M/S Samrat Int-Bhatta Sundarpur vs Assistant Commissioner ...
2015 Latest Caselaw 2125 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Reserved on  27.07.2015
 
                                                        Delivered on   03.09.2015                 
 
           
 
             
 
CIVIL MISC. WRIT PETITION (Tax) No.442 of 2012
 
M/s Samrat Int Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 2, Mirzapur
 
and others
 
Connected with:-
 
CIVIL MISC. WRIT PETITION (Tax) No. 894 of 2012
 
M/s V.P. Int Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 2, Mirzapur
 
and others
 

 
And
 
CIVIL MISC. WRIT PETITION (Tax) No. 895 of 2012
 
M/s Kumar Int bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 2, Mirzapur
 
and others
 

 
And
 
CIVIL MISC. WRIT PETITION (Tax) No. 896 of 2012
 
M/s Pahalwan Int Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 4, Mirzapur
 
and others
 

 
And
 
CIVIL MISC. WRIT PETITION (Tax) No. 897 of 2012
 
M/s Jai Sharda Int  Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 4, Mirzapur
 
and others
 
And
 

 
CIVIL MISC. WRIT PETITION (Tax) No. 898 of 2012
 
M/s Parvati Int Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 2, Mirzapur
 
and others
 

 

 
And
 

 
CIVIL MISC. WRIT PETITION (Tax) No. 899 of 2012
 
M/s Sat Guru  Int Bhatta
 
Vs.
 
Assistant Commissioner, Commercial Tax, Sector 4, Mirzapur
 
and others
 

 
Hon'ble Tarun Agarwala,J.

Hon'ble Surya Prakash Kesarwani,J.

(Per: Surya Prakash Kesarwani,J.)

1. In this group of petitions, the petitioners have challenged the validity and legality of the order passed by the authority under Section 6 of the U.P. Value Added ax Act 2008 (hereinafter referred to as the Act ) rejecting the petitioner's application for compounding the tax for the assessment years 2007-08 and 2008-09. For facility, the fact of Writ Petition No.442 of 2012 M/s. Samrat Int. Bhatta Vs. Assistant Commissioner, Commercial Tax, is taken into consideration.

2. The facts involved in this bunch of writ petitions are almost similar. Briefly stated the facts are that the petitioners run a brick kilns and are engaged in the business of manufacture and sale of bricks. The U.P. Value Added Tax Act, 2008 (hereinafter referred to as the "Act") came into force w.e.f. 1.1.2008. It repealed the U.P. Trade Tax Act 1948. Chapter IV of the Act provides for assessment, payment, recovery and collection of tax. Section 26 under this Chapter provides for assessment of tax for an assessment year. Section 28 provides for assessment of tax after examination of records. Section 6 falling under Chapter II provides for an alternate method of assessment, termed as composition of tax liability.

3. For the sake of convenience the provisions of Section 6, 26 and 28 of the Act are extracted below:

6. Composition of tax liability.-

(1) Notwithstanding anything contained in any other provision of this Act, but subject to other provisions of this section and the directions of the State Government, the assessing authority may agree to accept a composition money either in lump sum or at an agreed rate on his turnover of sale 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 in the case of a dealer not being a dealer executing works contract, who carries on exclusive business of re-sale of goods within the State after their purchase from a registered dealer within the State and whose turnover on sale of such goods, for any assessment year, does not exceed fifty lakh rupees or his turnover, is neither likely to exceed fifty lakh rupees nor his such turnover, for the assessment year preceding that assessment year, has not exceeded fifty lakh rupees, the State Government may notify a rate percent on sale of such goods. Different rates may be notified for different goods:

Provided further that any change in the rate of tax which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force.

(2) Any dealer, who opts for payment of lump sum under this section, shall not be entitled to claim credit of input tax under section 13 in respect of purchase of goods which are re-sold by him during the period in which he is liable to pay composition money under this section or in respect of purchase of goods which have been used, consumed or utilized in manufacture or processing of goods which are sold by him during such period and where the dealer has claimed credit of input tax in respect of any such goods, the same shall stand reversed and the dealer shall pay such amount of reverse input tax credit in accordance with the provisions of section 14.

(3) Any dealer who opts for payment of composition money under this section shall not issue any tax invoice and shall not realise any amount from the purchaser by way of tax or by giving it a different name or colour.

(4) A dealer who makes purchase of any goods from a dealer, who has opted for payment of composition money under this section, shall not be entitled to claim credit of input tax in respect of goods purchased from such dealer.

(5) Where the turnover of sales, in case of a dealer, who has opted to pay composition money under first proviso of sub-section 4 on and from the day the turnover exceeds Rs. fifty lakh.

26. Assessment of tax for an assessment year.- Subject to provisions of this Act, in respect of every taxable dealer, for each assessment year, there shall be an assessment of tax payable by him and amount of input tax credit admissible to him:

Provided that where the dealer has carried on business during a part of the assessment year, such assessment shall be for such part of the assessment year:

Provided further that in case of person who being a dealer other than a registered dealer brings any taxable goods from outside the State, the assessing authority may make separate assessments for each receipt of such goods by the dealer

28. Assessment of tax after examination of Records.-

(1) In following types of cases or dealers, the assessing authority, after detailed examination of books, accounts and documents kept by the dealer in relation to his business and other relevant records, if any, and after making such inquiry as it may deem fit, subject to provision of sub-section (9), shall pass an assessment order for an assessment year in the manner provided in this section: -

(a) in cases of such dealers as are specified or selected for tax audit by the Commissioner or any other officer, not below the rank of a Joint Commissioner, authorized by the Commissioner in this behalf; in such manner and within such time as may be prescribed.

