M/S Vaibhav Edibles Pvt Ltd vs State Of U.P. & Others
2014 Latest Caselaw 184 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

								Reserved
 

 

 

 
Case :- WRIT TAX No. - 1628 of 2009
 
Petitioner :- M/S Vaibhav Edibles Pvt Ltd
 
Respondent :- State Of U.P. & Others
 
Counsel for Petitioner :- S.D. Singh
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Ashok Bhushan,J.

Hon'ble Mahesh Chandra Tripathi,J.

(Delivered by Hon'ble M.C. Tripathi,J.)

Heard Sri S.D. Singh, Senior Advocate assisted by Sri Harsh Vardhan Gupta, learned counsel for the petitioner and Sri U.K. Pandey, learned counsel for the respondents.

The present writ petition has been with following prayers:-

"i. Issue a writ, order or direction in the nature of certiorari and to quash the Government Orders dated 12.01.07 (annexure-8), the order dated 30.07.07 (annexure-10) and the order dated 22.05.09 (annexure-12) both passed by respondent No. 3 in so far as they deny the claim of refund made by the petitioner.

ii. Issue a writ, order or direction in the nature of mandamus and direct the respondents to forthwith refund to the petitioner the sum of Rs. 8,38,800/- with statutory interest from the date of deposit till the date of refund.

iii. Award cost of this petition to the petitioner.

iv. Pass such other and further writ, order or direction in favour of the petitioner, as this Hon'ble Court may deem fit and proper in the circumstances of the case."

The petitioner applied for compounding of the liability of trade tax on the production of vegetables oil in pursuance of the compounding scheme under Section 7-D of U.P. Trade Tax Act dated 19.05.2003 hereinafter referred as "Act, 1948". The petitioner is a company duly incorporated under the Indian Companies Act, 1956 and engaged in manufacture and sale of refined oil. The State Government in exercise of its power under Section 7-D of the Act, 1948 issued direction on 19.05.2003 for assessment year 2003-04 for imposition of composition money on refined oil known as "Compounding Scheme". Under the said compounding scheme fees was to be computed and paid at the rate of Rs. 575/- per tonnes on production of refined oil not exceeding 120% per annum of the installed capacity of the refined oil unit and at the rate of Rs. 675/- per tonne on production exceeding such limit. As per the compounding scheme if the units are sick and remained closed for two 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 admittedly petitioner had made full compliance and also adhered to all the provisions of compounding scheme and the conduct of the company was bonafidy and in accordance to the law. He has further argued that as per the compounding scheme, the fee is to be realised in proportion of length of manufacturing activity, when company actually starts production. It is wholly unreasonable and discriminatory on the part of the State Government to deny the benefit for the period in which admittedly no production activity had been carried out by the company and in this regard the retention of the amount excess deposited by the petitioner's company is contrary to law and the order passed by the respondents are contrary to the compounding scheme and is liable to be set aside.

Sri U.K. Pandey, learned counsel for the respondents opposed the contention of the petitioner's counsel clearly stated that the State Government had initiated compounding scheme vide order dated 19.05.2003 in exercise of power under Section 7-D of the Act, 1948 for the assessment year 2003-04. He further states that the petitioner while obtaining for compounding had not requested for acceptance of compounding scheme in part of the assessment year rather company has accepted compounding scheme for complete assessment year and he rightly deposited the composition money for the entire assessment period and not entitled for any refund of the composition money deposited by him. He has also submitted that the petitioner had deposited money under Section 7-D under compounding scheme, the same was not an assessment order as such the application which had been moved by the petitioner under Section 22 was not maintainable and the same could not be decided under Section 22 of the Act and the same had rightly been rejected by the respondent. Once, the petitioner itself opted compounding scheme for the entire assessment year and deposited the requisite amount, then there was no occasion for making any somersault and start claiming that the amount could be realised only from the date of starting production. He further states that since the petitioner had deposited the composition money pursuant to the compounding scheme, the same cannot be refunded on the false claim made by the petitioner stating therein that he had carried out on business only for part of compounding period.

