TMI Blog2019 (7) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Assessing Authority had compounded the entire liability of tax on the purchase of entire quantities of coal without any stipulation of limitation as to the quantities which are required for running the brick kiln of the capacity disclosed by the assessee. The order under Section 7-D of the Act and composition of tax liability thereunder is in the nature of an alternative to regular assessment - Also, once accepted, it creates a binding contract between the assessee and the revenue. Therefore, the revenue cannot claim contrary to the order under Section 7-D of the Act. What remains to be considered is whether there was any material to draw an inference of sale of coal made by the assessee outside its books of accounts during A.Y. 2002-03. In this regard, a perusal of the three orders, in this case reveal, other than the circular of the Commissioner dated 19.04.1993, there is no material, whatsoever, to infer that the assessee had engaged in an activity of trading in coal. Thus, there is no evidence that the assessee violated the terms of the composition scheme - thus there is a complete absence of any evidence or material to reach a conclusion that the assessee had engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the impugned order, the Tribunal has also rejected the appeal filed by the assessee. 6. Both the revisions have been pressed on the following question of law: Whether in face of the entire tax liability of the assessee having been compounded and in absence of any material to establish sale of coal, the Assessing Officer could impose any tax liability on the assessee on the presumed sale of coal. 7. Relying on the provisions of Section 7-D of the Act read with the compounding scheme which contain the directions issued by the State Government under Section 7-D of the Act vide the communication dated 08.03.2001, learned counsel for the assessee submits, the State Government had offered compounding of tax liability on bricks, tiles, etc. manufactured and sold by the assessee along with the liability of tax on purchase of sand, coal, wood and sawdust. The assessee opted and was admitted to the benefit of compounding by order dated 26.02.2004. No condition was imposed in the directions issued by the State Government in the order dated 26.02.2004 to limit the extent of compounding on purchase of coal up to any quantity. Therefore, the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly sold the balance coal. 11. Since the compounding offered to the assessee was only with respect to the running of the brick kiln and not with respect to the trading activity, the Assessing Authority had rightly subjected the assessee to assessment with respect to the balance quantity of coal sold by him. 12. Having heard learned counsel for the parties and having perused the record, in the first place, under Section 7-D of the Act, the alternative method of assessment of tax liability by way of composition is subject to the direction of the State Government. As to the directions that are applicable to the present case, clearly under Clause (1) of the composition scheme dated 08.03.2001 as circulated by communication dated 12.03.2001 issued by the Commissioner of the Trade Tax, U.P., the State Government had issued directions for composition of the entire liability of tax on purchase of bricks, tiles etc., manufactured in the brick kiln and also the entire liability of tax that may have otherwise existed on the purchase of sand, coal, wood and sawdust. A perusal of the various clauses of the scheme only reveals that the State Government issued dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government is the only delegate that the legislature has recognized for the purpose of issuing directions. The Commissioner does not have any jurisdiction to himself issue directions to quantify or to limit the extent of composition. Otherwise, he may issue directions only for the purposes of carrying out the purpose of the Act. Insofar as the direction, referred to, is clearly outside the scope of the composition scheme insofar as it introduced a completely new concept with respect to the consumption of coal, is found to be in conflict with the directions issued by the State Government. While the scheme provides for the composition of tax liability of entire quantities of coal purchased without any reference of limitation qua the production capacity of the individual brick kiln, the circular of the Commissioner seeks to introduce the stipulation and limit the composition without any authority of law. It is neither binding on the assessee nor it can be enforced against the terms of the composition scheme. 16. The acceptance of the application for composition of the tax liability creates a contract between the revenue and the assessee. Thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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