactions of purchase or sale made during the financial year 2001-2002 or any other financial year before such commencement : Provided further that the form issued by the Trade Tax Officer within six months after such commen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... almost all the submissions made in the present petitions have been considered. The relevant paragraphs of the judgment are being referred herein below: 15. It is alleged in paragraph 39 of the writ petition that during the assessment year in question certain buyers had represented to the petitioner on the strength of their recognition certificates that they were entitled to purchase leather from the petitioner at a concessional rate or at a rate exempt from tax. These purchasers had also represented at the relevant time that Form 3-B were not available with them and would be furnished to the petitioner as soon as they were made available to them by the authority concerned. It is alleged in paragraph 40 of the petition that in such cases the petitioner has asked the purchasing dealers to produce before it only the recognition certificate, and the purchasing dealers produced the recognition certificate in original. The petitioner was hence satisfied that the purchasing dealer were entitled to make purchases at concessional rate or rate exempt from tax. The petitioner was informed by the purchasing dealer that Form 3-B was not available with him and his application for issuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion there is nothing unreasonable or arbitrary if the validity of a form is fixed for a certain period because if a form is made valid for an indefinite period it may become liable to be misused since after a lapse of a long time the related transaction cannot be verified. In our opinion the impugned amendment to the rules only imposes reasonable restrictions to avoid misuse of the form and tax evasion. 42. We see no illegality in the impugned rules as in our opinion they have been made with the object of preventing tax evasion. The right to do business in Article 19(1)(g) is subject to reasonable restrictions vide Hathisingh Mfg. Co. Ltd. v. Union of India, A.I.R. 1960 SC 923 and in our opinion the restrictions imposed by the impugned rules are clearly reasonable as they aim at preventing tax evasion. No Government can run without taxes. As held by the Supreme Court in Asst. Collector of Central Excise v. Dunlop India Ltd., the Government cannot run on bank guarantees. 44. We cannot accept the submission of the learned Counsel for the petitioner that the amended rules are in any way violative of Article 14 or 19 (1) (g) of the Constitution. As observed by the celebrated J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .I.R. 1965 SC1358; Banarasi Debi v. Income Tax Officer, A.I.R. 1964 SC 1742; Agra City Real Estate Development Organization v. State of U.P., 2003 (3) U.P.L.B.E.C. 2201, etc. As is said Dura lex sed led which means the law is hard, but it is the law. 59. It is well settled that a statutory rule cannot be said to be unreasonable merely because in a given case it operates harshly vide State of Gujarat v. Shantilal, A.I.R. 1969 SC 634 (vide paragraph 52). 60. In Srinivasa Enterprises v. Union of India, (1980) 4 S.C.C. 507 the Supreme Court observed (vide paragraph 13): When a general evil is sought to be suppressed some martyrs may have to suffer for the Legislature cannot easily make meticulous exception and has to proceed on board categorization not singular individualizations. 61. Hence even if some dealers suffer by the impugned rules that would not make the rules invalid. We see no illegality in the impugned amendment to the Rules or in the impugned order dated 14th August, 2002 (Annexure-4 to the writ petition). 64. In R.K. Garg v. Union of India, (1981) 4 S.C.C. 675 (690) a Constitution Bench of the Supreme Court observed: Another rule of equal importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel of experts by its own views. 70. In our opinion there should be judicial restraint in fiscal and economic regulatory measures. The State should not be hampered by the Court in such measures unless they are clearly illegal or unconstitutional. All administrative decisions in the economic and social spheres are essentially ad hoc and experimental. Since economic matters are extremely complicated, this inevitably entails special treatment for distinct social phenomena. The State must therefore be left with wide latitude in devising ways and means of imposing fiscal regulatory measures, and the Court should not, unless compelled by the Statute or by the Constitution, encroach into this field. So far as the submission of learned counsel for the petitioner that the Division Bench had taken the note that there was no specific allegation in the writ petition that the petitioner applied to the issuing authority for the forms and the same were not issued to the petitioner and in the absence of any such allegation, the petitioner cannot be said to have any grievance at all. While, in the present case the petitioner established that the form could not be issued by the Department de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the Act they are precluded from charging sales tax from other registered dealers since such a demand would invite prosecution under the Act. 9. Learned counsel also argued that they are in a helpless position and would be compelled to incur sales tax liability for events which are not within their control. Mr. Mahna submitted that as per Rule 8(4)(c) tax assessed must be paid as a condition for issuance of forms. The condition to deposit assessed amount of tax is a substantive provision of law going to the root of the right of the dealer to receive forms. The Rule laying down to deposit the assessed amount and therefore it affects the statutory right of the dealer to receive the forms. It was further contended that the impugned rule has been passed beyond the powers conferred under Section 71(2)(b) of the Act and therefore the rule is in excess of the jurisdiction and authority of law and as such is liable to be quashed. It was also urged that the Administrator cannot take upon himself the power of the Parliament in making any substantive amendments in the Act or the Rules. 10. This Rule directly affects the vested rights conferred upon the dealers to receive forms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason, the selling dealer is not automatically exonerated from liability. It is their statutory duty to collect tax, since the ST-1 Form is not forthcoming. Likewise, no reason for the State to lose its revenue merely because the purchasing dealer is unable to obtain such forms because of its falling in arrears. It is the dealer, because of its own acts of omission, who has broken the chain whereby tax is arranged and devised by the Department to be collected at a single point only. 30. It is settled law that equity plays only a minuscule role in fiscal matters, even if such considerations were to be applied, there would still be no justification for an application adverse to the interest of the State. The dealer who has chosen to trust the other dealer must suffer for his mercantile recklessness. This is the risk they run and if for any reason, including a subsequent decision of the Sales Tax Department to withhold the supply of ST-1 forms to a purchasing dealer they are put in an uncomfortable position of having to pay the tax and initiate appropriate legal action for recovering it from the purchasing dealer. The state is entitled to its tax, where the requisite ST-1 Form is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter se between the selling and purchasing dealers in the matter of furnishing AR-1 Forms. There is no reason for the consequences of the dealers acts of omission or commission to visit the Department. The Act and the Rules do not prohibit the simultaneous furnishing of ST-1 Forms, they, in fact, envisage it. Supply of ST-1 Forms by the Department under the Rules is in advance, however, the actual practice may be different (para 7 onwards of page 36 of the judgment). 39. In our opinion, the generality of the provision of Section 71(1) should be given its full effect so as to enable the making of Rules for the full implementation of any provisions of the Act. The impugned rule also gives effect to Section 43(5) of the Act which deals with appeals and contains the requirement of pre-deposit of tax and penalty. Other situations where the Commissioner has the discretion to cancel the dealers registration for failure to pay tax including penalty, furnishing a false declaration etc. which must be borne in mind while considering the sweep of Section 71(1) of the Act. Thus, the primary intendment of the Act is to levy and collect tax and every devise, including of stipultions pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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