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TMI Blog2008 (11) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the goods for sales and purchase, it shall not be lawful for the Government to interfere under the garb of section 15A(1)(qq) read with section 8A(2) of the Act. Appeal allowed. - Writ Petition No. 405 (M/B) of 1994 & 3330(M/B) of 1993 - - - Dated:- 20-11-2008 - DEVI PRASAD SINGH AND SATISH CHANDRA DR. , JJ. Heard Sri C.S. Lodha, learned Senior Advocate, assisted by Sri Nandit Srivastava, learned counsel for the petitioner and Sri H.P. Srivastava, learned Additional Chief Standing Counsel for the respondents. The question, cropped up, in this case is as to whether in the event of a situation where an industry has been granted exemption under section 4A of the U.P. Trade Tax Act, 1948 (in short, the Act ), notice can be issued under section 15A(1)(qq) of the Act for imposition of the penalty relying upon the provisions contained in section 8A(2)(a) of the Act and in case it is permissible, then under what circumstances. The Lipton India Limited, which is a public limited company has got branches at Kolkata (West Bengal), Ambattur, Madras (Tamil Nadu), Dharwad in Karnataka, and Etah (U.P.). During the pendency of the writ petition, the nomenclature has been chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for other, there will be a presumption that the petitioner has been charging the trade tax indirectly. Feeling aggrieved with the order passed by the Assistant Commissioner (Sales Tax), the petitioner preferred an appeal before the Tribunal under section 10 of the Act. The Tribunal, by order dated April 17, 1993, a copy of which has been filed as annexure No. 2 to the writ petition, set aside the order passed by the Assistant Commissioner, Sales Tax and held that the department has illegally issued penalty notice under section 15A(1)(qq) of the Act. The judgment of the Tribunal has been filed as annexure No. 3 to the writ petition. It has not been disputed by the learned Additional Chief Standing Counsel that the Tribunal's judgment has not been impugned by the State Government by preferring a writ petition in this court or before appropriate higher forum in accordance with law and it attains finality. The learned Tribunal has recorded a specific finding that on the perusal of the material on record, there appears to be no evidence which may substantiate the allegation of the charging of trade tax by the petitioner. The appellant being bona fide dealer was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the quantity of tea bags indicating the respective industries from where they are produced and the price of tea bags was assessed as same. Thereafter the respondent had issued fresh notices under section 15A(1)(qq) of the Act on May 17, 1993. Feeling aggrieved by the notice issued by the respondents, the petitioner had approached this court by preferring the writ petition under article 226 of the Constitution of India, which was decided finally vide judgment and order dated August 3, 1993. While deciding the controversy in Writ Petition No. 3330 (M/B) of 1993, this court had taken the notice of the fact that the Commissioner, Trade Tax has got ample power to adjudicate the controversy with regard to the fact as to whether the trade tax is payable over the goods produced at Etah industry or not. The observation made by the Division Bench of this court in the judgment [W.P. No. 3330(M/B) of 1993, decided on August 3, 1993] is reproduced as under: The judgment of the Tribunal has been annexed as annexure No. 2 to the writ petition, dated April 17, 1993. The fresh notice issued thereafter is annexed as annexure No. 3 and onward. Notice, annexure No. 3, is dated May 17, 1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as tax. The indication of similar composite price over the tea bags produced at Etah branch and other branches situated outside the State of U.P. shall not make out a case that the petitioner is charging trade tax. The learned counsel for the petitioner has relied upon the judgments reported in Maxims Delicacies (Private) Limited v. State of U.P. [1988] UPTC 100 (All), Kumar Fuels v. State of Uttar Pradesh [1986] 63 STC 467 (All); [1986] UPTC 357, Dilip Industries v. State of U.P. [1987] UPTC 412 (All), Mahalaxmi Roller Flour Mills v. State of U.P. [1984] UPTC 1270 (All), Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191 (SC), Ahmedabad Steel Craft and Rolling Mills v. State of Gujarat [1983] 52 STC 227 (Guj), Mather Platt Ltd. v. State of Maharashtra [1983] 53 STC 104 (Bom), Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax [1971] 28 STC 331 (SC), Subhash Iron Steel Rolling Industries v. State of Gujarat [1982] 50 STC 305 (Guj), Bhaidas Cursondas Co. v. Commercial Tax Officer [1975] 35 STC 459 (Karn), Bata India Limited v. State of Maharashtra [1983] 53 STC 132 (Bom), Sri Neelakanteshwar Oil Industries v. State of Karnataka [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... havir Prasad, Northern Railway City Booking Agent, Chowk, Allahabad v. Commissioner of Sales Tax [1993] UPTC 1283, C.A. Abraham v. Income-tax Officer, Kottayam [1961] 41 ITR 425 (SC); AIR 1961 SC 609. Before adjudicating the controversy on merit, it shall be appropriate that we should record a finding with regard to the alternative remedy available to the petitioner under the Act. Admittedly, the petitioner has approached this court raising the question of jurisdiction of