(b) in case of a dealer falling in any of the categories below,

(i) dealer who has not submitted annual return of turnover and tax within the time prescribed or extended; or

(ii) dealer by whom tax return for one or more tax periods of the assessment year have not been submitted; or

(iii)dealer in whose case assessing authority has passed provisional assessment order under section 25 in respect of one or more tax periods to the best of its judgment; or

(iv)dealer in whose case, on the basis of material available on records, if the assessing authority is satisfied that the turnover of sales or purchases or both, as the case may be, and amount of tax shown payable as disclosed by the dealer in annual return of turnover and tax are not worthy of credence or tax shown payable in the return has not been deposited by the dealer, or the amount of input tax credit claimed is wrong or the amount of tax payable shown is incorrect; or

(v)dealer who has prevented or obstructed an officer empowered to make audit, survey, inspection, search or seizure under the provisions of this Act; or

(2) Where after examination of books, accounts, documents and other records referred to in sub-section (1), -

(i) the assessing authority is satisfied about correctness of turnover of sale or purchase or both, as the case may be, disclosed by the dealer, it may assess the amount of tax payable by the dealer on such turnover and determine the amount of input tax credit admissible to the dealer or amount of reverse input tax credit payable by the dealer; and

(ii) where assessing authority is of the opinion that turnover of sale or purchase or both, as the case may be, disclosed by the dealer is not worthy of credence, it may determine to the best of its judgment the turnover of sale or purchase or both, as the case may be, and assess the tax payable on such turnover and determine admissible amount of input tax credit and reverse input tax credit payable by the dealer.

(3) Before making an assessment under sub-section (2), dealer shall -

(i) be required to furnish annual return of turnover and tax referred to in sub-section (7) of section 24, if he has not already submitted such return;

(ii) be given reasonable opportunity of being heard; and

(iii) be served with a notice to show cause, where determination of turnover, input tax credit or reverse input tax credit, or assessment of tax, all or any one of them, as the case may be, are to be made to the best of the judgment of the assessing authority.

(4) The show cause notice referred to in sub-section (3) shall contain all such reasons on which the assessing authority has formed its opinion about incorrectness of the turnover of sale or purchase or both, as the case may be, amount of tax, amount of input tax credit or amount of reverse input tax credit:

(5) Order of assessment shall be in writing and copy of assessment order alongwith prescribed notice of demand of the balance amount of tax, if any, to be deposited by the dealer, shall be served on the dealer.

(6) Dealer shall deposit amount of tax assessed in excess of amount of tax deposited by him for the assessment year, within a period of thirty days after the date of service of the assessment order and notice of demand.

(7) Where the amount of tax deposited by the dealer is found in excess of tax assessed, the same shall be refunded to the dealer according to the provisions of this Act.

(8) Assessing authority shall not be precluded from making assessment order under this section on the ground of passing of any provisional assessment order in respect of any tax period under section 25 and such provisional assessment order, if any, shall stand merged in the assessment order passed under this section.

(9) Notwithstanding anything to the contrary in any other provision of this Act, where an unregistered dealer brings any taxable goods from outside the State more than once during an assessment year, separate assessment relating to goods brought on each occasion may be made for the same assessment year.

(10)The provisions of this Act shall apply to each assessment order passed under sub-section (9) as they apply to an order passed under sub-section (2).

(11)Dealers under sub-section (9) shall not be required to furnish annual return of turnover and tax and in cases of such dealers assessment under sub-section (9) may be made even before the expiry of the assessment year.

(12)Provisions of sub-sections (5), (6) and (7) shall, mutatis mutandis, apply to every assessment order passed under any provisions of this Act.

4. Assessment of the petitioner was completed by the assessing authority under Section 28 of the Act for the A.Y. 2007-08 (From 1.1.2008 to 31.3.2008) against which the petitioner filed an appeal which was allowed in part and the tax liability was reduced.

5. Subsequently, the State Government announced a compounding scheme for brick kiln under Section 6 of the Act dated 9.6.2009 for the season 2007-08 (1.1.2008 to 31.9.2008) and for season 2008-09 (1.10.2008 to 30.9.2009) which was known as "Int Bhatta Samadhan Yojna" wherein the assessing authority was required to accept a composition money either in lump sum or on an agreed rate of the turnover of sales in lieu of tax that may be payable by the dealer.

6. The petitioners applied for compounding for the season 2007-08 (1.1.2008 to 30.9.2008). The assessing authority rejected the compounding application of the petitioner for the period 1.1.2008 to 31.3.2008 on the ground that regular assessment orders had already been passed. The compounding applications of the petitioners in Writ Petition No.896 of 2012 and 897 of 2012 were initially accepted in ignorance of the assessment order and, therefore, the compounding orders were immediately rectified under Section 31 of the Act and the compounding applications were rejected. For the remaining period of the season i.e. from 1.4.2008 to 30.9.2008, the assessing authority issued a notice intimating the petitioner that the assessing authority was proposing to make an assessment. It was at this stage, the petitioner being aggrieved has filed the present Writ Petition challenging the orders rejecting the compounding applications as well as the earlier orders of regular assessment. They have also prayed that the compounding scheme be declared ultra vires.

7. Thus the issues that arises for consideration in this bunch of writ petitions are as under:

I. Whether in the facts and circumstances of the case the writ petitions challenging constitutionality validity of the compounding scheme dated 9.6.2009 for the season 1.1.2008 to 30.9.2008 are maintainable?

II. Whether under the facts and circumstances the compounding for part of the season i.e.1.1.2008 to 31.3.2008 in respect of which regular assessment orders were already passed, can be accepted?

III. Whether compounding applications for part of the season from 1.4.2008 to 30.9.2008 may be accepted despite the fact that the compounding under Section 6 of the Act was offered by the State Government for a fixed period from 1.1.2008 to 30.9.2008 and for a fixed lump sum amount for the said period/season?

8. We have heard Sri Suyash Agarwal, the learned counsel for the petitioner and Sri C.B. Tripathi, the learned counsel for the State.

ISSUE NO. I

9. It is settled law that the validity of a provision can be challenged only on limited grounds, namely, that the provision infringes any of the fundamental or constitutional rights or it lacks legislative competence or the Rule is violative of any provision of the Act or beyond the Rule making power under which it has been enacted. Undisputedly, the compounding scheme dated 9.6.2009 has been framed by the State Government in exercise of powers conferred under Section 6 of the Act. Section 6(1) of the Act starts with a non obstante clause, but it is subject to other provisions of the same Section and the direction of the State Government. A plain reading of sub-Section 1 of Section 6 clearly indicates the following:

i). It gives over riding effect over the other provisions of the Act.

ii). It is subject to other provisions of Section 6 and the directions of the State Government.

iii) The assessing authority may agree to accept the composition money either in lump sum or at an agreed rate on the turn over of sale 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.

