TMI Blog2005 (5) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... en below. According to the petitioner, M/s Lakhi Chand Ram Kumar is a proprietorship concern of Krishan Lal Khetan. It is registered under the provisions of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the Act ) and the Central Sales Tax Act, 1956. It acts as a coal agent and imports coal from the State of Bihar and Madhya Pradesh on behalf of various persons and supply them on the purchase rate plus commission. The petitioner charges freight separately, which is paid to the transporters. According to the petitioner, for import of coal from outside the State of U.P., it requires form of declaration for import commonly known as Form 31. The declaration form is issued by the Assessing Authority, namely the Trade Tax Officer, Siddharth Nagar, respondent no.3. It is required to file monthly return under Rule 41 of the U.P. Trade Tax Rules, 1948 (hereinafter referred to as the Rules ) disclosing its turnover and its liability to tax, which the petitioner is filing regularly. Coal is a declared commodity under Section 14 of the Central Sales Tax Act, 1956 and in view of the restrictions imposed under Section 15 of the said Act, trade tax at the rate of not more than 4% i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the leading arguments, submitted that the circular dated 26.9.2002, issued by the Commissioner of Trade Tax, is arbitrary and has been issued in colourable exercise of powers conferred under Section 8C(3-A) of the Act. It is also beyond the scope of the aforesaid provisions. According to him, the petitioner is required to deposit a sum of ₹ 150 per metric ton of coal to be imported as cash security for issuing the declaration form for import. The aforesaid amount is to cover the tax liability, if any, on the imported coal which is to be sold within the State of U.P. The maximum tax liability comes to about ₹ 70/- or ₹ 80/- per metric ton whereas the deposit is to be made @ ₹ 150/- which is highly excessive and exorbitant. Relying upon a Division Bench decision of this Court in the case of M/s Giriraj Stone Crusher Pvt. Ltd., Agra v. Commissioner of Trade Tax, 2003 UPTC 241, he submitted that the cash security which the Commissioner can fix, cannot exceed the tax payable and should have a reasonable nexus. Further, it would be inappropriate and arbitrary to demand cash security only on the basis of highest grade or the quality of the commodity. Sri N.C.Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tone Crusher Pvt. Ltd., is sought to be distinguished on the ground that it has not considered the earlier Division Bench's decision of this Court and further it turned out on the peculiar facts of that case. He, thus, submitted that no benefit can be taken by the petitioner from the aforesaid decision. According to him, sub-section (3-A) of Section 8C of the Act starts with non obstante clause and, therefore, it has an overriding effect. He further submitted that taking into consideration the increase in the price of diesel oil as well as loading and unloading charges as also the total value of the coal as per information given by the Deputy Commissioner, S.I.B., Trade Tax, Varanasi Zone, Varanasi, vide letter dated 28.8.2002, regarding the rate of coal obtained from Bharat Coking Coal Ltd., Dhanbad which specifies the rate of coal between ₹ 2,300/- to ₹ 2,375/- per metric ton in respect of steam coal, slack coal and other coal where the content of ash is less than 15% and where the content of ash is between 15% to 18%, the rate of coal being ₹ 1,900/- to ₹ 2,050, the cash security was worked out at ₹ 150/- per metric ton treating the cost of coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statutory declaration form. The order/circular dated 26.9.2002 prescribing cash security of ₹ 150/- per metric ton for issuance of declaration form for import of coal is, thus, referable to sub-section (3-A) of Section 8C of the Act as it is not in dispute that coal is one of the goods notified by the State Government. In the case of M/s West Coal Handling Agent (supra), this Court has declined to interfere with the exercise to be undertaken by the Court on the issue if the amount of security determined by the Commissioner is arbitrary as it pertains to the domain of the authority entrusted with such responsibility who are expected to work it out on expert's advice. The only power of the Court is to examine if while exercising power the authority did not adhere to the norms and acted in the manner which renders the entire exercise arbitrary. It had taken note of the fact that there is variation in the price in different types of coal and while determining the security, the Commissioner could not have been guided by the price of any particular type of coal and if instead