authorities. Whether the authorities have got right to issue the impugned notice under the Act or not? What is the effect of the judgment of the Tribunal with regard to almost same cause of action? Whether the Tribunal has recorded a finding that no notice can be issued for imposition of penalty under the Act? Since question of jurisdiction has been raised and more so the Commissioner while adjudicating the controversy in pursuance of the earlier judgment of this court had not applied his mind being the supervisory authority, whether the writ petition should be dismissed exclusively on the ground of availability of alternative remedy? By a catena of judgments, since long, the honourable Supreme Court settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants that a remedy by way of an appeal being available to the respondent, the High Court ought not to have entertained his petition filed under article 226/227 of the Constitution. There is no gainsaying that in a given case, the High Court may not entertain a writ petition under article 226 of the Constitution on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. The rule of exclusion of writ jurisdiction due to availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In these circumstances, an alternative remedy does not operate as a bar. (See: Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1, Harbanslal Sahnia v. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy relates to a situation where exemption was granted under section 4A of the Act but the allegation against the taxpayer was that he has charged the trade tax before the grant of exemption by the State. Naturally, the Department was right in issuing notice for imposition of tax or for penalty for the period when no exemption was granted by the State Government but the assessee was charging trade tax from the customers. The case of Anil Kumar [2006] 145 STC 656; [2005] 11 SCC 451 does not seem to be applicable. The case of Radha Krishna Mahavir Prasad [1993] UPTC 1283 as well as Ansal Papers [2008] UPTC 21, relied upon by the learned Additional Chief Standing Counsel does not relates to the controversy where the State Government has taken action for imposition of penalty on an industry where exemption was granted under section 4A of the Act. Needless to say that every judgment is to be looked into by the court keeping in view the facts and circumstances of a particular case. The propositions of law laid down by the court based on different facts and statutory provisions cannot be applied in a case where they are not attracted being based on different facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of tax. Power to impose penalty vests in section 15A(1) of the Act. In the present case section 15A(1)(qq) of the Act is not attracted which provides that where an assessee realises any amount as trade tax on sale of purchase of goods or any amount in lieu of such tax by giving it any different name or colour in contravention of a provisions of sub-section (2)(a) of section 8A of the Act, the assessee shall be liable for payment of penalty. The condition precedent as appears from section 15A(1)(qq) of the Act is that the dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him in the manner provided by section 8A(2)(a) of the Act. Unless the provision contained in section 8A(2) is satisfied, primafacie no notice can be issued under section 15A(1)(qq) of the Act. The provision contained in section 2(i) of the Act defines the word turnover and section 2(ii) defines the word turnover of purchases . The word turnover provides that the aggregate amount for which goods are supplied or distributed by way of sale or are sold by a dealer either directly or through another, on his account or on account of others, whether for cash or deferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to be set aside. [Commissioner of Trade Tax, Lucknow v. Hanuman Trading Co., Varanasi [2005] STI 754 (All)] Section 4A. Exemption from trade tax in certain cases. (1) Notwithstanding anything in any other provisions except the provisions of section 3H of this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promoting the development of any industry in the State generally or in any district or parts of the district in particular, it may on application or otherwise, in any particular case or generally, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such notification, which may be the date of the notification or a date prior or subsequent to the date of such notification and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production, and in any other case from the date following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 13 or section 13A, or both, as the case may be. The provision contained in rule 4 of the Rules is wide enough to cover the interpretation of Act, Rules and Regulation as well as the question cropped up because of action or inaction of the subordinate authorities, the Commissioner can give finding over the question or dispute so referred. For convenience, the aforesaid statutory provision of rule 4 is reproduced as under: Rule 4. Trade tax authorities and their powers. (1) The Commissioner shall have jurisdiction over the whole of the State and shall exercise the powers conferred, and perform the duties imposed, by or under the Act or these Rules. (2) Consistent with the provisions of the Act and these Rules, the Commissioner may issue instructions generally regulating the procedure