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TMI Blog2014 (4) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme under a taxing statute is well established as so many advantages are attached to such scheme besides being hassle free to the dealer - It also avoids unnecessary litigation - The department in its turn receives a fixed amount of tax without undertaking the assessment work and, thus, saves a lot of time - It also facilitates the speedy recovery of tax. Agreement to Scheme - Held that:- Relying upon Venkateshwara Theatre v. State of Andhra Pradesh [1993 (5) TMI 157 - SUPREME COURT OF INDIA] - Liability of payment of tax is dependent upon the agreement entered into by the parties and the amount so agreed would continue to be payable by the company notwithstanding the fact that the company could not produce during the period for which it had opted for composition under Section 7-D - The said scheme is not relatable to any actual turn over but depends upon the agreement under the scheme - The company once exercise its option under compounding scheme cannot be permitted to turn around and resile from its liability mere on the ground that it had no turn over or had not produced during the said period - Government Orders dated 12.01.2007, 30.07.2007 and 22.05.2009 are fully justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years or more years preceding the date 31.03.2003 and which resume production in the assessment year 2003-04, such units would be liable to pay proportionate compounding fees for the period starting from the date of their restarting production. Sri S.D. Singh, learned Senior Advocate has submitted that the petitioner company had started production on 23.10.2003 and as per compounding scheme the company was liable to pay only from the date of starting production for the said financial year. He has also submitted that company was required to pay compounding fee proportionate to the remaining period beginning from the date of commencement of their manufacturing activity i.e. 23.10.2003. He has also submitted that the company which has started production on 23.10.2003 and in pursuance of the compounding scheme the company has deposited the entire compounding fees as demanded and simultaneously represented against the computation and realisation of such high fees and there was no justification for realising compounding fees for the period of 01.04.2003 to 22.10.2003 (six months and 22 days) during which admittedly petitioner company did not engage any manufacturing activity and admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions advanced by the learned counsel for the parties and perused the record. The State Government in exercise of power under Section 7-D of the Act, 1948 had issued Government Order on 19.05.2003 for the assessment year 2003-04 known as Compounding Scheme . The relevant and salient features of the said scheme are quoted as under:- The petitioner is a company duly incorporated under the Indian Companies Act, 1956 and engaged in manufacture and sale of refined oil. The petitioner company was registered on 02.04.2003 in the department and started actual production since 23.10.2003. Initially installed capacity of the manufacturing unit was 8000 tonnes on 23.10.2003 and subsequently, increased to 9000 tonnes. The petitioner modified the application for compounding with installed capacity of 9000 tonnes. The last date of application under the compounding scheme was 31.05.2003, the complete procedure was given under the said scheme and the merchant who were interested to avail the said facility had to apply the same on the format alongwith full description. The scheme alongwith format has been brought on record through annexure No. 1 to the writ petition. The compou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arification dated 03.03.2006 made by the Commissioner, Trade Tax by which it had been clarified that the compounding will be admissible for those units, which had started production in the middle of the year 2003-04 proportionately, for the period they had actually made production and for that purpose even if the production started in the middle of month, the entire month will be counted for production but those units, which had paid the entire amount under the compounding scheme for the entire year, will not be given any refund on such clarification. Section 7-D of the Act runs as under :- 7-D. Composition of tax liability-Notwithstanding anything contained in this Act, but subject to directions of the State Government, the Assessing Authority may agree to accept a composition money either in lump sum or at any agreed rate on his turnover in lieu of tax that may be payable by a dealer in respect of such goods or class of goods and for such period as may be agreed upon: Provided that any change in the rate of tax which may come into force after the date of such agreement shall have effect of making a proportionate change in the lump sum on the rate agreed upon in relation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deals with the assessment and payment of tax. A non-obstante clause, as observed by the Apex Court in the case of State of Bihar v. Bihar M.S.K.K. Mahasangh and Ors. AIR 2005 SC 1605, is generally appended to a section with a view to give the enacting part of the section, in case of a conflict, an overriding effect over the provision in the same or other Act mentioned in the non-obstante clause. It is equivalent to saying that in spite of the provisions or Act mentioned in the non-obstante clause, the provision following it will have its full operation or the provisions embraced in the non-obstante clause will not be an impediment for the operation of the enactment or the provision in which the non-obstante clause occurs. The payment of compounded tax is a convenient, hassle free and a simple method of assessment. A dealer who has opted for payment of lump sum amount in lieu of tax, is not required to file monthly or quarterly return of its turnover. It has to pay a fixed sum of money as tax as agreed upon by the department. It is the choice of a dealer to opt for compounded payment of tax and if the said choice is in accordance with the scheme and is ultimately accepted by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. Similar view has been taken by the Apex Court in the case of M/s Mycon Construction Ltd., M/s Venus Castngs (P) Ltd. and Supreme Steels and General Mills (supra). 33. A Full Bench of this Court in the case of Satish Prakash Ajai Kumar (supra) while considering the provision of Section 3(1)(b) of the U.P. Sugarcane Purchase Tax Act, 1961 and Rule 13 of the Rules framed thereunder, has held that they do not contemplate any exemption from the liability for payment of tax by the owner of a unit who has opted for payment of tax on assumed basis merely because he has, by chance or on account of some mechanical defect, been unable to work some of the crushers in his unit. 34. Clause 19 of the scheme under which the petitioner had applied for composition, specifically provided that if the firing is started late or is not commenced or, for any other reason, the amount of composition money would neither be reduced nor changed. Thus, from the provision of Section 7-D of the Act as also the scheme announced thereunder, we are of the considered opinion that the liability for payment of tax is dependent upon the agreement entered into by the parties and the amount so agreed would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney as tax as agreed upon by the department. It is a choice of company to opt for payment of compounded tax and if the said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. The department as well as the company or the merchant are bound by the said agreement. The company which has opted to pay tax in lump sum under Section 7-D of the Act, displaces the requirement of regular assessment proceeding and the quantification of tax liability and eventually the liability is to be governed on the basis of an agreement. As per the terms of the scheme which would bind both the parties. It is further clarified that the compounding scheme has many advantages, once opted to it, as it is hassle free and also avoids unnecessary litigation. The department in turn received a fixed amount of tax without undertaking the assessment work and thus saves a lot of time. In the present matter, the petitioner had applied for composition without any conditionalties , the same was with free will without any coversion or subjugation, whereas the Clause 16 of the agreement specifically provides if the production is started late or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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