10. In the present case, we are not concerned with the 1st and 2nd proviso of sub Section (1) of Section 6. The petitioners have neither pleaded nor argued nor demonstrated that the directions of the State Government in the impugned compounding scheme providing for compounding for the season from 1.1.2008 to 30.9.2008 is violative of any of the provisions of Section 6 of the Act or the Constitution of India. The impugned compounding scheme neither violates any fundamental or constitutional rights of the petitioners nor it lacks legislative competence nor it is violative of any of the provisions of the Act. Neither the scheme nor any of the provision of Section 6 of the Act provides for acceptance of compounding application for part of the season.

11. Under the circumstances, we do not find any unconstitutionality in the compounding scheme dated 9.6.2009. Apart from this, the relief sought by the petitioners to declare the compounding scheme dated 9.6.2009 to be ultra vires, is not entertainable inasmuch as on one hand the petitioners have prayed for declaring the scheme to be ultra vires and on the other hand they prayed that benefit of the scheme be provided to them for part of the period. Law does not permit a person to approbate and reprobate simultaneously. Petitioner can not accept and reject the same instrument i.e. the compounding scheme dated 9.6.2009. They can not urge on one hand that the scheme is valid to obtain some advantage to which they could be entitled only on the footing that it is valid and then turn round and say that it is void. The impugned compounding scheme is in fact a policy decision of the State Government.

12. It is well settled that the Courts, in exercise of their power of judicial review did not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on account of malafide, unreasonableness, arbitrariness or unfairness etc. Petitioners have not argued that the policy i.e. the compounding scheme is hit by any of these grounds. If the policy cannot be faulted on any of these grounds, the policy cannot be said to be invalid. Courts cannot question the wisdom of the government in taking a policy decision. Generally, policy cannot be tested in a court of law. The government is entitled to lay down its policy which cannot be subjected to judicial review except in the circumstances mentioned above. Reference in this regard may be had to the judgments of Hon'ble Supreme Court in the cases reported in (1993) 66 ELT 3 SC, (Subhash Photographics Vs. Union of India) para-13, (1996) 2 SCC 405 (Delhi Science Forum Vs. Union of India and another) para-7, JT (2006) 6 SC 500 (Ekta Shakti Foundation Vs. Govt. of NCT of Delhi para-12, AIR 1997 SC 128 (Krishnan Kakkanth Vs. Govt. of Kerla and others) para-34, (2002) 6 SCC 252 (State of Rajasthan and others Vs. Lata Arun) para -10 and 12, (2002) 4 SCC 510 (State of H.P. and another Vs. Padam Dev and others) para-13, AIR 1996 SC 149 (State of H.P. and others Vs. Ganesh Wood Products and others) para-51, 54 and 57, (2001) 3 SCC 635 (Sugar Works Ltd. Vs. Delhi Administration and others), AIR 1973 SC 588 (State of Maharastra and others Vs. Lok Shiksha Sansthan and others, (AIR 1990 SC 1277) M/s Shri Sita Ram Sugar Co. Ltd. and another vs. Union of India, (1998 4 SCC 117 (State of Punjab and others Vs. Ram Lubhaya Bagga and others) para- 25 and 26) JT (2001) 10 SC 466 para 91 to 99 (Balco Employees Union Regd. Vs. Union of India and others, (AIR 1998 SC 137 para-17) Gyan Prakash Vs. Union of India, (2007) 6 SCC 44 (Ram Singh Vijay Pal Singh and others Vs. State of U.P. and others) para -14, (2008)2 SCC 672 Para 64 and 65 (DDA Vs. Joint Action Committee, Allottee of SFS flats).

13. In the case of Mycon Construction Ltd.Vs. State of Karnataka and another, (2003)9 SCC 583, following the law laid down in the case of State of Kerala Vs. Builders Association of India, (1997) 2 SCC 183, Hon'ble Supreme Court upheld the constitutional validity of sub Section 6 of Section 17 of the Karnataka Sales Tax Act,1957 and observed as under:-

15. Mr. Raju Ramachandaran, Senior Advocate appearing on behalf of some of the appellants placed before us the judgement of this Court in State of Kerala v. Builders Assn. Of India (1997) 2 SCC 183 . We have carefully read the aforesaid judgment. Fairly Mr. Raju Ramachandaran submitted that he was unable to point out any distinction between the provisions of the Kerala Act and the Karnataka Act which may have a bearing on the question of interpretation. We have also considered the matter and we are also of the view that so far as the scheme of composition of tax is concerned, the relevant provisions of both the Acts even if not identical, are vastly similar. On the question of the constitutional validity of Sub- Section 6 of Section 17 the same argument was advanced before this Court in the State of Kerala v. Builders Association of India (1997) 2 SCC 183. In that case, the High Court had declared as unconstitutional Sub- Section (7) and (7A) of Section 7 upholding the contention that they sought to levy tax at the rate of 2% on the whole amount of the contract, or at a particular rate applied to the entire value of contract, and not merely upon the value of goods transferred in the course of execution of the works contract as contemplated under Sub-clause (b) of Clause (29-A) of Article 366. The court noticed that the goods which were transferred in the course of execution of works contract may be "declared goods", liable to be taxed under the Central Sales Tax Act, 1956. The goods so transferred may also be taxable under different Schedules to the Kerala Act which prescribe different rates. In such a situation levy of tax on entire value of the contract meant levy of tax contrary to the provisions of the Central Sales Tax Act and the Kerala General Sales Tax Act. It also meant including the non- taxable components of works contract e.g. labour and services etc. For all these reasons, the High Court held that the said sub-sections were clearly beyond the legislative competence of the State Legislature. This Court repelled the submission urged before it in the following words: (SCCp.188, para 9)