to be followed in carrying out the provisions of the Act or these Rules. (3) The Commissioner shall have all the powers exercisable by his subordinate authorities other than the appellate authorities under section 9. (4) Subject to the general control of the Commissioner, the Additional or Joint Commissioner shall exercise all the powers vested in the Commissioner. (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occur. Once a notification is issued in pursuance of power conferred by the Act, it has got statutory force. The relevant portion is reproduced as under: (page 116 of STC) ...The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expression occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them...The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself... In Commissioner of Wealth Tax, A.P. v. Officer in-charge (Court of Wards), Paigah [1976] 105 ITR 133 (SC); [1977] AIR 1977 SC 113, the honourable Supreme Court held that correct rule is that courts have to endeavour to find out the exact sense in which the words have been used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nglish equitable doctrine with regard to liquidated damages and penalties. A 'penalty' in a contract, is generally taken to mean not a sum to be recovered eo nomine but, a provision for securing the due performance of the contract. A penalty may be defined to be an agreement to pay a greater sum to secure the payment of a less sum. A penalty is a sum stipulated to be paid in gross in the event of a breach of a contract, the articles of which covenant for the performance of several things, or where a large sum is agreed to be paid on the non-payment of a smaller sum, or the non-performance of a duty, the damages resulting from which may be ascertained with the reasonable certainty, and which is much less than the sum expressed. A penalty is a sum named as damages to be recovered for violating an agreement or promise, in lieu of damages. An agreement that, if the interest on a note is not paid when due, the whole note principal and interest shall become due and payable, is not in the nature of a penalty or forfeiture, and one against which equity, by reason thereof, will not enforce its terms. There are no penalties, no damages called for. Merely altering the day o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r commission of an 'offence' in a criminal court. Director of Enforcement v. MCTM Corpn. Pvt. Ltd. AIR 1996 SC 1100, 1104 [Foreign Exchange Regulation Act (7 of 1947), S. 23(1)(a)] Penalty and forfeiture. The noun 'penalty' is defined 'forfeiture' or a sum to be forfeited for non-compliance with an agreement; a fine, (Worcester's Dictionary). These definitions show that in one sense, the words 'forfeit' and 'penalty' are substantially synonymous. Penalty and punishment: 'Penalty' is synonymous with 'punishment', in connection with crimes and is fixed by the law defining the criminal Act. Thus, even keeping in view the dictionary meaning of the word penalty , it shall be incumbent upon the authorities to establish that the petitioner has violated some statutory provisions, agreement, contracts or terms and conditions of the licence or exemption certificate while fixing the price of the blended tea bags produced from other industries situated outside the State. It has been not brought into the notice of this court that as to under what manner and how the petitioner had violated the statutory provisions under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el that the company which has got branches in more than one State has to maintain the equality of rates of its product, produced from industry situated in more than one State. Accordingly, we are of the view that while issuing notice under section 15A(1)(qq) of the Act, no material has been found by the respondents to record the finding of fact that the petitioner has been charging trade tax with different name and colour. While interpreting the provision contained in section 15A(1)(qq) of the Act, the provision contained in section 8A(2)(a) of the Act cannot be excluded. Both the provisions should be read simultaneously to assess the jurisdiction of the taxing authority for issuance of notice under section 15A(1)(qq) of the Act. In the present case, it is also not disputed that on the invoice of the produce of Etah industry, a specific indication has been made by the petitioner providing that sales tax is not being charged. It is not disputed by the respondents and neither it has been indicated in the counter-affidavit that in the invoice with regard to goods of Etah branch, the petitioner has not indicated that trade tax is not chargeable. The invoices filed in the writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r must on information at his disposal believe that income has been under-assessed by reason of failure fully and truly to disclose all material facts necessary for assessment. Such a belief, be it said, may not be based on mere suspicion: it must be founded upon information. In view of the above, for exercising power under section 15A(1)(qq) of the Act, the authorities must record a satisfaction and there must be some material on record which may fulfil the condition provided by section 8A(2)(a) of the Act. In the absence of sufficient material fulfilling the condition required by section 8A(2)(a) of the Act, it shall not be open for the authorities to issue notice under section 15A(1)(qq) of the Act. The next question cropped up