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TMI Blog2013 (9) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of UP. The petitioner is registered both under the U.P. Trade Tax Act, and Central Sales Tax Act with its principal place of business at 39 Factory Area, Fazalganj, Kanpur. 4. For assessment year 1999-2000 the return filed by the petitioner was examined by the assessing authority. The assessment order was passed on 26.9.2003 determining total taxable turnover at Rs. 65, 40, 36, 213/- on which a sum of Rs. 7, 70, 78, 418/- was imposed as trade tax. The petitioner had issued the sale invoices to its various customers and had charged Net Dealers Billing price from them. Accordingly the tax was paid/deposited. As per the practice prevailing in the industry, various kinds of trade discounts, such as cash discount etc. were passed on by the petitioner to its consumers subsequent to the sales through credit notes issued from time to time. As the exact quantification of various types of discounts relating to quantum of sales was not worked out, the tax liability was not possible to be estimated at the time of sale of goods. The petitioner accordingly made excess payment to the tune of Rs. 30, 33, 983/-. The total amount was refunded by the petitioner to the buyers/customers through cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-assessed; or has been assessed to tax at a rate lower than that at which is assessable; and/or any deductions or exemptions have been wrongly allowed in respect of the turnover. He submits that none of the four contingencies arise in the present case, and thus the notice of re-assessment and the order is bad in law. 8. Shri Bharat Ji Agrawal submits that the writ petition was admitted giving reasons that the order giving sanction under Section 21 (2) dated 4.3.2006 passed by the Additional Commissioner, Trade Tax does not contain any reasons whatsoever. He submits that having admitted the writ petition on a clear question of law, the impugned orders should not be sustained. He relied upon Yadav Traders vs. State of UP and others 2009 NTN (Vol. 40) 65, in which this Court approved the view taken in M/s S.K. Traders vs. Additional Commissioner, Grade-1, Trade Tax Zone, Ghaziabad 2007 NTN (Vol. 34) 343. The relevant paragraph of the judgement, in Jagdish Rolling Works vs. State of UP and others (Writ Petition No. 460 of 2009, decided on 18.2.2009), relied upon in Yadav Traders vs. State of UP and others, is quoted as below:- "It appears to this Court that the order impugned dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade Tax, Kanpur and also the facts, which were made known to the assessee. He has also referred to the reply given by the petitioner to which no reasons were assigned. The Additional Commissioner has simply stated that it will be just and proper that in this matter, even if the change of opinion is involved at the time of reassessment, the reassessment is necessary. Shri Agrawal submits that the order does not contain any reason much less independent reason in reopening the assessment affecting the vested rights of the petitioner. 10. Shri Bharat Ji Agrawal has also relied upon judgments in M/s Aryaverth Chawal Udyog and others vs. State of UP and others 2008 U.P.T.C. 881 and Commissioner of Income-Tax v. Kelvinator of India Ltd (2010) 320 ITR 561 (SC), and M/s Super Chemicals, Seo Ka Bazar, Agra vs. Additional Commissioner, Grade-I, T. Tax, Agra Zone, Agra & ors 2010 NTN (Vol. 42) 163 in support of his submission. He submits that in Super Chemicals, Seo Ka Bazar, Agra (supra) this Court, relying upon Johri Lal (HUF) vs. Commissioner of Income Tax, UP 1973 (88) ITR 439 (SC); Income Tax Officer vs. Lakhani Mewal Dutt 1976 (103) ITR 437; Indra Prastha Chemicals Pvt. Ltd. vs. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the excess tax so realized has to be made in favour of the person (consumer) from whom the same has been realised. 10. That in reply to the contents of paragraph nos. 16 to 20 of the writ petition it is submitted that since in the assessment proceeding benefit on deductions as claimed by the petitioner was wrongly allowed relating to realization of tax, therefore, proceeding u/s 21 (2) was rightly initiated as the realization of taz on such deduction and the refund of the same did not reach to the real consumer which according to the decision of Hon'ble Apex Court was not proper. 12. That in reply to the contents of paragraph no. 22 of the writ petition it is submitted that there is no need to give notice by the Additional Commissioner while granting permission u/s 21 (2). It is further submitted that the notice for initiation of proceeding u/s 21 was given to the petitioner on 8.3.06 for appearance on 24.3.06 which notice was received by the petitioner on 18.3.06 which was mentioned that the said proceeding is being initiated after due permission from the Additional Commissioner, hence any averment contrary are false and hence denied. 17. That in reply to the contents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts as part of turnover. In the operative portion of the assessment order, the assessing officer found that a sum of Rs. 30, 33, 983.00 was deposited as tax in excess. Although this amount of tax was shown by the trader as recovered from the consumers in the bills, this amount was returned by credit notes by way of various discounts to the consumers. Out of this excess amount Rs. 1,29, 248.00 was not returned to the consumers and thus this amount was not liable to be returned to the trader. The assessing authority thus found that the trader is entitled to refund of Rs. 29, 04, 735.00 and thus the remaining amount in view of Section 29-A (3) realised from the consumers and deposited in Government treasury can be returned only to the consumers on their application and not to the traders. In D.C.M. Sriram Consultants Ltd vs. State of UP and others S.T.I. 2001 457 the Allahabad High Court has not treated such amount, which has been returned by credit notes to the consumers as the amount, which has been realised from the consumers. A similar view has been taken in M/s Agrawal Enterprises vs. Trade Tax Officer 1977 U.P.T.C. 763, and thus the trader was entitled to refund of Rs. 29, 84, 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) "Purchase price means the amount of valuable consideration paid or payable by a person for the purchase of any goods, less any sum allowed by the seller as cash discount according to trade practice and shall include any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of freight or delivery or the cost of installation when such cost is separately charged." 16. The Additional Commissioner, Grade-I, Trade Tax in the impugned order dated 4.3.2006 has referred to the proposal of the Joint Commissioner and the reply given by the petitioner. He has, however, not given any reason whatsoever for directing reassessment. He has not even referred to the contents of the reply given by the petitioner on 03.3.2006. The order is mechanical, and stereotyped in which it is only stated after examining the reply given by the petitioner that it is just and proper that in this matter even if the change of opinion is involved, the reassessment is necessary. 17. As discussed above the question of various discounts offered by the petitioner company and the passing off of such discounts to the consumers was disclosed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready observed that in the present case on the findings recorded by the assessing officer in the original assessment proceedings, it was clearly found that the amount of discounts were actually offered and were passed on to the consumers. A specific finding was recorded that by credit notes the amount was refunded to the consumers. There was no fresh material nor any tangible evidence was brought in any survey or in subsequent years which may have indicated that the discounts were actually not received by the consumers and that it was only a paper transaction by credit notes. The entire exercise of the powers of reassessment was vitiated by non-application of mind and non-recording of the reasons in the order dated 04.3.2006 passed by the Additional Commissioner, Grade-I, Trade Tax, Kanpur Zone,Kanpur under Section 21 (2) of the Act. The order of re-assessment based on the exercise of powers under Section 21 (2), is thus vitiated by non-application of mind and non-recording of reasons. 21. The writ petition is allowed. The impugned order dated 3/4.3.2006 passed by the Additional Commissioner, Trade Tax, Kanpur Zone, Kanpur under Section 21 (2) of the Act; the consequential order d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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