2013 (8) TMI 859 - HC - VAT and Sales Tax

Reassessment proceedings on the ground that one Form 3-B filed by the assesse claiming concessional rate of tax on the turnover of raw material i.e. liquid detergent supplied by it to selling dealer holding recognition certificate for an amount exceeds Rs.5 Lakhs in view of Rule 25B (4) of the Rules framed under the U.P. Trade Tax Act is invalid - Held that - There was sufficient force in the argument of the learned counsel for the assesse that it was not a case of escapement of turnover as contemplated u/s 21 of the Act or under assessment or the like - Allied Motors Private Limited Versus Commissioner of Income-Tax 1997 (3) TMI 9 - SUPREME Court - the amended Sub-rule (4) of Rule 25-B which includes (ii) of second proviso as it stood on the date of issuance of form 3B will be available to the assesse. The irregularity, if any, was form 3-B curable and it will not in any manner invalidate the form 3-B which had been found valid otherwise - The assesse had fulfilled the conditions of section 4-B (i) (b) of the U.P. Trade Tax Act at least in the spirit of law - Filing of required form was the only mode to prove the existence of certain facts which had been done and if such form was not a forged or fabricated document and there was no element of fraud or suppression of facts, the defect, if any, was more in the domain of procedural part - procedural law lays emphasis on the spirit of law and not on form - The approach in such fact situation of courts should be justice oriented and not to find some fault here or there Order set aside Decided in favor of assesse.

Issues Involved:
1. Justification of reopening concluded assessment proceedings under Section 21(2) of the U.P. Trade Tax Act.
2. Validity of Form 3-B for turnover exceeding Rs. 5 Lakhs under Rule 25-B(4) of the U.P. Trade Tax Rules.
3. Applicability of amended rules to the facts of the case.
4. Interpretation and retrospective application of remedial amendments in Rule 25-B(4).

Detailed Analysis:

1. Justification of Reopening Concluded Assessment Proceedings:
The primary issue is whether the Additional Commissioner Grade-I, Commercial Tax, Meerut Zone, Meerut is justified in reopening the concluded assessment proceedings for the Assessment Year 2001-2002 under Section 21(2) of the U.P. Trade Tax Act. The reopening was based on the ground that Form 3-B filed by the petitioner for claiming a concessional rate of tax on the turnover of raw material (liquid detergent) exceeded Rs. 5 Lakhs, which was deemed invalid under Rule 25-B(4) of the U.P. Trade Tax Rules.

2. Validity of Form 3-B for Turnover Exceeding Rs. 5 Lakhs:
The petitioner disclosed the sale of liquid detergent amounting to Rs. 16,28,408/- to two companies and initially failed to produce Form 3-B during the assessment proceedings. Later, the petitioner submitted Form 3-B, which was verified and accepted by the Assessing Authority, reducing the tax demand. However, the department contended that a single Form 3-B covering transactions exceeding Rs. 5 Lakhs was invalid under Rule 25-B(4), necessitating the reopening of the assessment.

3. Applicability of Amended Rules:
The court examined the successive amendments to Rule 25-B(4) to determine which version of the rule applied to the case. The amendments aimed to reduce the procedural rigour and included provisions allowing a single form to cover transactions exceeding Rs. 5 Lakhs for entities with substantial turnovers. The petitioner argued that the rule as amended on the date of issuance of Form 3-B (31st May 2003) should apply, which included the provision allowing transactions exceeding Rs. 5 Lakhs for dealers with a turnover of Rs. 25 crores or more.

4. Interpretation and Retrospective Application of Remedial Amendments:
The court emphasized that the amendments to Rule 25-B(4) were remedial and intended to ease procedural burdens. The amendments should be applied retrospectively to benefit the business community and large turnover entities. The court cited precedents where remedial provisions were given retrospective effect to ensure reasonable interpretation and avoid undue hardship.

Conclusion:
The court concluded that the amended Rule 25-B(4), as it existed on the date of issuance of Form 3-B, applied to the case. The petitioner's selling dealer had a turnover exceeding Rs. 25 crores, making the form valid for the entire transaction amount. The court found no grounds for reopening the assessment under Section 21 of the Act, as the procedural irregularity was curable and did not invalidate the form. The petition was allowed, and the impugned order granting sanction for reopening the assessment was quashed. No order as to costs was made.

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