"The first feature to be noticed is that the alternate method of taxation provided by Sub-section (7) or (7-A) of Section 7 is optional. The sub-section expressly provided that the method of taxation provided thereunder is applicable only to a contractor who elects to be governed by the said alternate method of taxation. There is no compulsion upon any contractor to opt for the method of taxation provided by Sub-section (7) or Sub-section (7-A). It is wholly within the choice and pleasure of the contractor. If he thinks it is beneficial for him to so opt, he will opt; otherwise, he will be governed by the normal method of taxation provided by Section 5(1)(iv). Sub-section (8) provides that the option to come under Sub-section (7) or (7-A) has to be exercised by the contractor 'either by an express provision in the agreement for the contract or by an application to the assessing authority to permit him to pay the tax in accordance with any of the said sub-section'. In these circumstances, it is evident that a contractor who had not opted to this alternate method of taxation cannot complain against the said sub-sections, for he is in no way affected by them. Nor can the contractor who has opted to the said alternate method of taxation, complain. Having voluntarily, and with the full knowledge of the features of the alternate method of taxation, opted to be governed by it, a contractor cannot be heard to question the validity of the relevant sub-sections or the rules. Sub-sections (8), (11) and (12) of Section 7 are incidental and ancillary to Sub-sections (7) and (7-A) and cannot equally be faulted. Secondly, it is true that the goods transferred in the course of execution of the works contract may be chargeable at different rates under different Schedules appended to the Kerala Act; it may also be that some of them may be 'declared goods', the levy of tax upon which is subject to certain restrictions specified in Section 14 and 15 of the Central Sales Tax Act; it may also be that sale of some of the goods may also be subject to Central sales tax. It must yet be remembered that the method of taxation introduced by Sub-sections (7) and (7-A) is in the nature of composition of tax payable under Section 5(1)(iv). The impugned sub-sections have evolved a convenient, hassle-free and simple method of assessment just as the system of levy of entertainment tax on the gross collection capacity of the cinema theatres. By opting to this alternate method, the contactor saves himself the botheration of book-keeping, assessment, appeals and all that it means. It is not necessary to enquire and determine the extent or value of goods which have been transferred in the course of execution of a works contract, the rate applicable to them and so on. For example, under Sub-section (7), the contractor pays two per cent of the total value of the contract by way of tax and he is done with all the above-mentioned botheration. The rate of two per cent prescribed by Sub-section (7) is far lower than the rates in Schedules 1,2 and 5 referred to in Section 5(1)(iv)(a). In short, Sub-section (7) and (7-A) evolve a rough and ready method of assessment of tax and leave it to the contractor either to opt for it or be governed by the normal method. It is only an alternate method of ascertaining the tax payable, which may be availed of by a contractor if he thinks it advantageous to him. It must be remembered that the analogous system of alternate method of taxation evolved by certain State Legislatures in the matter of levy of entertainment tax has been upheld by his Court in Venkateshwara Theatre v. State of A.P (1993)3SCC 677. The rough and ready method evolved by the impugned sub-section for ascertaining the tax payable under Section 5(1)(iv) of the Act cannot be said to be beyond the legislative competence of the State or violative of Clause (29-A) of Article 366 either. The Constitution does not preclude the legislature from evolving such alternate, simplified and hassle-fire method of assessment of tax payable, making it optional for the assessee. The object of Sub-sections (7) and (7-A) is the same as that of Section 5(1)(iv); it is only that they follow a different route to arrive at the same destination."

16. We are of the considered view that principles laid down by this Court in the aforesaid decision squarely apply to the facts of this case having regard to the similarity of the provisions in the two Acts. We therefore find ourselves in complete agreement with the High Court and hold that Sub-section 6 of Section 17 of the Karnataka Sales Tax Act is constitutionally valid and the challenge on the ground of lack of legislative competence of the State Legislature must be repelled.

17. Learned Counsel then submitted that even while evolving a simplified method for assessment of tax, such as the scheme of composition in the instant case, they law cannot give an option to the assesses which is in the teeth of constitutional provisions. This argument does not survive in view of the principles laid down by the Supreme Court in State of Kerala v. Builders Association of India (1997) 2 SCC 183. He made a faint attempt to draw a distinction between the Kerala Act and the Karnataka Act by reference to the background in which the provisions were enacted. He submitted that under the Kerala Act the composition scheme was introduced by the amendments in the year 1991 and 1992. So far as State of Karnataka is concerned Sub-section 6 of Section 17 which gave option to the assessees to pay tax at a fixed rate on the value of the goods, the property in which was transferred in the course of execution of works contract come into effect in the year 1988 and continued till the year 1996. The appellants had taken benefit of the said scheme of composition by exercising their option for assessment under the composition scheme. They had therefore opted for something different from what is sought to be given to them under the amended provision which levies tax not merely on the value of goods transferred but on the whole amount of the contract. He, therefore, submitted that having regard to the legislative background. amendment of Sub-section 6 of Section 17 with retrospective effect by Act 7 of 1997 is clearly unconstitutional. The submission has no force. If the Legislature has legislative competence to enact a statute and the statute so enacted does not breach any constitutional provision, the same cannot be said to be unconstitutional merely because it is retrospective in operation. Moreover, in the instant case as explained in State of Kerala v. Builders Association of India (supra) the appellants had opted for assessment under the composition scheme. They were not compelled to exercise their option and otherwise they would have assessed in accordance with the provisions of the Act particularly Section 5-B thereof. To remove any hardship to the assessees by retrospective operation of the amended scheme of composition the State Government itself submitted that the appellants and other like them may be given option to opt for assessment under Section 5-B of the Act even if they had earlier opted for assessment under Sub-section 6 of Section 17. The High Court has in fact made such a direction. The appellants are therefore not prejudiced in any manner whatsoever.

