2021 (11) TMI 435 - HC - VAT and Sales Tax

Levy of tax on Bitumen - no authorisation was sought by the assessing authority and given by the Additional Commissioner, Allahabad Zone, Allahabad for initiation of proceeding as per provision to section 21(2) of the U.P. Trade Tax Act 1948 to tax Bitumen - material on record to form a reason to believe that the turnover thereof has escaped from assessment, or not - no exemption was given in the original assessment order - Tribunal was legally justified or not addressing itself on the application given under section 12-B, of the U.P. Trade Tax Act, 1948 - Bitumen was supplied by the department to the contractee for the construction of road in the civil work contract performed during the assessment year 2001-02. HELD THAT - The record reveals that at the time of passing of the original assessment order the benefit of the same was given after due verification. Thereafter reassessment proceeding has been initiated . The permission was granted by the Additional Commissioner, Allahabad Zone, Allahabad by order dated 15.11.2006. The reassessment order dated 1.9.2006 reveals that two dealers from which tax paid purchases has been shown by the revisionist are namely; M/s Singh Stone Mill, Kabrai, Mahoba and M/s Mahashakti Stone Mill, Kabrai, Mahoba. There is no information whatsoever contrary to the material on record. So far as M/s Singh Stone Mill for disbelieving the purchases made by the dealer is concerned, the only information has been received that the selling dealer has neither produced bill book nor has given the details of sale list. From the perusal of the record it shows that there is no material which could be attributed that the wrong claim having been made by the revisionist. The revisionist had admittedly shown purchases of gitti against the cash memo which has not been disbelieved at any stage. The reassessment proceeding has only been initiated as the selling dealer has not shown the cash memo and the sale list. There is no finding of any material so far as M/s Mahashakti Stone Mills as no enquiry what soever has been brought on record. The initiation of reassessment proceeding is bad. Further once the revisionist has brought on record by means of an application under section 12-B of the Act before the Tribunal that the Bitumen has neither been used nor purchased by the revisionist but the same was given by the PWD department for its use for repairs of the road. In absence of any material on record the assessing authority was not justified in imposing tax on the use of Bitumen. The revision is allowed with cost of ₹ 5,000/- and the question of law is answered accordingly.

Summary

Issues:
1. Imposition of tax on Bitumen without proper authorization under U.P. Trade Tax Act
2. Justification of tax levy on Bitumen without evidence of turnover escape
3. Tribunal's failure to address application under section 12-B of U.P. Trade Tax Act

Analysis:
1. The case involved a challenge against the imposition of tax on Bitumen without proper authorization under the U.P. Trade Tax Act. The revisionist contended that the reassessment order was passed without sufficient material and that the assessing authority did not have a valid reason to believe that the turnover had escaped assessment. The Court observed that for reassessment proceedings, there must be valid reasons to believe based on relevant facts, as highlighted in the case of M/s Royal Trading Co. vs. Trade Tax Officer. The Court found that there was no concrete evidence to support the imposition of tax on Bitumen, especially when the revisionist provided evidence that the Bitumen was supplied by the PWD department for road repairs, not purchased or used by the revisionist. Therefore, the Court held that the imposition of tax on Bitumen was unjustified.

2. The second issue pertained to the justification of tax levy on Bitumen without any evidence of turnover escape. The Court noted that the reassessment proceedings were initiated based on doubts regarding purchases of Gitti from registered dealers. However, the revisionist had provided cash memos as evidence, which were not disbelieved at any stage. The Court emphasized the importance of having valid reasons to believe for initiating reassessment, as established in various legal precedents. Since there was no substantial evidence to support the tax levy on Bitumen and no material to suggest any wrongdoing by the revisionist, the Court concluded that the reassessment proceedings were unjustified.

3. The final issue raised was the Tribunal's failure to address the application under section 12-B of the U.P. Trade Tax Act, along with an affidavit and a certificate from the Superintending Engineer certifying the use of Bitumen by the PWD department. The revisionist argued that this evidence should have been considered by the Tribunal. The Court agreed with the revisionist, stating that in the absence of any material on record justifying the imposition of tax on Bitumen, the assessing authority was not justified in levying tax on its use. Therefore, the Court allowed the revision, imposed a cost, and directed the opposite party to comply with the order within the specified timeframe.

In conclusion, the High Court of Allahabad ruled in favor of the revisionist, highlighting the importance of valid reasons to believe in initiating reassessment proceedings and emphasizing the need for concrete evidence to support tax levies. The Court's decision was based on the lack of substantial evidence and justification for imposing tax on Bitumen, ultimately leading to the allowance of the revision with costs.