1986 (12) TMI 335 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the intimation for closure of the khandsari manufacturing unit.
2. Liability to pay purchase tax for the entire month of May 1982.
3. Interpretation of Rule 13-A of the U.P. Sugarcane (Purchase Tax) Rules, 1961.
4. Legality of the demand notice for Rs. 10,350.
5. Consequential refusal to renew the license for the assessment year 1983-84.

Detailed Analysis:

1. Validity of the Intimation for Closure:
The petitioner held a license for a khandsari manufacturing unit and sent a registered letter on April 23, 1982, to close the unit on April 30, 1982. Subsequently, another letter was sent on April 26, 1982, changing the closure date to May 3, 1982. The Khandsari Inspector inspected the unit on May 4, 1982, and found it closed. The dispute arose over whether the second intimation for closure was in accordance with the law.

2. Liability to Pay Purchase Tax for May 1982:
The Khandsari Inspector opined that the second intimation for closure on May 3, 1982, was not legally valid, making the petitioner liable to pay purchase tax for the entire month of May 1982. Consequently, a demand notice for Rs. 10,350 was issued, relating to the assessment year 1981-82.

3. Interpretation of Rule 13-A of the U.P. Sugarcane (Purchase Tax) Rules, 1961:
Rule 13-A outlines the procedure for payment of tax by the owner of a unit. It mandates that the owner must inform the authorities of the date of closure at least one week in advance. The rule allows for changes in the specified date of closure, provided the intimation is given in writing and under registered cover at least one week before the new date.

The court examined the principles of statutory interpretation, emphasizing that the statute should be construed to make it effective and workable. The court noted that the substantive part of clause (1-A) of Rule 13-A contemplates multiple specified dates for closure, not just one. The words "specified date" in the second proviso to sub-clause (1-A) include all subsequently altered dates.

4. Legality of the Demand Notice for Rs. 10,350:
The court found that the intimation given by the petitioner on April 26, 1982, to close the unit on May 3, 1982, was valid and in accordance with the prescribed rules. The Khandsari Inspector's demand for additional tax for the entire month of May 1982 was deemed unjustified. The demand notice for Rs. 10,350 was declared illegal and was quashed.

5. Consequential Refusal to Renew the License for the Assessment Year 1983-84:
The refusal to renew the license for the assessment year 1983-84 was based on the arrears of Rs. 10,350. However, the court noted that no specific grievance was raised regarding this refusal in the writ petition, and it was merely consequential to the illegal demand notice. Therefore, no relief was granted concerning the refusal to renew the license.

Conclusion:
The writ petition was allowed with costs. The demand notice for Rs. 10,350 was quashed, and any money deposited by the petitioner in pursuance of the demand notice was ordered to be refunded. The court upheld the validity of the second intimation for closure and ruled that the petitioner was not liable to pay purchase tax for the entire month of May 1982.

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