2003 (12) TMI 602 - HC - VAT and Sales Tax

Seeking to quash the proceedings u/s 21 of the U.P. Trade Tax Act, 1948 in pursuance of the permission/ authorisation granted by the respondent No. 2 under the proviso to section 21(2) of the U.P. Trade Tax Act, 1948 - Validity of impugned order and notice - business of civil construction and supply of building material to Government departments especially railways - HELD THAT -In the present case the order dated January 16, 2003, annexure 2 to the writ petition, shows that the allegations against the petitioner were that the petitioner had done sale and construction work of Rs. 17,22,771 for the Divisional Railway Manager, Jhansi, but he had not submitted the contract papers in this connection. The further allegation was that an exemption of Rs. 10,07,496 had been granted to him and the purchase papers in that connection were not on record. The notice, copy of which is annexure 5 to the writ petition, also makes similar allegations against the petitioner and also states that the petitioner had not submitted the papers regarding purchases or its photocopies. Thus the allegation against the petitioner was that he had not got such purchases verified nor had he produced the relevant vouchers regarding the purchases. He had not produced the relevant account books or bills and vouchers in support of the purchases made by him. In our opinion this was relevant material on the basis of which action u/s 21 could be taken, and we cannot go into its adequacy. As observed by the division Bench of this Court in Kalpana Kala Kendra v. Sales Tax Officer 1988 (12) TMI 318 - ALLAHABAD HIGH COURT , taxes must be collected by the statutory machinery, and hence action could be taken u/s 21, whether it results on account of concealment or fraud by the assessee or as a result of negligence or ignorance of the assessing officer. The escapement of assessment contemplated by section 21 may be due to various reasons. We are of the opinion that there was material before the respondent-authorities prima facie showing that there was both concealment by the petitioner as well as negligence and ignorance on the part of the assessing officer, as already discussed above. In the present case there was certainly lack of care on the part of the assessing officer who framed the original assessment as he did not verify the purchases made by the petitioner and he did not look into the contract document and appears to have wrongly granted exemption. Hence there is no illegality in the impugned order and notice. Thus, we find no merit in this petition and it is dismissed.

Issues Involved:
1. Validity of proceedings u/s 21 of the U.P. Trade Tax Act, 1948.
2. Legality of the notice dated February 15, 2003, issued by the Assistant Commissioner, Trade Tax.
3. Adequacy of the material for reassessment under section 21 of the U.P. Trade Tax Act, 1948.
4. Timeliness of the challenge to the orders and notices.

Summary:

1. Validity of proceedings u/s 21 of the U.P. Trade Tax Act, 1948:
The petitioners challenged the proceedings initiated u/s 21 of the U.P. Trade Tax Act, 1948, arguing that the original assessment was final and no fresh material justified reopening the assessment. The court noted that section 21(1) allows reassessment if the assessing authority believes that any part of the turnover had escaped assessment or was under-assessed. The court found that the Additional Commissioner had reason to believe that the exemption was wrongly granted and necessary papers were not on record, thus justifying the reassessment proceedings.

2. Legality of the notice dated February 15, 2003:
The petitioners contended that the notice dated February 15, 2003, was illegal as it did not contain reasons for reopening the assessment. The court observed that the petitioners had not challenged the notice promptly and there was an unexplained delay of seven months. Consequently, the court declined to examine the validity of the notice due to the belated challenge.

3. Adequacy of the material for reassessment under section 21 of the U.P. Trade Tax Act, 1948:
The court referred to previous judgments, including *Commissioner of Sales Tax, U.P. v. Bhagwan Industries (P) Ltd.* and *Kalpana Kala Kendra v. Sales Tax Officer*, to emphasize that reassessment can be initiated if there are reasonable grounds to believe that part of the turnover had escaped assessment. The court held that the allegations against the petitioner, such as not submitting contract papers and purchase documents, constituted relevant material for action u/s 21. The court reiterated that it cannot interfere on the ground of insufficiency of the material, only on the existence of the belief.

4. Timeliness of the challenge to the orders and notices:
The court highlighted that the writ petition was filed long after the order dated February 11, 2003, and the notice dated February 15, 2003. The court emphasized that a party must approach the court within a reasonable period and not at their convenience. The delay in challenging the orders and notices led the court to dismiss the petition on the grounds of laches, citing *Chandra Singh v. State of Rajasthan*.

Conclusion:
The court dismissed the petition, finding no merit in the arguments presented by the petitioners. The reassessment proceedings u/s 21 of the U.P. Trade Tax Act, 1948, were deemed valid, and the petitioners' delayed challenge to the orders and notices was not entertained. The court emphasized the importance of timely challenges and the adequacy of material for reassessment under the relevant legal provisions.

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