2006 (11) TMI 328 - SC - VAT and Sales Tax

Market fee on the consignment of cut tobacco dispatched - Held that - The revisional power went out of the domain of the State Government and the same remained with the Board. After 1991 the situation is that section 33 deals with aspects other than those covered under section 32. That is because the revisional power was already with the Board. Post 1991, the delegation could be done only under the regulation. That being so, the High Court s vis-a-vis conclusions, section 32 of the Act are not correct. On the merits there is no scope for interference with the High Court s order because there was no power to reopen. The respondent shall, however, produce the accounts relating to the period subsequent to August 1, 1998, and the factual aspects have to be considered by the appellants.

Issues Involved:
1. Legality of the Director's exercise of revision power under Section 32 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964.
2. Validity of the High Court's interpretation of various statutory provisions, including Sections 26-I, 26L, 32, and 33.
3. The authority to levy market fee on cut tobacco transported to another factory or contract manufacturers.
4. Power of reopening assessments by the Director.

Issue-wise Detailed Analysis:

1. Legality of the Director's exercise of revision power under Section 32 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964:
The High Court held that the Director could not have exercised the power of revision under Section 32 of the Act, rendering the order dated January 14, 1999, without jurisdiction. The Supreme Court noted that after the 1973 amendment, the revisional power was vested with the Board and not the State Government. The High Court erroneously proceeded on the basis that the sole repository of power was the State.

2. Validity of the High Court's interpretation of various statutory provisions, including Sections 26-I, 26L, 32, and 33:
The High Court's interpretation was challenged on the grounds that it would render Section 26-I otiose and irrelevant. The Supreme Court highlighted that Sections 32 and 33 relate to provisional powers, while Section 26L deals with the powers and functions of the Board. The High Court incorrectly concluded that the Director ceased to have authority after 1991 due to amendments in Section 33. The Supreme Court clarified that post-1991, delegation could be either under Section 26-I or Section 33, and the Director's power continued under the existing arrangements.

3. The authority to levy market fee on cut tobacco transported to another factory or contract manufacturers:
The respondent-company was initially allowed to transport cut tobacco without paying market fee. However, the Director, Mandi Parishad, later required the levy of market fee. The Supreme Court noted that the High Court's view on the Director's power to reopen all cases since 1987 was incorrect. The Director's guidelines for transactions from 1987 onwards lacked proper analysis under Section 17(iii)(b). The Supreme Court emphasized there was no power to reopen assessments, and only transactions post-August 1, 1998, could be considered.

4. Power of reopening assessments by the Director:
The Supreme Court found that there was no statutory provision allowing the reopening of assessments. The Director's attempt to reopen cases from 1987 onwards was beyond his jurisdiction. The Supreme Court upheld the High Court's order on the merits, stating that the Director had no power to reopen assessments. However, the respondent was directed to produce accounts for the period after August 1, 1998, for consideration by the appellants.

Conclusion:
The Supreme Court disposed of the appeal, maintaining that the High Court's conclusions regarding Section 32 were incorrect. However, it agreed with the High Court on the merits, emphasizing the lack of power to reopen assessments. The respondent was instructed to present accounts for the period post-August 1, 1998, for further consideration. The appeal was disposed of without any order as to costs.

← Previous Next →