We have heard the rival submissions 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:-

dk;kZy; dfe'uj] O;kikj dj] mRrj izns'k (fof/k vuqHkkx)] fnukad 19 ebZ] 2003&dEI;wVj ifji= la0 [email protected] &i= la[;k&fof/k&1(3) fjQkbUM vk;y lek0 ;ks0&2003&[email protected]@O;kikj djA

leLr TokbUV dfe"uj (dk;Zikyd) O;kikj dj; leLr fMIVh dfe"uj (d0fu0) O;kikj dj; leLr vflLVsUV dfe"uj (d0fu0) O;kikj dj] mRrj izns'kA

le;d~ fopkjksijkUr 'kklu }kjk fu.kZ; fy;k x;k gS fd mRrj izns'k O;kikj dj vf/kfu;e] 1948 dh /kkjk 7&?k ds vUrxZr mRrj izns'k esa fLFkr fjQkbUM vk;y fuekZrk O;kikfj;ksa (/kkjk 4&d ds vUrxZr ifjHkkf"kr ubZ bdkb;ksa dks NksM+dj) }kjk LofufeZr fjQkbUM vk;y] vixzsMsM vk;y rFkk mlds ckbZ [email protected] izksMDV ds fnuakd 1&4&2003 ls 31&3&2004 rd fd, x, fodz; ij ns;dj ds fodYi esa ,deq'r /kujkf'k fy, tkus ls lEcfU/kr lek/kku ;kstuk ykxw dh tk,A bl lEcU/k esa 'kklu ds funsZ'k] izkFkZuk&i= o 'kiFk&[email protected] vuscU/k&i+= ds izk:i bl i= ds lkFk layXu gSaA

2- d`i;k ;kstuk dk O;kid [email protected] djkus ,oa ;kstuk esa izkIr /kujkf'k dk fooj.k izR;sd ekg dh 7 rkjh[k rd bdkbZokj eq[;ky; dks miyC/k djkus dk d"V djsA

3- mYys[kuh; gS fd bl ;kstuk ds vUrxZr izkFkZuk&i= vkfn izLrqr djus dh vfUre frfFk 31 ebZ] 2003 gSA

layXud (;Fkksifj)

mRrj izns'k esa fLFkr fjQkbUM vk;y fuekZrk O;kikfj;ksa}kjk fjQkbUM vk;y] vixzsMsM vk;y] ckbZ izksMDV] osLV izksMDV ds fnukad 1&4&2003 ls 31&3&2004 dh vof/k esa fd, x, fodz; ij mRrj izns'k O;kikj dj vf/kfu;e] 1948 ds vUrxZr ns;dj ds fodYi esa /kkjk 7&?k esa ,deq'r /kujkf'k Lohdkj fd;s tkus ds laca/k esa 'kklu ds funsZ'k

(1) mRrj izns'k O;kikj dj vf/kfu;e dh /kkjk 7&?k ds micU/kksa ds vUrxZr mRrj izns'k esa fLFkr fjQkbUM fuekZrk O;kikfj;ksa (/kkjk 4&d ds vUrxZr ifjHkkf"kr ubZ bdkb;ksa dks NksM+dj) }kjk LofufeZr fjQkbUM vk;y] vixzsMsM vk;y rFkk mlds ckbZ [email protected] izksMDV ds o"kZ 2003&2004 esa fnukad 1&4&2003 ls 31&3&2004 rd) (ftls vkxs mDr vof/k dgk x;k gS) izns'k ds vUnj fd, x, fodz;@dsUnzh; fodz; ij ns;dj ds fodYi esa ,deq'r /kujkf'k dj fu/kkZjd vf/kdkjh }kjk vkxs ds izLrjksa esa vafdr 'krksZ ds v/khu Lohdkj dh tk ldrh gSA

(2) bu funsZ'kksaZ ds vUrxZr fodYi nsus okys O;kikfj;ksa }kjk mij vafdr enksa ds fodz; lEO;ogkj ij fof/kor dj ns; gksxk] tks ,sls O;kikjh fdlh vU; O;fDr ;k O;kikjh ls dz; djds fodz; djsaA blh izdkj mij vafdr enksa ls fHkUu fdlh vU; en ds dz; fodz; ij Hkh fof/kor~ dj ns; gksxkA