14. In the case of Venkateshwara Theatre Vs. State of Andhra Pradesh and others 1993(3) SCC 677, Hon'ble Supreme Court considered the applicability of Article 14 of the Constitution of India with reference to the compounding scheme under A.P. Entertainment Tax Act 1939 and held in para 20,21 and 22 as under:

"20. Article 14 enjoins the State not to deny to any person equality before the law or the equal protection of the laws. The phrase "equality before the law" contains the declaration of equality of the civil rights of all persons within the territories of India. It is a basic principle of republicanism. The phrase "equal protection of laws" is adopted from the Fourteenth Amendment to U.S. Constitution. The right conferred by Article 14 postulates that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Since the State, in exercise of its governmental power, has, of necessity, to make laws operating differently on different groups of persons within its territory to attain particular ends in giving effect to its policies, it is recognised that the State must possess the power of distinguishing and classifying persons or things to be subjected to such laws. It is, however, required that the classification must satisfy two conditions namely, (i) it is founded on an intelligible differentia which distinguishes those that are grouped together from others; and (ii) the differentia must have a rational relation to the object sought to be achieved by the Act. It is not the requirement that the classification should be scientifically perfect or logically complete. Classification would be justified if it is not palpably arbitrary. (See: Re Special Courts Bill, 1978 (1979)1 SCC 380). If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get and advantage over others, so long as they are not singled out for special treatment. [See: Khandige Sham Bhat v. Agricultural I.T.O. AIR 1963 SC 591]

21. Since in the present case we are dealing with a taxation measure it is necessary to point out that in the field of taxation the decisions of this Court have permitted the legislature to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. (See: East India Tobacco Co. V. State of A.P., (1963) 1 scr 404, P.M. Ashwathanarayanan Shetty v. State of karnataka, 1989 Supp (1)SCC 696, Federation of Hotel & Restaurant Association of India v. Union of India, 1989 3 SCC 634, Kerala Hotel & Restaurant Association v. State of Kerala (1990)2 SCC 502 and Gannon Dunkerley and Co. v. State of Rajasthan, (1993)1 SCC 364].

22 Reference, in this context, may also be made to the decision of the U.S. Supreme Court in San Antonio Independent School District v. Bodrigues, wherein Justice Stewart, speaking for the majority has observed :

"No scheme of taxation, whether the tax is imposed on property, income or purchases of goods and services, has yet been devised which is free of all discriminatory impact. In such a complex arena in which no perfect alternatives exist, the court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection Clause."

15. In view of the above discussion we do not find any illegality or unconstitutionality in the compounding scheme dated 9.6.2009. Under the circumstances, the relief sought by the petitioners to declare the aforesaid compounding scheme as ultra vires, is hereby rejected.

ISSUE NO. II

16. It is undisputed that regular assessment orders of the petitioners for the assessment year 2007-08 (1.1.2008 to 31.3.2008) were passed under Section 28 of the Act after affording opportunity of hearing to them. They participated in the assessment proceedings. Once the assessment orders have been passed, the tax stood assessed and therefore the scheme itself would not be applicable.

17. By the said scheme the State Government issued directions under Section 6(1) of the Act that for the season 2007-08 (1.1.2008 to 30.9.2008) the lump sum amount may be accepted by the assessing authority depending upon the number of "PAYAS" of the brick kiln. The compounding money for the block period of 1.01.2008 to 30.9.2008 was fixed as under:

Ikk;ksa dh la[;k

Lkhtu o"kZ 2007&08 esa ¼fn0 01&01&2008 ls fn0 30&09&2008 rd½ ds fy, fu/kkZfjr lek/kku jkf'k

Lkhtu o"kZ 2007&08 esa ¼fn0 01&01&2008 ls fn0 30&09&2008 rd½ ds fy, fu/kkZfjr izos'k dj lek/kku jkf'k

uku gkbZ MªkV HkV~Bk

gkbZ MªkV HkV~Bk

uku gkbZ MªkV HkV~Bk

gkbZ MªkV HkV~Bk

68223

75045

62179

90396

97683

107451

10745

114738

148386

11474

12621

134895

148386

13490

14839

155052

170556

15505

17057

176760

194436

17676

19444

201567

221724

20157

22172

231027

254130

23103

25413

262038

288243

26204

349384

294600

324060

29460

32406

330261

363288

33026

36329

367473

404220

36747

40422

404685

445144

40469

44516

441900

486090

44190

48609

479109

527019

47911

52702

516324

567957

51632

56796

553536

608889

55354

60889

590748

649824

59075

64982

627960

690756

62796

69076

666723

733395

66672

73340

705486

776034

70549

77603

744249

318673

74425

81867

783012

861312

78301

86131

821775

903954

82178

90395

860528

946593

86054

94659

899301

989232

89930

98923

938064

1031871

93806

104287

976827

1074510

97683

107451

1015590

1117149

101559

111715

1054353

1159788

105435

115979

1093116

1202427

109312

120243

1131879

1245066

113188

124507

18. The directions given by the State Government under Section 6(1) of the Act by compounding scheme dated 9.6.2009 were as under :

"bZV HkV~Bk lhtu o"kZ 2007&2008 esa fnukWd 01&01&2008 ls fnukWd 30&9&2008 rd dh vof/k rFkk lhtu o"kZ 2008&2009 esa fnukWd 01&10&2008 ls fnukWd 30&09&2009 rd dh vof/k ds fy, mRrj izns'k ewY; laof/kZr dj vf/kfu;e] 2008 dh /kkjk 6 dh mi/kkjk ¼1½ ds vUrxZr bZV fuekZrk O;kikfj;ksa }kjk fufeZr bZVksa] bZV HkV~Vks fufeZr VkbYl] bZV ds jksM+ks rFkk jkfcl dh fcdzh vkSj bZVksa ds fuekZ.k esa iz;qDr dks;yk] ckyw rFkk ydM+h ds cqjkns dh [kjhn ij mDr vf/kfu;e ds v/khu ns; dj ,oa izos'k dj ds fodYi esa ,d eq'r /kujkf/k fn;s tkus lEcfU/kr lek/kku ;kstuk ykxw fd;s tkus ds lEcU/k esa 'kklu ds

