1991 (5) TMI 247 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Rule 25-A of the U.P. Sales Tax Rules, 1948.
2. Rejection of the application for renewal of the recognition certificate due to non-payment of requisite fees.
3. Adjustment of refundable amount against the requisite fee.

Issue-Wise Detailed Analysis:

1. Validity of Rule 25-A of the U.P. Sales Tax Rules, 1948:
The petitioner initially challenged the validity of Rule 25-A of the U.P. Sales Tax Rules, 1948, seeking a declaration that rules 25-A(1), 25-A(1A), and 25-A(12) were invalid, void, and ultra vires. However, during the course of arguments, the petitioner abandoned this point and focused solely on the issue of the renewal of the recognition certificate.

2. Rejection of the Application for Renewal of the Recognition Certificate Due to Non-Payment of Requisite Fees:
The primary issue adjudicated was whether the application for renewal of the recognition certificate for the years 1981-82, 1982-83, and 1983-84 was rightly rejected by the competent authority due to non-payment of the requisite fee of Rs. 150. The application, dated 17th March 1981, was rejected on 7th October 1985 because it was not accompanied by the requisite deposit of fees as required under Rule 25-A(3).

3. Adjustment of Refundable Amount Against the Requisite Fee:
The petitioner argued that he was entitled to a refund of Rs. 15,477.18 for the assessment year 1976-77 and had requested the respondent-authority to adjust Rs. 150 out of this refund towards the exemption fee. The respondent-authority rejected this request, stating that on the date of the application (17th March 1981), there was no order of refund. The refund order was passed on 30th March 1983, and the application was rejected on 7th October 1985.

Legal Provisions and Interpretation:
- Rule 25-A(3): Specifies the fee payable for the recognition certificate.
- Rule 25-A(5): States that the recognition certificate takes effect from the date of the application.
- Rule 25-A(7): Allows the Sales Tax Officer to reject an application if the fee has not been paid, but mandates giving the applicant a reasonable opportunity to correct or complete the application.

The court noted that the petitioner had been given an opportunity to correct the deficiency via a notice dated 19th September 1985, and the petitioner responded by requesting the adjustment of Rs. 150 from the refundable amount. The court found that the respondent-authority should have considered this adjustment before rejecting the application.

Precedents and Legal Reasoning:
The court referred to the Full Bench decision in Commissioner of Sales Tax v. Behari Lal Ram Krishna, which held that an exemption application is only valid from the date the deficiency is corrected. However, the court distinguished this case, noting that Rule 25-A does not require an application to be accompanied by a treasury challan or deposit of fees, unlike Rule 20-B(f).

Conclusion and Judgment:
The court concluded that the rejection of the petitioner's application was not justified since the petitioner complied with the requirement of deposit of fees by requesting an adjustment of the refundable amount. The impugned order dated 7th October 1985 was quashed, and the respondent was directed to grant the recognition certificate for the relevant years within three weeks of receiving the certified copy of the order. The writ petition was allowed, with costs on parties.