(3) (d) lek/kku /kujkf'k okf"kZd vf/k"Bkfir mRiknu {kerk ds 120 izfr'kr rd :0 575 izfr ehfV~zd Vu okf"kZd dh nj ls rFkk blls vf/kd mRikfnr eky dh fcdzh ij : 675 izfr ehfV~zd Vu okf"kZd dh nj ls ns; gksxh rFkk blh lek/kku /kujkf'k esa fjQkbUM vk;y] ds fuekZ.k ls ckbZ [email protected] izksMDV dh fodzh ij ns; O;kikj dj Hkh lfEefyr ekuk tk,xk rFkk lek/kku ;kstuk viukus okys fuekZrk O;kikfj;ksa dks vf/k"Bkfir {kerk ds vk/kkj ij de ls de :0 575 izfr ehfV~zd Vu ds fglkc ls lek/kku /kujkf'k nsuh gksxh] ysfdu chekj bdkbZ ftldk mRiknu fnukad 31&3&2003 dks nks o"kZ ;k vf/kd vof/k ds fy, cUn gS o"kZ 2003&2004 esa viuk mRiknu izkjEHk djrh gSa] ds ekeys esa lekuqikrh vk/kkj ij dsoy mrus ekg dk lek/kku 'kqYd fy;k tk,xk ftrus ekg og pyh gSA bl gsrq ml ekg dk ftlesa mRiknu izkjEHk fd;k x;k gS ;k QeZ cUn ;k fo?kfVr gq;h gS og iw.kZ ekg ekuk tk,xkA cUn bdkbZ }kjk mRiknu 'kq: djus dh lwpuk] mRiknu 'kq: gksus dh frfFk ls 15 fnu ds vUnj dj&fu/kkZjd vf/kdkjh dks nsuh gksxhA"

X X X X

(4) bl ;kstuk esa lek/kku jkf'k nsus dk fodYi viukus ds bPNqd O;kikjh fu/kkZfjr izk:i esa izkFkZuk&i= uksVjh }kjk izekf.kr vius dj fu/kkZjd vf/kdkjh dks fnukad 31&5&2003 rd izLrqr djsaxss] ftlds lkFk vf/k"Bkfir {kerk ls lEcfU/kr izek.k&i= dh izekf.kr izfrfyfi Hkh layXu dh tk;sxhA izkFkZuk&i= ds lkFk ns; lek/kku jkf'k dk og va'k tks uhps izLrj (7) esa vafdr gS] tek fd;s tkus dk izek.k&i= (lacaf/kr pkyku) Hkh layXu fd;k tk;sxkA

X X X X

(6) ,sls fdlh O;kikjh dks /kkjk 7&?k ds vUrxZr lqfo/kk vuqekU; u gksxh ftldk izkFkZuk&i= fnukad 31&5&2003 ds ckn izkIr gksrk gS fdUrq izLrj (3) esa mfYyf[kr n'kk esa mRiknu 'kq: djus okyh bdkbZ ,oa izLrj (3) ds Li"Vhdj.k esa vafdr fo?kVu ds i'pkr~ ubZ O;kikjh QeZ viuk izkFkZuk&i= ;FkkfLFkfr mRiknu 'kq: djus dh [email protected]?kVu dh frfFk ls 30 fnu ds vUnj dfe'uj] O;kikj dj dks izLrqr dj ldsxhA fo'ks"k n'kkvksa esa dfe"uj] O;kikj dj }kjk fdlh ekeys esa vFkok lHkh ekeyksa esa izkFkZuk&i= fn, tkus dh vof/k c<+kbZ tk ldrh gS] ysfdu ns; lek/kku jkf'k fdLrksa ij ns; frfFk ls izkFkZuk&i= nsus dh frfFk rd 2 izfr'kr izfr ekg dh nj ls C;kt ns; gksxkA

X X X X

(16) nsj ls mRiknu izkjEHk djus] ;k mRiknu u gksus ;k fdlh vU; dkj.k ls mij izLrjksa ds vuqlkj ns; lek/kku jkf'k esa dksbZ ifjorZu ;k deh ugh gksxhA+

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 compounding scheme applicable for the entire year 2003-04 beginning from 01.04.2003 up to 31.03.2004. The only exception for proportionate benefit for the period, for which the unit was operated, was given to those units, which were either sick and were closed for two years or more prior to 31.03.2003 and had started production for the financial year 2003-04. In such category the proportionate benefit for the period had to be given and compounding had to be realised for remaining period.

