TMI Blog2006 (1) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... nte clause, the provision following it will have its full operation or the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment or the provision in which the non obstante clause occurs. Once a dealer has opted to pay the tax in lump sum under section 7-D of the Act after it has been accepted by the department, any demand for that period is not relatable to the actual turnover but the sum agreed upon. In other words, the department as well as the dealer both know the amount payable and receivable by each other. The determination of lump sum amount in lieu of tax displaces the requirement of regular assessment proceedings and the quantification of tax liability is by agreement as per the term of the scheme which would bind both the parties. The object of introducing such a scheme under a taxing statute is well established as so many advantages are attached to such scheme besides being hassle-free to the dealer. It also avoids unnecessary litigation. The department in its turn receives a fixed amount of tax without undertaking the assessment work and, thus, saves a lot of time. It also facilitates the speedy recovery of tax. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n constituted to reconsider the correctness of the aforesaid judgments rendered by the division Bench. 2. While referring the matter for reconsideration by the larger Bench, the division Bench has expressed its disagreement in the following words: We have carefully perused the above decisions and we are in respectful disagreement with the same. In the aforesaid decisions it has been held that once the petitioner has opted for composition scheme he has to pay trade tax even if he has not made any sales. In our opinion sales tax (now known as trade tax) is payable when there is a sale. When there is no sale we cannot understand how sales tax (trade tax) can be charged. It may be mentioned that section 7-D mentions that assessing authority may agree to accept the composition money either in lump sum or at an agreed rate on the dealers turnover in lieu of tax that may be payable by a dealer in respect of such goods or class of goods. . . Thus section 7-D is only a convenient mode of realisation of trade tax and it has been made so that the dealer may not be harassed to go to the trade tax office again and again. Thus section 7-D provides for convenient alternative mode of realisation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a period of three assessment years, i.e., 1993-94, 1994-95 and 1995-96. The Government of Uttar Pradesh announced a scheme, commonly known as Composition Scheme, under the provisions of section 7-D of the Act under which an option was given to all brick kiln owners to either pay the tax assessed on their actual sales or purchase or to give an option to pay the tax in one lump sum. Under the said Scheme, the brick season was from October 1, 1992 to September 30, 1993. The amount payable by the brick klin owners who have opted under the said Scheme, was known as Samadhan Dhanrashi or the composition amount. It was fixed according to the capacity determined in terms of paya or columns. The petitioner s brick kiln had 19 paya. It opted for payment of tax under the composition scheme and deposited a sum of Rs. 8,600 on March 19, 1993, being 20 per cent of the total composition money. According to the petitioner, it could not run the brick kiln during the brick season 1992-93, i.e., from October 1, 1992 to September 30, 1993 and, therefore, informed the sales tax authorities to make survey and physical verification so that the petitioner may not be saddled with the liability for paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e II, posted at a check-post. Law laid down in the cases referred for reconsideration: Jaya Bhatta Udyog s case [Civil Misc. Writ Petition No. 858 of 1990 decided on July 17, 1990 Allahabad High Court]: 6. In the case of Jaya Bhatta Udyog [Civil Misc. Writ Petition No. 858 of 1990 decided on July 17, 1990 Allahabad High Court], a division Bench of this court has held that section 7-D of the Act is very clear. It enables the dealer to pay the sales tax in lump sum in lieu of the tax. For that purpose, the dealer executes an agreement undertaking to pay the sales tax in lump sum and the liability arising under such agreement is not related to actual turnover of the petitioner. The petitioner having elected to pay the sales tax in lump sum, could not be permitted to turn around and contend that he was not liable to pay the amount agreed to be paid by him because his turnover turned out to be either nil or that it was not adequate on account of various factors. This court has further held that there is another reason why it is not persuaded to interfere. Clause 16 of the agreement specifically provided that it would not be open to the dealer to pay reduced amount or to resile therefrom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard Sri Navin Sinha, learned Senior Counsel, assisted by Sri R. K. S. Chauhan, on behalf of the petitioner, Sri S. M. A. Qazmi, learned Chief Standing Counsel, assisted by Sri K.M. Sahai and Sri S. P. Kesarwani, learned Standing Counsel, appearing for the respondents. Rival submissions: 11. Sri Navin Sinha, learned Senior Counsel, has submitted that, under section 7-D of the Act, the amount to be paid is in lieu of the amount of tax that may be payable by a dealer in respect of such goods or class of goods and for such period, as may be agreed upon. Laying emphasis on the words in lieu of , he submitted that if there was no liability for payment of tax, as there was no production or sale during the relevant period, the petitioner cannot be saddled with the liability for payment of the amount agreed by it as the liability to pay the said amount was in place of the amount of tax payable on actual sales. 12. He further submitted that to levy the sales tax, there must be a sale as defined in the Sale of Goods Act and unless there are some transaction, and if there is no transaction, obviously no sales tax can be levied. He, thus, submitted that the decisions rendered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one, it cannot claim the benefit for the other. According to Sri Qazmi, once the petitioner had voluntarily made the application for payment of a lump sum amount in lieu of tax payable by it, it cannot resile or seek remission either in full or in particular or deny its liability for payment of the amount on any ground whatsoever, including the plea of non-production or no sale during the brick season. He, therefore, submitted that this court in the case of Jaya Bhatta Udyog [Civil Misc. W. P. No. 858 of 1990 decided on July 17, 1990] which has been reiterated subsequently in the case of Sri Durga Brick Field [1991] UPTC 510 and Jai Sharma Int. Udyog [1999] 116 STC 357 (All), has correctly laid down the law and it does not require any reconsideration. In support of his various pleas, he has relied upon the following decisions: (i) Har Shankar v. Deputy Excise and Taxation Commissioner AIR 1975 SC 1121 ; (ii) State of Orissa v. Narain Prasad [1996] 5 SCC 740 ; (iii) Bharathi Knitting Co. v. DHL Worldwide Express Courier, Division of Airfreight Ltd. [1996] 4 SCC 704 ; (iv) State of Kerala v. Builders Association of India [1997] 104 STC 134 (SC) ; [1997] 2 SCC 183 ; (v) Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that there is a subsisting obligation to make the payment. 