funsZ'k

mRrj izns'k ewY; laof/kZr dj vf/kfu;e] 2008 dh /kkjk 6 mi/kkjk ¼1½ ds micU/kksa ds v/khu mRrj izns'k esa bZVksa ds fuekZrkvksa ls muds }kjk lhtu o"kZ 2007&08 esas fnukWd 01&01&2008 ls fnukWd 30&09&2008 rd dh vof/k rFkk lhtu o"kZ 2008&09 esa fnukd 01&01&2008 ls fnukWd 30&09&2009 rd dh vof/k esa fufeZr bZVksa] bZV HkV~Vks esa fufeZr VkbYl] bZV ds jksM+ksa rFkk jkfcl dh fcdzh vkSj bZaVksa ds fuekZ.k esa iz;qDr dks;yk] ckyw rFkk ydM+h ds cqjkns dh [kjhn ij mDr vf/kfu;e ds v/khu ns; dj ,oa izos'k dj ds fodYi esa ,d eq'r /kujkf'k ¼ftls vkxs lek/kku jkf'k dgk x;k gS½ dj fu/kkZjd vf/kdkjh }kjk fuEufyf[kr 'krksZ ds v/khu Lohdkj dh tk ldrh gS%&

¼1½ lhtu o"kZ 2007&08 esa fnukWd 01&01&2008 ls fnukWd 30&09&2008 rd dh vof/k ds fy, lek/kku jkf'k iwoZ eas bl lhtu o"kZ dh fnukWd 01&10&2007 ls 31&12&2007 rd dh vof/k ds fy, fofHkUu ik;ksa ds HkV~Bksa ds fy, fu/kkZfjr lek/kku jkf'k ds rhu xqus ds cjkcj ¼lekuqikfrd vk/kkj ij½ fu/kkZfjr dh tk;A

lhtu o"kZ 2008&09 ¼fnukad 01&10&2008 ls 30&09&2009 rd½ dh vof/k ds fy, fy, lek/kku jkf'k lhtu o"kZ 2007&08 dh fnukWd 01&10&2007 ls fnukWd 30&09&2008 rd dh vof/k ds fy, fofHkUu ik;ksa ds HkV~Bksa ds fy, fu/kkZfjr lek/kku jkf'k ds cjkcj fu/kkZfjr dh tk;A

¼2½ lkekU; izdkj ds uku&gkbZ MªkV HkV~Bksa ds fy;s fu/kkZfjr lek/kku jkf'k dh rqyuk esa gkbZ MªkV HkV~Bksa gsrq lek/kku jkf'k 10 izfr'kr c<+kdj fu/kkZfjr dh tk;A

¼3½ dks;ys dh [kjhn ij ns; izos'k dj ds fodYi ds :i esa lek/kku jkf'k mijksDrkuqlkj fu/kkZfjr /kujkf'k dk 10 izfr'kr vfrfjDr gksxh rFkk dks;ys ij izos'k dj ds fodYi ds :i esa lek/kku ;kstuk viukus ds fy, rnuqlkj lek/kku jkf'k tek djuh gksxhA

¼4½ o"kZ 2007&08 dh mDr vof/k ds fy;s lek/kku ;kstuk dk ykHk mUgha bZV fuekZrkvksa dks miyC/k gksxk tks ;kstuk ds funsZ'k dfe'uj] okf.kT; dj] mRrj izns'k }kjk ifjif=r djus ds 15 fnu ds vUnj fodYi izkFkZuk&i=] fu/kkZfjr lek/kku jkf'k ds tek djus dk izek.k ds lkFk lEcfU/kr dj fu/kkZj.k vf/kdkjh ds le{k tek dj nsaxsA fodYi izLrqr djus dh frfFk fdlh Hkh n'kk esa c<+k;h ugh tk;sxhA

¼5½ lhtu o"kZ 2008&09 ds fy, lek/kku ;kstuk dk fodYi izkFkZuk&i= lek/kku jkf'k ds 90 izfr'kr dh /kujkf'k tek djus ds izek.k ds lkFk dfe'uj] okf.kT; dj] mRrj izns'k }kkjk ;ksftr ifjif=r djus ds 15 fnu ds vUnj dj fu/kkZj.k vf/kdkjh ds le{k tek djus ij gh izkFkZuk i= Lohdkj fd;k tk;sxkA ns; lEiw.kZ lek/kku jkf'k dk vo'ks"k 10 izfr'kr Hkkx fnukWd 30&06&2009 rd tek fd;k tk;sxkA fodYi izkFkZuk&i= rFkk mlds lkFk fu/kkZfjr lek/kku jkf'k tek djus dh frfFk dks fdlh Hkh n'kk esa c<+k;k ugh tk;sxkA

mijksDrkuqlkj fu/kkZfjr lek/kku jkf'k;ksa dh fdLr le;kuqlkj tek u djus dh fLFkfr esa 15 izfr'kr okf"kZd dh nj ls C;kt ns; gksxkA

¼6½ lek/kku ;kstuk ifjif=r gksus ds iwoZ tkjh fd;s x;s VSDl buokbl ds vuqlkj olwy dh xbZ dj dh /kujkf'k dk dksbZ ykHk lek/kku /kujkf'k esa ugha fn;k tk;sxkA blds vfrfjDr dj ds :i esa tek dh xbZ /kujkf'k] ftlesa vLFkkbZ dj fu/kkZj.k ds QyLo:i tek dh xbZ dj dh /kujkf'k] lfEefyr gS] dk lek;kstu lek/kku jkf'k esa fd;k tk;sxkA

¼7½ fdlh Hkh izdkj dh vFkZn.M ds :i esa tek /kujkf'k vFkok C;kt dh /kujkf'k dk lek;kstu fu/kkZfjr lek/kku jkf'k esa ugh fd;k tk;sxkA

¼8 ½ bu O;olkbZ;ksa dks vkbZ0Vh0lh0 dk ykHk vuqeU; ugh gksxk vkSj lek/kku ;kstuk fuxZr gksus ds ckn u rks ,slk O;olkbZ dj dh /kujkf'k olwy ldsxk vkSj u gh dksbZ VSDl buokbl tkjh djsxsaA