Bare perusal of the scheme, it is apparent that no other category for giving proportionate benefit has been provided. Specially, Clause 16 of the Scheme clearly provides that those units, which had started production late or that for certain reasons they could not produce goods for the relevant year, will not be given any benefit of change or reduction for any amount determined for compounding. For ready reference, the Clause 16 is quoted below:-

"(16) nsj ls mRiknu izkjEHk djus] ;k mRiknu u gksus ;k fdlh vU; dkj.k ls mij izLrjksa ds vuqlkj ns; lek/kku jkf'k esa dksbZ ifjorZu ;k deh ugh gksxhA+"

In the present matter, admittedly, the petitioner had applied on 23.10.2003, there is no doubt that the said scheme was applicable upto 31.05.2003 and as per Clause 3 of the scheme it had been provided from the date of production the firm or company would apply to the Commissioner within 30 days' time. It is admitted situation that the company got permanent registration on 02.04.2003 and commenced the production since 23.10.2003 and on 23.10.2003 it had been shown capacity of 8000 tonnes per annum which had been modified to 9000 tonnes on 30.10.2003. The petitioner has applied for compounding on 30.10.2003 and consequently the petitioner was given benefit of compounding with the liability of interest at Rs. 2,01,996/- to be paid by the petitioner on late deposit of the installments of compounding and on which the demand of Rs. 1,94,975/- towards the compounding and interest was raised vide order dated 30.07.2007. In the present matter, the petitioner was assessed for trade tax and the entry tax vide order dated 09.08.2007 passed by the Deputy Director Commissioner (Assessment)-2, Trade Tax, Kanpur. In the assessment order dated 09.08.2007 it was found that the petitioner had applied for compounding which was extended in its case upto 30.10.2003 and consequently the petitioner was given benefit of compounding. It also reveals that the State Government had clarified vide its order dated 12.01.2007 on the representation for clarification 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 to that part of the period of assessment during which the changed rate remains in force.

Explanation.-For the purposes of this section the Assessing Authority includes an officer not below the rank of Trade Tax Officer, Grade II, posted at a check post."

The Section 7-D of the Act is very clear which enables the company or firm to the traders to pay sale tax in lump sum in lieu of tax. For that purpose, the dealer executes an agreement with undertaking to pay the sale tax in lump sum and the liability arise under such agreement is not related to actual turnover of the petitioner. The petitioner have agreed to pay the tax in lump sum could not be permitted to turn around and contend that he was not liable to pay the amount agreed to be paid by him because his turnover turned out to be either nil or that it was not adequate on account of various factors. In the present case, the Clause 16 of the agreement specifically provides that it would not open to the dealer to pay a reduced amount or to resile therefrom as that clause clearly contemplated that once a dealer agreed to pay the tax in lump sum, they cannot insist on payment of the tax on the basis of actual turnover or any other reason for e.g. started production very late.

In the present case, the petitioner itself voluntarily applied under the compounding scheme deposited the requisite tax and submitted the form on the proforma, it implies that the petitioner had accepted the terms and conditions voluntarily. As scheme specifically provided that there would not reduction in the composition money.

The Hon'ble Full Bench of this Court in the case of M/s Bhadauria Gram Sewa Sansthan, Fatehpur Vs. Assistant Commissioner, Sales Tax, Allahabad and others reported in 2006 UPTC 538 has considered Section 7-D of the U.P. Trade Tax Act, 1948. The relevant portion is quoted below:-

