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TMI Blog2009 (8) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... in trading of all kinds of iron and steel and is assessed by the assessing authority, respondent No. 3, Assistant Commissioner of Trade Tax, U.P. Respondent No. 2, the Commissioner of Trade Tax, U.P. (in short, "the Commissioner") issued a circular dated January 20, 2006 under section 8C(3A) of the Act. According to the aforesaid circular dated January 20, 2006, the traders of the iron and steel who are engaged in import of these commodities have been directed to furnish security as and when they apply for requisite forms. Four different categories of iron and steel have been classified and the Commissioner has given an average price to all the categories, and the dealers are required to furnish security at the rate of four per cent of the value of the goods to safeguard the interest of Revenue. The said circular dated January 20, 2006 covers only the registered dealers who have applied for registration under U.P. and Central Sales Tax Act (in short, "the Act") on or after April 1, 2001. The traders registered before this date have been exempted from furnishing any security for issuance of the requisite forms. Paragraph 3 of the aforesaid circular states that the requisite forms w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the parties it will be useful to refer to section 8C(3A) of the U.P. Trade Tax Act, 1948 which reads as under: "8C. Security in the interest of Revenue.-(1) to (3) . . . (3A) Notwithstanding anything contained in sub-section (2) or sub-section (3), the Commissioner may, in respect of any goods notified by the State Government in this behalf, by a general order in writing, direct that a cash security of such amount as may be specified in such order shall be required to be furnished by a dealer or person requiring any of the forms prescribed under this Act." Iron and steel is categorized in four sets. For a reasonable and rational fixation of cash security under section 8C(3A) of the Act, the record of the case reveals that for the fixation of security amount, a committee of senior officers was constituted by the Commissioner and the said Committee considered the prevalent market rates between November 16, 2005 to November 30, 2005 of different categories of iron and steel collected by the research section of Trade Tax Department and the selling rates collected from the reputed manufacturers like M/s. TISCO and M/s. Steel Authority of India, Kanpur as on January 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment, after collecting the rates from the reputed manufacturers like M/s. TISCO and M/s. Steel Authority of India, Kanpur and thereafter on the basis of the said datas, the average wholesale price was fixed. Thus it is apparent that before fixing the rates and security amount, committee of senior officers was constituted for the said purpose and consequently the report of the said committee was duly considered and accepted by respondent No. 2. Thereupon, the impugned circular order dated January 20, 2006 was issued. Thus, in view of the aforesaid facts and circumstances of the case, we are of the view that rates and security fixed in the circular are not arbitrary. Second contention of the petitioner is that the cut-off date January 20, 2006 is arbitrary and unreasonable because the circular covers only those registered traders who have applied for registration under the U.P. Sales Tax Act on or after April 1, 2001 and the traders before these dates have been exempted from furnishing any security for the issuance of the requisite forms. As a corollary to the aforesaid submission, it has been contended that such a classification is discriminatory, whimsical and arbitrary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to decide the cut-off date as a part of executive policy and the reasons assigned by the respondents cannot be said to be arbitrary or violative of article 14 of the Constitution. Fixing a cut-off date is well within the powers of the Government as long as reasons thereof are neither arbitrary nor unreasonable. In view of the above, we are of the considered opinion that the cut-off date as provided in the present matter, cannot be said to be artificial or without any rational basis, so as to attract wrath of article 14 of the Constitution. The allegation of the petitioner regarding adjustment of excess amount of security is not being given to him, has been denied by the respondents. It has been submitted by the respondents that the adjustment is allowed towards the liability in monthly returns and for excess security. Declaration forms which are being issued to the petitioner against the excess amount of security calculated by him. In this connection, paragraph No. 3H of the counter-affidavit is relevant, which is reproduced below: "3H. That the allegation of the petitioner that adjustment of excess amount of security is not being given to him is incorrect. The fact is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Trade Tax to adopt any reasonable and rational method for demanding cash security under section 8C(3A) of the Act. There should have nexus to the amount of tax which would be payable. If it is not being deposited under section 8C(3A) of the Act, the Commissioner had power to direct for deposit of cash security to issue some declaration forms in respect to particular goods which power has been upheld by this court in several case. Moreover, it starts with a non obstante and thus gives the overriding power to the Commissioner to direct for deposit of cash security. It has also been held by this court in the case of West Coal Handling Agent v. Commissioner of Sales Tax [1989] UPTC 1402 that the court should be reluctant to interfere in exercise of the power fixing the amount of security. The only consideration should be whether the authorities have adhered to the norms and acted in the manner which renders the entire exercise arbitrary. In the case of Saurabh and Brothers, Siddharthnagar v. State of U.P. [1993] UPTC 833, this court has upheld the validity of sub-section (3A) of section 8C of the Act. It has held as follows: "3. We do not think merely demanding ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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