¼9½ lek/kku ;kstuk fuxZr gksus ds iwoZ VSDl buokbl ls dz; djus okys iathd`r dzsrk O;kikfj;ksa dks vkbZ0Vh0lh0 dk ykHk vuqeU; ugah gks ldsxk ijUrq ,sls dzsrk O;kikfj;ksa dks gkfu ls cpkus ds fy, vkbZ0Vh0lh0 vuqeU; u gksus ds dkj.k ekax l`ftr gksus ij mls ekQ djus dk vf/kdkj dj fu/kkZj.k vf/kdkjh dks ns fn;k tk;A

¼10½ lek/kku ;kstuk viukus okys O;olkbZ;ksa dks rHkh bldk ykHk fn;k tk;sxk ;fn blds iwoZ ds o"kksZ dh lek/kku ;kstuk dh cdk;k fdLrksa dh /kujkf'k C;kt lfgr tek djus dk izek.k bl lek/kku ;kstuk ds izkFkZuk&i= ds lkFk tek fd;k tk;sxkA vU;Fkk lek/kku ;kstuk dk ykHk vuqeU; gksxkA

¼11½ ;fn dksbZ O;kikjh ftl HkV~Bs ds fy;s lek/kku ;kstuk dk fodYi pqurs gS] mlls fHkUu HkV~Bs ij fufeZr fdlh eky dh fcdzh djrs gSa ;k vU; izdkj ds dz;&fodz; ds dk;Z Hkh djrs gSa] rks muds vU; izdkj ds dz;&fodz; ij ns;dj bl lek/kku ;kstuk ls vkPnkfnr ugha gksxkA

¼12½ dksbZ O;kikjh ftl HkV~Bs ds fy, lek/kku ;kstuk dk fodYi pqurk gS] lek/kku ;kstuk dsoy mlh HkV~Bs ds fy, ykxw ekuh tk;sxhA O;kikjh ;fn mlls fHkUu fdlh HkV~Bs ls fufeZr fdlh eky dh fcdzh djrs gSa ;k vU; izdkj ds dz; fodz; ds dk;Z djrs gSa rks vU; HkV~Bs ij fufeZr eky vFkok vU; izdkj ds dz; fodz; ij ns;dj bl lek/kku ;kstuk ls vPNkfnr ugh gksxkA

¼13½ dsoy iathd`r O;kikjh rFkk ftUgksaus iath;u izkFkZuk&i= izLrqr dj fn;k gS vkSj og vLohd`r ugh gqvk gks dsoy ,sls O;kikjh bl ;kstuk ds ik= gks ldsxsaA

¼14½ izkFkZuk&i= rFkk 'kiFk i= vkfn esa vafdr rF;ksa ds lEcU/k esa okf.kT; dj foHkkx ds vf/kdkjh bZV HkV~Bksa vkfn dh tkWp djus ds fy, Lora= gksxsaA ,slh tkWp ds le; bZV fuekZrk O;kikjh vFkok muds dksbZ deZpkjh ;k izfrfuf/k tkWp dk;Z esa fdlh izdkj dk O;o/kku mRiUu ugha djsxsa vkSj tkWp esa iwjk lg;ksx nsaxsA O;o/kku mRiUu gksus vFkok vlg;ksx djus dh fLFkfr esa izkFkZuk&i= rFkk 'kiFk i= esa vafdr rF;ksa ds lEcU/k esa foijhr fu"d"kZ fudkyk tk;sxkA lkFk gh ;fn dj fu/kkZj.k vf/kdkjh }kjk ,slk mfpr le>k tk; rks izkFkZuk&i= vLohdkj fd;k tk ldrk gS rFkk mRrj izns'k ewY; laof/kZr dj vf/kfu;e] 2008 ds vUrxZr vU; fof/kd dk;Zokgh Hkh dh tk ldrh gSA fookfnr fcUnq ij dfe'uj] okf.kT; dj] mRrj izns'k dk fu.kZ; vfUre gksxkA

¼15½ lhtu o"kZ ds nkSjku lek/kku ;kstuk fdlh Hkh le; lekIr dh tk ldrh gS ;k okil yh tk ldrh gS vkSj ,slh n'kk esa lek/kku ;kstuk ds ykxw jgus dh vof/k esa lekuqikfrd :i ls lek/kku jkf'k ns; gksxh rFkk 'ks"k vof/k esa O;kikfj;ksa dks fu;ekuqlkj dj nsuk gksxkA""

19. Thus in view of the above discussions compounding under Section 6 of the Act would not be available in respect of completed regular assessment.

ISSUE NO. III

20. Coming to the 3rd issue, we find that the directions of the State Government to the Assessing Authorities for accepting lump sum amount in lieu of tax from a dealer depending upon the number of "PAYAS" of brick kilns, are for a fixed period/season of 1.1.2008 to 30.9.2008. The scheme does not provide for computation of lump sum amount for part of the season which may be accepted by the assessing authority. In the case of M/S. Sri Durga Brick Field, Gorakhpur Vs. State of U.P. and others,1991, U.P.T.C. the Division Bench of this Court held that in case where option is exercised for payment of sales tax in a lump sum under Section 7-D, the demand is not based on the turn over but on agreement to pay tax in lump sum. The demand is not relatable to the actual turn over. In the case of M/s. Jai Sharma Int. Udyog, Allahabad, Vs. Deputy Collector (Collection), Sales Tax, Allahabad & Others 1992, U.P.T.C. 1161 similar view was again taken.

21. It is settled law that in interpreting a taxing statute, equitable consideration are entirely out of place nor can a taxing statute be interpreted on any assumptions or presumptions. The Court must strictly construe the words of the statute and interpret them literally. It must interpret a taxing statute in the light of what is clearly expressed. It can not imply anything which is not expressed, it can not import provisions from the statutes so as to suffer any assumed deficiency.