"31. Having given our anxious considerations to the various submissions made by the learned Counsel for the parties, we find that Section 7-D which provides for composition of tax liability, starts with a non-obstante clause. A plain reading of Section 7-D of the Act shows that an option has been given to a dealer who is covered by a scheme issued by the State Government from time to time to opt for payment of lump sum amount in lieu of the amount of tax. It excludes the applicability of other provisions of the Act which 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 authority concerned, it becomes an agreed amount of tax. The department as also the dealer are bound by the said agreement. A dealer who has opted to pay the tax in lump sum under Section 7-D of the Act after it has been accepted by the department, any demand for that period is not relatable to the actual turnover but the sum agreed upon. In other words, the department as well as the dealer both know the amount payable and receivable by each other. The determination of lump sum amount in lieu of tax displaces the requirement of regular assessment proceeding and the quantification of tax liability is by agreement as per the term of the scheme which would bind both the parties. The object of introducing such a scheme 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.

32. In the case of Venkateshwara Theatre v. State of Andhra Pradesh , the Apex Court while considering the scheme announced by the Government of Andhra Pradesh, providing that instead of payment of entertainment tax on the basis of actual number of cinema goers, the proprietor of a cinema hall may opt to pay a consolidated levy on the basis of gross collection capacity per show, has held that the compound payment of entertainment tax is a more convenient mode of levy of the tax inasmuch as it dispenses with the need of verification or to enquire into the number of person admitted to each show and to verify the correctness or otherwise of the returns submitted by the proprietor containing the number of. persons admitted to each show and the amount of tax collected. The aforesaid decision has been followed by the Apex Court in the case of Builders Association of India (supra) wherein the Apex Court has held that the object of levy of compound payment of tax is not to increase the revenue. The legislature provides the alternate method of taxation with a view to realise the tax with least discomfort to the assessee. It is only a convenient mode of realisation of tax. It also ensures the fixed amount of payment of tax to the Government irrespective of the fact that the business of the assessee earned profit 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 continue to be payable by the dealer notwithstanding the fact that the dealer has neither manufactured nor sold any bricks during the period for which it had opted for the composition under Section 7-D of the Act.

35. The amount payable under the composition scheme is not relatable to any actual turnover but depends upon the agreement under the scheme at the option of the dealer. The dealer having once exercised its option, cannot, therefore, be permitted to turn around and resile from its liability merely on the ground that of had had no turnover or had not done any manufacturing activity during the relevant year.

36. So far as the decisions and the dictionary meaning of the words "in lieu of relied upon by Sri Navin Sinha, learned Senior Counsel, are concerned, we may mention that it is of no help to the petitioner inasmuch as here the amount of tax is being demanded in terms of the composition scheme which the petitioner had opted.

37. There cannot be any dispute that there cannot be any estoppel against a statute. However, where the demand is being made underline terms of the contract which specifically provides that there would be no reduction or change in the composition money even if the firing has not been done in brick kiln or it has been started late or for any other reason, the petitioner is bound, by the said clause and he cannot be permitted to challenge the same in view of the law laid down by the Apex Court in the case of Har Shanker and others, Narain Prasad and others and Bharathi Knitting Co. (supra). As we have already come to the conclusion that the liability to pay the composition money is not relatable to actual sales at all, the principle laid down by the Apex Court in the case of Gannon Dunkerley & Co. (Madras) Ltd. (supra) will not be attracted."

In the present matter, the petitioner had opted compounding scheme voluntarily issued by the State Government which facilitate to the company for payment of lump sum amount in lieu of the amount of tax. This also excludes the applicability of other provisions of the Act which deals with the assessment and payment of tax. The payment of compounded tax is a convenient, hassle free and simple method of assessment. A company which opts for payment in lump sum amount in lieu of the tax, is not required to fill monthly or quarterly return of its turn over. It has to pay fixed sum of money 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 is not commenced or for any other reason, the amount of composition money, neither be reduced nor changed. Thus from the provisions of Section 7-D of the Act has also scheme commenced thereunder.

We are of the considered opinion that the 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 of the Act. 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, thereafter, 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.

In view of above Government Orders dated 12.01.2007, 30.07.2007 and 22.05.2009 are fully justified and sustainable in the eyes of law.

In view of the above, we do not find any error in the impugned orders, which requires interference by this Court. In the result, the writ petition, being devoid of merits, fails and is dismissed.

Order Date :- 26.3.2014

Jaswant