2003 (2) TMI 460 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of notices issued under sections 21 and 22 of the U.P. Trade Tax Act, 1948.
2. Classification and taxability of toffee/chocolate as sweetmeat or unclassified item.
3. Applicability of the Supreme Court judgment in Pappu Sweets and Biscuits v. Commissioner of Trade Tax.
4. Jurisdiction under section 22 of the Act for rectification of mistakes.
5. Alternative remedy and maintainability of writ petitions.

Detailed Analysis:

1. Validity of Notices Issued Under Sections 21 and 22 of the U.P. Trade Tax Act, 1948:
The petitioners, dealers of chocolates and toffees, challenged the notices issued under sections 21 and 22 of the Act. The notices were based on the Supreme Court judgment in Pappu Sweets and Biscuits, which the department interpreted as classifying toffee/chocolate as unclassified items rather than sweetmeat. The court found that the original assessment orders, which taxed toffee/chocolate at 5%, did not suffer from an error apparent on the face of the record. The assessment officer had considered relevant material and judicial pronouncements, including the Supreme Court judgment, before concluding the tax rate.

2. Classification and Taxability of Toffee/Chocolate:
The core issue was whether toffee/chocolate should be taxed as sweetmeat or as unclassified items. The court noted that the Supreme Court's judgment in Pappu Sweets should be read in the context of a notification under section 4-A of the Act, which dealt with the exemption from sales tax for new industrial units. The Supreme Court did not categorically declare toffee/chocolate as unclassified items for tax purposes. The court emphasized that the term "sweetmeat" could include toffee in its wider sense, and previous departmental practices and circulars treated toffee as sweetmeat.

3. Applicability of the Supreme Court Judgment in Pappu Sweets and Biscuits:
The court clarified that the Supreme Court's observations in Pappu Sweets were specific to the context of exemption notifications and should not be broadly applied to classify toffee/chocolate for tax purposes. The judgment should be interpreted in light of the specific issues it addressed, and not be taken out of context to support a different interpretation.

4. Jurisdiction Under Section 22 of the Act for Rectification of Mistakes:
The court held that the power under section 22 is limited to rectifying mistakes apparent on the face of the record, which do not include debatable questions of law or fact. The assessment officer had deliberated on the tax rate for toffee/chocolate during the original assessment, thus it was not a case of an apparent error. The court distinguished this case from others where the tax rate was accepted without discussion.

5. Alternative Remedy and Maintainability of Writ Petitions:
The court acknowledged that while alternative remedies exist, they are not an absolute bar to exercising jurisdiction under Article 226 of the Constitution. Given the legal questions involved, the court chose to address the merits of the case. However, for some petitions challenging orders under section 30 or seeking prohibition against tax imposition, the court directed the petitioners to pursue alternative remedies like appeals.

Individual Cases:

- Writ Petition No. 101 of 2000: Notices under sections 21 and 22 quashed; provisional assessment notices not quashed.
- Writ Petition No. 110 of 2000: Dismissed; petitioner directed to use alternative remedy.
- Writ Petitions Nos. 20, 281, and 294 of 2000: Dismissed.
- Writ Petition No. 48 of 2000: Notice under section 22 quashed; other reliefs denied.
- Writ Petition No. 912 of 1999: Notices under section 22 for 1993-94 and 1995-96 quashed; relief for 1999-2000 denied.
- Writ Petition No. 727 of 2000: Notice under section 22 quashed.
- Writ Petition No. 310 of 2000: Dismissed on the ground of alternative remedy.
- Writ Petition No. 1060 of 2001: Notice under section 22 quashed; other reliefs denied.

Conclusion:
The court quashed several notices issued under sections 21 and 22 of the Act, emphasizing that the original assessments did not suffer from apparent errors and that the Supreme Court's judgment in Pappu Sweets was misinterpreted by the department. The court directed petitioners in some cases to pursue alternative remedies.

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