2010 (7) TMI 888 - HC - VAT and Sales Tax

Validity of the notice under section 21 of the U.P. Trade Tax Act dated March 20 2010 issued by the Deputy Commissioner Commercial Tax sector 12 Meerut Zone Meerut challenged Held that - Initiation of the proceedings under section 21 of the Act under the Central Sales Tax Act cannot be said to be without any basis and merely on account of change of opinion. We decline to interfere in the matter under article 226 of the Constitution of India and to quash the proceeding at this stage. However it will be open to the petitioner to participate in the proceedings under section 21 of the Act and file the necessary reply. Writ failed.

Summary

Issues:
Challenge to validity of notice under section 21 of the U.P. Trade Tax Act for assessment year 2003-04 under the Central Sales Tax Act.

Detailed Analysis:

1. Challenge to Notice and Reliefs Sought:
The petitioner challenged the notice under section 21 of the U.P. Trade Tax Act issued by the Deputy Commissioner, Commercial Tax, Meerut, under the Central Sales Tax Act. The petitioner sought various reliefs including quashing the order and notice dated March 20, 2010, and restraining the respondents from proceeding further. The petitioner argued that the initiation of proceedings was based on a change of opinion, which is impermissible in law.

2. Background and Facts:
The petitioner, a private limited company, had units across different states, including one in U.P. manufacturing Indian-made foreign liquor. The assessment year in question was 2003-04 when the company was known as Seagram India (P) Limited. The petitioner had shown stock transfers of IMFL to its depot outside U.P. based on submitted form F, which was accepted in the original assessment order.

3. Reasoning and Legal Provisions:
The Additional Commissioner sought approval for reassessment beyond the limitation period due to incomplete columns in form F. The initiation of proceedings under section 21 of the Act was justified as per the Central Sales Tax Act amendments in 2002, making form F mandatory for stock transfer claims. The court referred to a Supreme Court case emphasizing the necessity of a valid form for exemption claims.

4. Court's Decision and Analysis:
The court analyzed section 21 of the Act, stating that if exemption was wrongly allowed, proceedings could be initiated. The court found that the initiation of proceedings based on incomplete form F was not without basis, as the petitioner did not dispute the allegations of incomplete columns. Consequently, the court declined to interfere under Article 226 but allowed the petitioner to participate in the ongoing proceedings under section 21 of the Act.

5. Conclusion:
Ultimately, the court dismissed the writ petition, allowing the petitioner to engage in the proceedings under section 21 of the Act. The judgment highlighted the importance of valid form submissions for exemption claims and upheld the initiation of proceedings based on incomplete documentation, refusing to quash the proceedings at that stage.