TMI Blog2014 (5) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... tax thereon becoming ineffective on the assessment year coming to an end or because of initiation of proceedings for final assessment under Rule 41(5), does not arise – Therefore, the proceedings for recovery initiated for the amount under the provisional assessment shall not become non-est merely by passing of the final assessment order. The petitioners themselves have enclosed the copy of the security/sureties to the writ petition - The contents of the surety clearly indicate that the surety bound themselves to make the payment of surety amount even if the appeal is decided or become infructuous – The petitioners have also brought on the record copy of the order passed in second appeal as to the writ petition by which order the second appeal filed by the petitioners against the provisional assessment order was dismissed by Tribunal – Thus, 95% security was given under the interim order of the Tribunal which was passed in the second appeal during its pendency - The appeal having been finally dismissed, the security/surety given in pursuance of the interim order can very well be enforced by the tax authorities for realisation of the amount - In the final assessment order there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feeling aggrieved by the appellate order dated 22nd January, 2011, filed a second appeal before the Commercial Tax Tribunal. The Tribunal vide order dated 3rd March, 2011 stayed realisation of 95% of the disputed tax subject to condition that the Company shall furnish adequate security for the stayed amount to the satisfaction of the assessing authority. In pursuance of the order of the Tribunal dated 3rd March, 2011, the security was given by the Company in which the petitioners were sureties. The security/surety was given for an amount of ₹ 33,41,833/- which was 95% of the total disputed tax. By an order dated 7th October, 2011, the Deputy Commissioner, Commercial Tax assessed the Company for the year 2010-11 (provincial) and created a demand of ₹ 70,50,000/- towards tax. The assessment order also referred provisional assessment orders for the months of April, 2010 to August, 2010. The final assessment order was issued for the entire year covering the period for which provisional assessment order was already issued. In essence, the final assessment order was clearly in accord with the provisional assessment order which was referred to and relied in the final assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dead) by his legal representatives and another reported in A.I.R. 1967 SC 1634. Sri U.K. Pandey, learned Standing Counsel, refuting the submissions of learned counsel for the petitioners, contends that by passing the final assessment order provisional assessment order is not wiped out, rather provisional assessment order merges with final assessment order as per Section 28(8) of the U.P. Value Added Tax, 2008 and the submission of learned counsel for the petitioners that liability under the provisional assessment order stood discharged, cannot be accepted. He further submits that petitioners having given security/sureties with regard to the amount under provisional assessment order, the security/sureties are not discharged and the petitioners are still bound to pay the amount for which they submitted security/sureties. Mr. Pandey has placed reliance on a Division Bench judgment of this Court in the case of Gangadhar Ramchand Oil Mills vs. Sales Tax Officer, Sector VI, Agra and another reported in 1981 (Vol.48) Sales Tax Cases 356. We have considered the submissions of learned counsel for the parties and have perused the record. The assessment of a registered dealer is regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticed above, the 2008 Act specifically contemplates assessment of tax for a tax period under Section 25 whereas Section 26 deals with assessment of tax for an assessment year. Section 28(8) is as follows:- 28. Assessment of tax after examination of Records: (1)...... (8). Assessing authority shall not be precluded from making assessment order under this section on the ground of passing of any provisional assessment order in respect of any tax period under section 25 and such provisional assessment order, if any, shall stand merged in the assessment order passed under this section. Section 7A of the U.P. Trade Tax Act, 1948 dealt with return of turnover for portion of the assessment year. Section 7A of the said Act is quoted below:- 7-A. Return of turnover for portion of the assessment year. - (1) The State Government may require any dealer to submit a return for his turnover of a portion of the assessment year, and the Assessing Authority may, without prejudice to the provisions of Section 7, make provisional assessment in respect of such portion of the assessment year in accordance with the provision of this Act in so far as they may be applicable if the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Authority. There is no substance in the argument that at the time of final assessment, because of any findings recorded by the Sales Tax Tribunal, in the proceedings arising out of provisional assessment, the Sales Tax Officer would be debarred or handicapped to draw different conclusion, if so warranted by the evidence on record and otherwise justified in the eye of law. Another judgment, which is relied by learned counsel for the petitioners, is Commissioner of Sales Tax vs. M/s Rahul Traders, Kanpur (supra). In the said judgment, learned Single Judge has again held that assessing authority is not bound by provisional assessment order while making regular assessment. The proposition, which has been laid down in the aforesaid cases, is to the effect that while making the final assessment the assessing officer is not bound by the provisional assessment and can take a different view. In the present case the assessing officer in the final assessment has not taken any different view nor discharged the tax liability of the Company. The aforesaid two cases are not the authorities for the proposition that tax liability created by provisional assessment shall stand wipe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no proceedings for realisation of the amount provisionally assessed can be taken after the year in question is over and in any case it cannot be taken after the proceedings for the regular assessment in respect of the relevant year have been initiated. According to the learned counsel, Section 3 of the U. P. Sales Tax Act is the charging section. It makes the dealer liable to pay sales tax on the turnover of each assessment year. In other words, it is a single integrated levy on the entire turnover of the year. The liability in that regard has to be assessed and satisfied in the manner laid down in Rule 41(5) of the Rules framed under the Act. He contends that there is no provision in the Sales Tax Act which makes the turnover of a part of the assessment year liable to sales tax. However, the legislature has, in its wisdom, provided that a dealer can, after the end of each quarter of the assessment year, be provisionally assessed to sales tax under Rule 41(3) of the Rules framed under the U. P. Sales Tax Act. In the very nature of things, the provisional assessment for different quarters of the assessment year does not lead to a separate and independent liability. This provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Officer can recover it under Rule 41(6). Viewed in this light, the question of such determination of turnover and the liability for payment of tax thereon becoming ineffective on the assessment year coming to an end or because of initiation of proceedings for final assessment under Rule 41(5), does not arise. The aforesaid Division Bench judgment is fully applicable in the present case. In view of the proposition laid down by the Division Bench in the aforesaid case, the proceedings for recovery initiated for the amount under the provisional assessment shall not become non est merely by passing of the final assessment order. There is one more reason due to which the petitioners are not entitled for any relief and the recovery proceedings cannot be dropped. The petitioners themselves have enclosed the copy of the security/sureties as Annexure-3 to the writ petition. The contents of the surety clearly indicate that the surety bound themselves to make the payment of surety amount even if the appeal is decided or become infructuous. Following portion of the surety is relevant, which is quoted below:- The petitioners have also brought on the record copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantee given by A was payment of five sacks of flour only. The said guarantee did not contain payment of any future price and subsequent transaction was rightly held not liable. The said illustration does not help the petitioners in any manner. Section 133 of the Contract Act, 1872 deals with discharge of surety by variance in terms of contract. The petitioners have referred to Illustration (b) of Section 133. Present is not a case where surety can be said to be discharged by variance in any terms of the contract. No variance in the guaranteed document can be inferred or has been actually made. Thus Section 133 has no application in the present case. Section 135 of the Contract Act, 1872 on which reliance has been placed by the learned counsel for the petitioners provides for discharge of surety when creditor compounds with, gives time to, or agrees not to sue principal debtor. Section 135 of the Contract Act, 1872 is quoted below:- 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor. A contract between the creditor and the principal debtor, by which the creditor make a composition with, or promises to give time, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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