TMI Blog2005 (3) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... had the authority to consider and dispose of the application under section 7D of the Act. By means of order dated February 7, 1994 passed by the Deputy Commissioner (Executive) Trade Tax, he accepted the application of the petitioner for payment of tax at the rate of one per cent on the payment received during the year 1990-91. Subsequently, the Deputy Commissioner (Executive), Trade Tax issued a notice purporting to be under section 22 of the Act and by the order dated February 6, 1997 cancelled the earlier order dated February 7, 1994 passed under section 7D of the Act. The validity of the order dated February 6, 1997 was the subject-matter of challenge before this court in Writ Petition No. 338 of 1997. A Division Bench of this court by judgment dated May 17, 1999 allowed the writ petition and quashed the order dated February 6, 1997. The order of this court has attained finality as the department has not challenged the same. Undaunted by the failure, the department issued impugned notice dated November 4, 1999 purporting to be under section 21(2) of the Act. In this notice it is mentioned that the petitioner factually had obtained the order for job work, which was declared b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer to assess the petitioner under the provisions of the Act. The said order dated February 6, 1997 has been quashed by this court in Writ Petition No. 338 of 1997. The case of the respondent is that the work awarded to and executed by the petitioner was mainly for the interior decoration; it is not work of a civil nature and consequently, the scheme was not available to the petitioner and the application for compounding the payment of tax was wrongly allowed by the Deputy Commissioner (Executive) and thus, the initiation of proceedings under section 21(2) of the Act is just, legal, valid and in accordance with law. Heard Sri Krishna Agrawal, learned counsel for the petitioner and Sri S.P. Kesarwani, learned Standing Counsel for the department. Learned counsel for the petitioner submitted that the order passed under section 7D of the Act accepting the compounding application of the petitioner is still intact and has not been set aside or modified by any authority. Resultantly, the petitioner is liable to pay trade tax at the rate of one per cent on the sum received during the year. The department accepted the application of the petitioner with wide open eyes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of tax which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lumpsum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force. Explanation. For the purposes of this section the assessing authority includes an officer not below the rank of Trade Tax Officer Grade-II posted at a check-post. To resolve the controversy it is essential to examine the nature of an order passed under section 7D of the Act. A plain reading of section 7D shows that the option has been given to a dealer who is covered by the scheme issued by the State Government from time to time to opt for payment of a lumpsum amount in lieu of the amount of tax. The Supreme Court has examined a similar kind of provision under the Andhra Pradesh Entertainment Tax Act in the case of Venkateshwara Theatre v. State of Andhra pradesh [1995] 96 STC 130 (SC); AIR 1993 SC 1947. The State Government provided 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 consolidated levy on the basis of gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of sales tax in lumpsum under section 7D, the demand is not based on the turnover but on the agreement to pay the tax in lumpsum, i.e., the demand is not relatable to the actual turnover. Thus, the payment of compounded tax is a convenient hassle-free and simple method of assessment. A dealer who has opted for payment of lumpsum amount in lieu of tax is not required to file monthly or quarterly returns of the turnover. A dealer has to pay a fixed sum of money as tax as agreed upon by the department. It is the choice of a dealer to opt for compounded payment of tax. If the said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. The department as well as the dealer both are bound by the said agreement. The necessary corollary of this is that a dealer whose application for compounding has been accepted cannot turn around and urge that he is not liable to pay any tax for any reason, such as closure of business or low turnover, etc. Moreover section 7D starts with a non obstante clause and it excludes the applicability of other provisions of the Act which deal with the assessment and payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing authority has been empowered to issue notice under section 21 of the Act, if he has reason to believe that whole or any part of the turnover of the dealer has escaped assessment to tax or has been under-assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act or any deduction or exemptions have been wrongly allowed in respect thereof. Learned Standing Counsel submitted that it is a case of escaped assessment of the turnover of the petitioner as the petitioner carried on the work of interior decoration, which was not covered by the scheme issued under section 7D of the Act and in any view of the matter the turnover of the petitioner has been under-assessed by extending the umbrella of section 7D of the Act. The said argument of the learned Standing Counsel is misconceived. Power vested with any authority under various provisions of law can be exercised only for the stated purpose and for no other purpose. All acts by authorities must be in conformity with or according to the intent of the Act and not for any other collateral purpose. It is not in dispute that besides the contracts with Modi Pon Fibre Company, the petitioner has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not be an impediment in the operation of the enactment or the provision in which the non obstante clause occurs. Thus, the argument of the learned Standing Counsel that the scheme was subject to such direction as the State Government may from time to time issue in that behalf, and the petitioner's works contract being beyond the scope of the scheme, the order passed by the Deputy Commissioner (Executive) accepting the compounding application is liable to be ignored, has no substance. Moreover, it could not be disputed by him that the Deputy Commissioner (Executive) is a higher officer than the Trade Tax Officer who issued the impugned notice and the order dated February 7, 1994 has been passed by the Deputy Commissioner (Executive) in exercise of powers vested in him under section 7D of the Act. In any administration it is essential for a junior officer to obey and follow and give due weight to an order which has been validly passed by an officer who is higher in rank, otherwise there would be chaos in the administration. It is not open to an officer who is junior in rank to give a complete go-by to such an order passed by his superior. The order passed by the superior u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 338 of 1997 on May 17, 1999 by this court has attained finality. This court has found that the order dated February 7, 1994 was sought to be cancelled by way of rectification by the order dated February 6, 1997 on the ground of change of opinion. This finding has attained finality and no reassessment proceedings can validly be initiated in the face of the aforesaid finding of this court. Learned Standing Counsel has placed reliance on the following three cases: Sonpal Sanjay Kumar v. Sales Tax Officer [1997] UPTC 73, Kalpana Kala Kendra v. Sales Tax Officer [1989] 75 STC 198 (All); [1989] UPTC 597 and Shyam Babu Vaishya and Co. v. Assistant Commissioner of Trade Tax [2005] 139 STC 397 (All); [2004] UPTC 210. We have carefully considered these cases and find hardly any application to the controversy involved in the present writ petition. The fact-situation was different in all these cases. It has come on the record that the assessing officer passed a miscellaneous order for refunding the excess amount to the petitioner and prepared the refund voucher which was sent for counter signature of the Deputy Commissioner (Executive) as per the Rules. Thereafter, the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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