22. Thus it is not open for the assessing authority either to bifurcate the period of the season or the lump sum amount under the scheme unless the assessing authority is permitted to do so under the scheme itself or under Section 6 of the Act. In the absence of any such direction or power, the assessing authority committed no error in rejecting the compounding application of the petitioners. In view of the above discussions, neither the petitioners have any right to claim for composition under the scheme dated 9.6.2009 for part of the season nor the assessing authority has power to accept the compounding applications of the petitioners for part of the season in the absence of any stipulation either in Section 6 of the Act or direction in the scheme and quantification of compounding amount for the period 1.4.2008 to 30.9.2008

23. In the case of Lallooji and Sons, Allahabad Vs. State of U.P. and others, 2003 U.P.T.C. 900 the Division Bench of this Court considered the provisions of compounding under Section 7-D of the U.P. Trade Tax Act and held as under:

"10. In our opinion there is no merit in this petition. As stated in Section 7-D itself, the compounding scheme is subject to any direction of the State Government, which itself means that no one has a right to claim composition and this is subject to the decision of the State Government. In tax matters the Government has greater latitude to tax one category and not to tax other categories vide Anant Mills v. State of Gujarat, A.I.R. 1975 SC 1234; R.K. Garg v. Union of India, 1982 U.P.T.C. 355 (SC); Malwa Bus Service v. State of Punjab, 1983(3) S.C.C. 237; Income Tax Officer v. N.T.R. Rymbai, A.I.R. 1976 SC 670; Amalgamated Tea Estate v. State of Kerala, 1975 U.P.T.C.89, etc. A taxing statute is not open to attack on the ground that it taxes some persons or objects and not others, East India Tobacco Co. v. State of A.P., A.I.R.1962 SC 1733. The State has a wide discretion in selecting the objects or persons that it will tax, and in order to tax something it is not bound to tax everything, Orient Weaving Mills v. Union of India, A.I.R.1963 SC 98; State of M.P. v. Bhopal Sugar Industries, A.I.R.1974 SC 1179. It can pick and choose objects, areas, persons, rates of tax, etc. V.V.R. Verma v. Union of India, A.I.R. 1969 SC 1094; Gopal Narain v. State of U.P., A.I.R.1964 SC 370; Khyerbari Tea Co. Ltd. v. State of Assam, A.I.R.1964 SC 925; T.G. Venkatrama v. State of Madras, A.I.R.1970 SC 508, etc. There is no violation of natural justice in such cases. The very purpose of the composition scheme is to provide alternative mode of realization of tax other than regular assessment. It is not for the Court to enter into the realm of legislative or Government policy or to question the proprietary of the Tax.

(emphasis supplied by us)

24. Again the aforesaid provisions of Section 7-D of U.P. Trade Tax Act was considered by the Division Bench in the case of M/s. Jai Prakash Industries Ltd. Vs. State of U.P. and others 2003, U.P.T.C., 1272 and held that it is only when both sides are agreeable then only an agreement of compensation can be entered into between the parties.

(emphasis supplied by us)

25. In the case of M/s. Bhadauria Gram Sewa Sansthan, Fatehpur Vs. Assistant Commissioner, Sales Tax, Allahabad and others 2006, U.P.T.C. 538, the full Bench of this Court held that the amount payable under the compensation scheme is not relatable to any actual turnover but depends upon the agreement under the scheme at the option of the dealer.

26. In view of the above discussions, we are clearly of the view that the composition scheme under Section 6 of the Act dated 9.6.2009 could be opted by an assessee/dealer for the season on terms and condition as provided by the scheme itself. The jurisdiction of the assessing authority is confined to accept only such compounding applications which are in accordance with the direction of the scheme. He can neither travel beyond the directions of the scheme and the provisions of Section 6(1) of the Act nor has power either to bifurcate the period of the season or the lump sum amount unless it is so provided under the scheme. Option exercised by an asseessee under Section 6(1) of the Act in respect of a compounding scheme results in an agreement which agreement can be entered only if both the parties are agreed. Under Article 226 of the Constitution of India, the Court cannot compel the State Government to enter into a composition agreement in conflict with or beyond the terms of the composition scheme.

27. In Writ Petition Nos.896 of 2012, 897 of 2012 and 898 of 2012 the compounding application was allowed, but, subsequently a notice under Section 31 of the Act was issued by the assessing authority pursuant to which the order passed under Section 6 of the Act was recalled and the application of the petitioner was rejected. The petitioner has questioned the said order, on the ground, that the assessing authority had no power to recall the order since there was no mistake which was apparent on the face of the record. In support of his submissions, the learned counsel has placed reliance upon a decision of the Supreme Court in M/s Deva Metal Powders Pvt. Ltd. vs. Commissioner of Trade Tax, U.P., 2008 NTN (Vol.36)-4 and M/s Ram Prakash Vijai Kumar Pvt. Ltd. Saharanpur vs. Deputy Commissioner (Executive), Sales Tax, Saharanpur, 1996 U.P.T.C. 998, wherein the Court observed that in the absence of any misrepresentation or suppression of material fact the rectification application could not be considered or allowed.

28. Having heard the learned counsel for the petitioner, we are of the opinion, that the assessing authority was justified in recalling the order under Section 31 of the Act. It is not necessary that a mistake could be rectified only in the case of misrepresentation or fraud. If there is an error, which is apparent from the record, the said error can be rectified under Section 31 of the Act. We have already held, that there cannot be two assessment orders. Since an assessment order had already been passed, under Section 28 of the Act, no fresh assessment order under the composition scheme could have been passed under Section 6 of the Act and this being an error apparent on the face of the record could be rectified under Section 31 of the Act.

.

29. We, therefore, hold that the compounding scheme dated 9.6.2009 is valid and the petitioners in whose cases regular assessment were already completed under Section 28 of the Act for assessment year 2007-08 (1.1.2008 to 31.3.2008) were not entitled to apply for compounding. The petitioners were also not entitled to opt for compounding for part of the season i.e. 1.4.2008 to 30.9.2008.

30. In view of the above discussion, we do not find any merit in these writ petitions. All the writ petitions deserve to be dismissed and are hereby dismissed. No order as to costs

Order Date :- 3.9.2015

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