18. In the case of Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 (SC) ; AIR 1958 SC 560, the apex Court has held that the expression sale of goods in entry 48 is a nomen juris, the essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement. In a building contract which is entire and indivisible there is no sale of goods, and it is not within the competence of the Provincial Legislature under entry 48 to impose a tax on the supply of the materials used in such contract treating it as a sale. Hence the provisions of the Madras General Sales Tax Act, 1959 which impose a tax on such materials as if there is a sale of them are ultra vires. 19. In the cases of Har Shankar AIR 1975 SC 1121 and Narain Prasad [1996] 5 SCC 740, the apex Court has held that the writ petition is not an appropriate remedy for impeaching contractual obligations voluntarily incurred. 20. In the case of Bharathi Knitting Co. [1996] 4 SCC 704, the apex court has held that when a person signs a document which contains certain contractual terms, normally parties are bound by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Mycon Construction Ltd. [2002] 127 STC 105 (SC) ; [2002] UPTC 585 (SC). The apex court has repelled the submission that while evolving a simplified method of payment of tax, such is the case in the instant case, the law cannot give an option to the assessee which is in the teeth of constitutional provision. It has held that this argument does not survive in view of the principles laid down by the apex court in the case of Builders Association of India [1997] 104 STC 134 (SC) ; [1997] 2 SCC 183. 23. In the case of Venus Castings (P) Ltd. [2000] 4 JT SC 77, the apex court while considering the provision of section 3A(4) of the Central Excise Act, 1944 and rule 96ZO(3) of the Central Excise Rules, which envisaged the composition method of payment of duty, has held that they provided two alternative procedure to be adopted at the option of the assessee and they do not clash with each other. The manufacturer if they have availed of the procedure under rule 96ZO(3) at their option, cannot claim the benefit of determination of production capacity under section 3A(4) of the Act, which is specifically excluded. 24. In the case of Jalan Castings (P) Ltd. [2000] 119 ELT 531, this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex court has held that in the absence of an express provision, a delegated authority cannot impose tax or fee and the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental or ancillary power in the matter of exercise of fiscal powers. 29. In the cases of Bengal Iron Corporation [1993] 90 STC 47 (SC) ; AIR 1993 SC 2414, Inder Sain Mittal [2002] 3 SCC 175 and M. D. Army Welfare Housing Organisation [2004] 9 SCC 619, the apex court has held that there can be no estoppel against the statute. Discussion: 30. Having given our anxious considerations to the various submissions made by the learned counsel for the parties, we find that section 7-D which provides for composition of tax liability, starts with a non obstante clause. A plain reading of section 7-D of the Act shows that an option has been given to a dealer who is covered by a scheme issued by the State Government from time to time to opt for payment of lump sum amount in lieu of the amount of tax. It excludes the applicability of other provisions of the Act which deal with the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme announced by the Government of Andhra Pradesh, providing that instead of payment of entertainment tax on the basis of actual number of cinema goers, the proprietor of a cinema hall may opt to pay a consolidated levy on the basis of gross collection capacity per show, has held that the compound payment of entertainment tax is a more convenient mode of levy of the tax inasmuch as it dispenses with the need of verification or to enquire into the number of persons admitted to each show and to verify the correctness or otherwise of the returns submitted by the proprietor containing the number of persons admitted to each show and the amount of tax collected. The aforesaid decision has been followed by the apex court in the case of Builders Association of India [1997] 104 STC 134 (SC) ; [1997] 2 SCC 183, wherein the apex court has held that the object of levy of compound payment of tax is not to increase the revenue. The Legislature provides the alternate method of taxation with a view to realise the tax with least discomfort to the assessee. It is only a convenient mode of realisation of tax. It also ensures the fixed amount of payment of tax to the Government irrespective of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the contract which specifically provides that there would be no reduction or change in the composition money even if the firing has not been done in brick kiln or it has been started late or for any other reason, the petitioner is bound by the said clause and he cannot be permitted to challenge the same in view of the law laid down by the apex court in the cases of Har Shankar AIR 1975 SC 1121, Narain Prasad [1996] 5 SCC 740 and Bharathi Knitting Co. [1996] 4 SCC 704. As we have already come to the conclusion that the liability to pay the composition money is not relatable to actual sales at all, the principle laid down by the apex court in the case of Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 ; AIR 1958 SC 560, will not be attracted. Conclusion: 37. In view of the foregoing discussions, we are of the considered opinion that the division Bench in the case of Jaya Bhatta Udyog (Civil Misc. Writ Petition No. 858 of 1990, decided on July 17, 1990), subsequently followed by other division Benches in the cases of Sri Durga Brick Field [1991] UPTC 510 and Jai Sharma Int. Udyog [1999] 116 STC 357, lay down the correct law. 38. Let the matter be placed before the appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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