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2015 (3) TMI 1002 - HC - VAT and Sales TaxTaxability of molasses - ex-parte order - it was submitted that entire proceedings against the assessee were held ex-parte and that no notices had been served upon the assessee, since the Unit had been taken over by the Receiver under the orders of the Court dated 18.9.2009 and the possession thereof has also been handed over to the Bank on 3.11.2012 - Further submission that interest on the amount of admitted tax had already been deposited by the assessee inspite of financial hardship being faced by the Unit and therefore in view of the bonafide conduct of the assessee no penalty should have been imposed under section 54(1) and its sub sections of the Act, 2008. Held that - Orders cannot be said to be ex-parte as from the record it is established that the notices were adequately served upon the Unit. However, what is not clear is whether the notices were served upon the assessee or whether they were served upon the Receiver and what would be the effect, once the Unit had been taken over by the Receiver on 18.9.2009. These questions have not been decided by the Tribunal while justifying the imposition of penalty upon the assessee. The Tribunal has also not taken into consideration the question as to whether molasses would be taxable or not in view of the judgment of the Court in the case of SAF Yeast Company Pvt. Ltd. (2008 (10) TMI 583 - ALLAHABAD HIGH COURT) as well as in the case of D.S. M. Group of Industries (2002 (2) TMI 1310 - ALLAHABAD HIGH COURT). - Order of Tribunal is not sustainable - Matter remanded back - Decided in favour of assessee.
Issues:
Challenges to the common order of the Commercial Tax Tribunal Lucknow Bench; Imposition of penalties under section 54(1) of the U.P. VAT Act, 2008; Non-receipt of notices by the assessee due to possession being taken over by Receiver; Taxability of molasses under U.P. Trade Tax Act; Financial difficulties leading to non-payment of admitted tax; Applicability of penalties considering financial constraints; Adequacy of notices served on the Unit or the Receiver; Need for reconsideration by the Tribunal. Analysis: The judgment dealt with challenges against a common order of the Commercial Tax Tribunal Lucknow Bench where the appeals of the revisionist were rejected. The assessee, a Khandsari Unit, faced financial issues due to a non-performing asset status with Allahabad Bank, leading to penalties under section 54(1) of the U.P. VAT Act, 2008. The possession of the Unit was taken over by a Receiver, impacting notice delivery. The Tribunal imposed penalties without discussing the Receiver's appointment and possession transfer to the Bank, raising questions on the validity of the penalties. The revisionist argued that molasses were not taxable under the U.P. Trade Tax Act, citing precedents. They contended that penalties should not apply due to the bonafide conduct of depositing interest despite financial constraints. The Tribunal's order did not address the Receiver's role and the financial difficulties faced by the assessee, leading to a lack of clarity in the decision-making process. The Court noted discrepancies in the notice delivery and the Tribunal's failure to consider the molasses taxability issue and the financial challenges faced by the assessee. It directed the matter to be reconsidered by the Tribunal after providing adequate notice to the assessee. The judgment emphasized the need for a comprehensive review of the case in light of the observations made, highlighting the importance of addressing all relevant aspects before imposing penalties or making tax determinations. The judgment underscored the significance of due process and proper consideration of all circumstances, especially when financial constraints impact tax compliance. It highlighted the necessity for clarity in notice delivery and the relevance of legal precedents in determining tax liabilities. The decision aimed to ensure a fair and thorough examination of the case by the Tribunal, emphasizing the importance of procedural fairness and legal accuracy in tax matters.
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