of taking lowest price or working out average price, the security was determined on the price of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-A) could not be said to be ultra vires. Secondly, such security remains blocked up for several years leading the provisions as unreasonable is also misconceived. No provision of an enactment would be ultra vires only on account of any hardship to a particular dealer. Further under sub-section (8), on an application by a dealer or the person concerned, the authority could order the return of the surety bond or refund of any amount or part thereof deposited as security if it is not required for the purposes of this Act. Apart from this even if an adverse order is passed both first and second appeal lies against that order. Thus, we do not find any merit in this contention also. It has further held that - 5. The contention is that the Commissioner can only issue order pertaining to a dealer who is evading tax not to all dealers generally. This contention is also misconceived. The preceding word of the same Section 8-C(3-A) qualifies two pre-conditions, first that the Commissioner of Sales Tax will issue the order in respect of a notified goods and secondly, it should be a general order in writing for a specified cash security. This cash security is spoken to be furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those reasons are perfectly valid with the passage of time i.e. inflationary tendency is visible in the market, the price of the goods and also freight rates have gone up. Therefore after taking these two factors into consideration, the Circular dated 27.3.91 (Annexure - 4 to the petition) was issued. So, it cannot be said that there is no nexus between the object to be achieved and the provision enhancing the amount of cash security. So, even testing it on the principles of delegated legislation, this Circular cannot be adjudged to be void. In the case of M/s Raj Coal Agency (supra) this Court has held the validity of the circulars dated 21.4.1986, 24.9.1992, 13.4.1993, 30.11.1994 and 28.8.1995 issued by the Commissioner of Sales Tax requiring deposit of the security amount at the time of issuance of declaration Form 31 or at the check post, to be inoperative and ineffective in those cases where in the application under Section 4-A of the Act the eligibility certificates are issued to the new industrial unit. Similar view has been taken by this Court in the case of M/s Jai Bhawani Coke Industry (Pvt.) Ltd. (supra) wherein it has held that the demand of bank guarantee or securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing the circular under Section 8C(3-A) can adopt any reasonable and rational method so that the cash security is demanded of an amount which is reasonable having nexus to the amount of tax which would be payable. In this way the interest of the State and that of the dealers would be balanced. In the case of Iridium India Telecom Ltd. (supra), the Apex Court, in the context of non obstante clause, has observed as follows:- 33. After noticing the observations made in Aswini Kumar Ghosh (supra) and Dominion of India v. Shrinbai A.Irani (1955 (1) SCR 206) this Court in Chandavarkar Sita Ratna Rao v. Ashalata S. Gauram (JT 1986 SC 619) observed thus, in the contest of construction of a non obstante clause: 67. a clause beginning with the expression notwithstanding anything contained in the Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non obstante clause. It is equivale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case the Commissioner of Trade Tax had earlier fixed ₹ 125/- as cash security per metric ton of coal to be deposited for issuance of declaration form for import vide order dated 8.3.2001. Vide Order dated 26.9.2002, i.e., after about one and half years, the amount of cash security has been enhanced by 20%. The enhancement has been justified and has rightly so by the State respondents on the basis of quotations of rate of different varieties of coal obtained from M/s Bharat Coking Coal Limited, Dhanbad. Thus, the amount of ₹ 150/- fixed as cash security cannot be said to be arbitrary or unreasonable or without any nexus with the rate. It is common knowledge that during the period of one and a half year, particularly in the year 2001 and 2002, there had been a steep rise in the price of all commodities including coal and fuel and there was an upward trend in overall inflation. As already held by this Court in the year 1989 in the case of M/s West Coal Handling Agent (supra) this Court should be reluctant to interfere in exercise of the power fixing the amount of security. The only consideration should be whether the authorities had adhered to the norms and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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