for adjudication with regard to composite price is when the eligibility certificate issued and enforced, whether the assessing authority has got right to proceed with the matter. The learned Additional Chief Standing Counsel on the basis of pleading in the counteraffidavit has made a statement that Department has not taken any initiative to proceed with the assessment or add quantum of assessment. Though the learned Additional Chief Standing Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 117 STC 244 (Karn), Commissioner of Sales Tax v. Madhya Bharat Papers Ltd. [1996] 103 STC 142 (MP) and Maurya Timbers [1997] 104 STC 243 (P H). However, it would be appropriate to reproduce the observation of the honourable Supreme Court in the case of Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax [1971] 28 STC 331. The relevant portion is reproduced as under: (page 334) ...But that provision does not give any statutory power to collect sales tax as such from any class of buyers. There is no other provision in the Act which confers such a power on the dealers. Unless the price of an article is controlled, it is always open to the buyer and the seller to agree upon the price to be payable. While doing so it is open to the dealer to include in the price the tax payable by him to the Government. If he does so, he cannot be said to be collecting the tax payable by him from his buyers. The levy and collection of tax is regulated by law and not by contract. So long as there is no law empowering the dealer to collect tax from his buyer or seller, there is no legal basis for saying that the dealer is entitled to collect the tax payable by him from his buyer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... branches of the petitioner-company like Kolkata, Chennai and Karnatka is same. Needless to say that uniformity in price of the same product is a necessary condition for a public limited company even if the industries are situated in various parts of the country. The procedure to grant exemption under section 4A of the Act is beneficial provision and is an incentive to the industrialist to establish their industries in the backward areas of the State so that people of the locality may be benefited in various ways like employment, etc. Once the Government exempt the payment of trade tax under section 4A of the Act, which is an incentive given to the industrialists then it is not open for the Government to take initiative only on the ground that the prices of the product is same produced by various units situate in various parts of the country. Whether the sales tax is paid in other State or not, is not a concern for the State Government. The Government is concerned only with the action or inaction of the industries in its own State. The Government have to see only whether the conduct of the petitioner or other industries is proper or not, keeping in view the statutory provision. Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount separately. We are agreed with the proposition laid down by the Karnatka High Court. In the case of Bata India Limited [1983] 53 STC 132, the Bombay High Court again reiterated the aforesaid principle and held that the dealer is authorised to pass on to his purchaser the tax which he is liable to pay to the Government but that should be done by raising of separate agreement expressed or implied with the purchaser that in addition to the price he will also pay to the dealer the amount of tax which has become liable to pay to the Government. However, it is optional for the dealer to collect or not to collect the amount of tax. In case a dealer fixes his sale price by taking into account the amount of tax which he would have to pay by charging a lump sum price and not showing separately the amount collected by way of tax, such lump sum price would be the price of the goods because it would be impossible to determine whether or not the dealer had taken into account the amount of tax which he would have to pay. A Division Bench of the Karnatka High Court in the case of Sri Neelakanteshwar Oil Industries [1995] 98 STC 303 had reiterated the aforesaid proposition of law with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of the goods are assessed by the industrialists or producers keeping in view the various factors like cost of construction of building, salary payable to workmen, cost of raw material, cost of transportation, cost of management and so many other things. Accordingly as held by the honourable Supreme Court in the case of Delhi Cloth and General Mills Co. Ltd. [1971] 28 STC 331 if there is no some statutory provision regulating the production, cost or price of the goods for sales and purchase, it shall not be lawful for the Government to interfere under the garb of section 15A(1)(qq) read with section 8A(2) of the Act. In view of the above, the writ petition deserves to be allowed. Accordingly, the writ petition is allowed. A writ in the nature of certiorari is issued quashing the impugned order dated December 29, 1993, contained in annexure No. 12 to the writ petition, passed by the Commissioner of Sales Tax, U.P., Lucknow, as well as notices issued in pursuance of the provision contained in section 15A(1)(qq) of the Act for the assessment years 1989-90 to 1992-93 and respondents are restrained from imposing penalty in pursuance of the proceeding in question. No order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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