Allahabad High Court
M/S Ambey Processors Thru Its Director vs The Commissioner Commercial Tax U.P. ... on 19 May, 2025
Author: Piyush Agrawal
Bench: Piyush Agrawal
HIGH COURT OF JUDICATURE AT ALLAHABAD
Neutral Citation No. - 2025:AHC:83266
Court No. - 10
Case :- SALES/TRADE TAX REVISION No. - 554 of 2017
Revisionist :- M/S Ambey Processors Thru Its Director
Opposite Party :- The Commissioner Commercial Tax U.P. Lucknow
Counsel for Revisionist :- Aloke Kumar
Counsel for Opposite Party :- C.S.C.
HON'BLE PIYUSH AGRAWAL,J.
1. Heard Shri Aloke Kumar, learned counsel for the revisionist and Mr. B.K. Pandey, learned ACSC for the State - respondent.
2. The instant revision was admitted vide order dated 18.12.2015 on the following substantial questions of law:-
"(B) Whether the Tribunal was legally justified in ignoring that the circular issued by the Commissioner is binding on the authorities?
(C) Whether the Tribunal was legally justified in affirming the demand created under Section 3 B of the Act without establishing that the applicant has submitted false or wrong Form III B ?"
3. Learned counsel for the applicant-revisionist submits that the revisionist is a registered proprietorship concern and is engaged in the business of processing and dyeing of cloths and in terms of Section 4 B of the UP Trade Tax Act and Rule 25 B of UP Trade Tax Rules, the revisionist is entitled to purchase its raw material, processing material, consumable, packing material etc. on concessional rate of tax against Form III B issued by the department. He further submits that in the normal course of business, the revisionist has purchased spares and dying materials against Form III B issued by the Assessing Authority duly filling the columns prescribed prescribed therein.
4. However, a show cause notice has been issued on the ground that the revisionist was required to issue Form III B for the concessional rate of 4 % though he had issued Form III B for the rate of 2.5. %. He further submits that due to variance of rate of tax, circulars have been issued by the Commissioner, Commercial Tax from time to time, which is binding upon the department. The assessing authority has proceeded under Section 3 B of the Act and imposed the demand to the tune of Rs. 84981/- vide order dated 7.12.2011. Against the said order, the revisionist has preferred an appeal, which has been dismissed vide order dated 20.3.2015. Aggrieved to the said order, the revisionist has preferred Second Appeal before the Commercial Tax Tribunal, which was dismissed vide judgment dated 27.7.2017 and the order passed by the assessing authority was affirmed.
5. Learned counsel for the revisionist further submits that the circulars specify certain directions to be followed by the assessing authority and different color shades of Form III B to be issued for concessional rate of tax and full rate of tax. It was incumbent upon the assessing authority, while issuing the form ought to have issued the forms as contemplated in the above mentioned circular. The circular as stated above ought to have been complied with in its letter and spirit by the assessing authority. He further submits that negative onus cannot be imposed upon the revisionist and for the duty not discharged by the assessing authority properly, the revisionist cannot be penalized. He submits that Form III B has been obtained under due process by the Trade Tax Department and not by false or wrong declaration. He further submits that the authorities, while passing the order, have not recorded any finding justifying the action against the revisionist that Form III B has been issued falsely or wrongly and in the absence thereof, the impugned order cannot be justified.
6. Per contra, learned ACSC supports the impugned order and submits that the revisionist was well aware for what purpose, requiring Form III B and it was duty incumbent upon the revisionist to intimate the assessing authority about the intention for obtaining form either for purchase on concessional rate or at higher rate The assessing authority issues form at the request of the registered dealer, therefore, it is incorrect to suggest / argued to shift the burden on the assessing authority, while issuing the form. The intent of the dealer cannot be tested at the time of issue of such form. He supports the impugned order.
7. After hearing learned counsel for the parties, the Court has perused the records.
8. It is not in dispute that the revisionist is duly registered dealer and is entitled for purchase of goods as prescribed under Section 4 B of the Act. Form III B is a requisite form which authorizes the registered dealer to purchase the goods as contemplated under Section 4 B of the Act at a concessional rate or at reduced rate. The record shows that the proceedings has been initiated against the revisionist on the alleged ground of issuance of Form III B without mentioning the rate of tax.
9. Rule 25 B of UP Trade Tax Rules prescribes Form III B. On perusal of Form III B, it appears that no column has been prescribed for mentioning the rate of tax to be leviable. Once the Act / Rule, does not specifically provide for mentioning the rate of tax in Form III B, the revisionist cannot be held responsible for issuing Form III B.
10. Further the records shows that for one assessment year, the order has been passed, as a whole, holding liability for short payment of tax. Section 3 B of the Act contemplates a provision for realizing in short payment of tax. If the assessing authority found that there was a short payment of tax that ought to have been attributed to the respective form on which he alleges short payment of tax. A general order for complete assessment year cannot be passed. The assessing authority was required to pin point the form used in the particular assessment year for alleging short payment of tax.
11. Section 3 B of the Act is quoted hereunder:-
3B. Title : Liability on issuing false certificates, etc.
Notwithstanding anything to the contrary contained elsewhere in this Act and without prejudice to the provisions of sections 14 and 15A, a person, who issues a false or wrong certificate or declaration, prescribed under any provision of this Act or the rules framed thereunder, to another person by reason of which a tax leviable under this Act on the transaction of purchase or sale made with or by such other person ceases to be leviable or becomes leviable at a concessional rate, shall be liable to pay on
such transaction an amount which would have been payable as tax on such transaction, had such certificate or declaration not been issued:
PROVIDED that before taking any action under this section the person concerned shall be given an opportunity of being heard.
Explanation: Where a person issuing a certificate or declaration discloses therein his intention to use the goods purchased by him for such purposes as will make the tax not leviable or leviable at a concessional rate but uses the same for a purpose other than such purpose, the certificate or declaration shall, for the purpose of this section, be deemed to be wrong.
12. On bare reading of the aforesaid section, it shows that on issuing of false or wrong certificates to another person by reasons of which tax leviable under the Act on the transaction of purchase or sale made with or by such other person ceases to be leviable or becomes leviable at a concessional rate, shall be liable to pay on such transaction an amount which would have been payable as tax on such transaction, had such certificate or declaration not been issued.
13. In other words, if the registered dealer in a particular transaction issued a certificate on the intent on which no tax is levied or concessional tax was levied then for the balance amount, if found to be paid, can be realized on such certificate or declaration. The word 'such certificate or declaration' clearly shows that every certificate or declaration has to be looked into independently and for each default, if any, separate order has to be passed. For the complete assessment year, no common order can be passed. The legislature in its wisdom has not used the word 'certificates or declarations' for such transaction to which only one order can be passed.
14. Further the record shows that the circular dated 15.4.1986 and 24.4.1987 have not given due weightage though it was binding upon the authorities.
15. In view of above, the matter requires reconsideration by the assessing authority and for that purpose, the impugned order passed by the Commercial Tax Tribunal is hereby set aside.
16. The matter is remanded to the assessing authority, who shall decide the case, de novo, in accordance with law.
17. The revisionist is directed to submit a certified copy of this order within ten days from today before the assessing authority and on receipt of the same, notice will be issued to the revisionist within a week thereafter. The revisionist shall submit its reply within 15 days from the date of issuing of the notice and thereafter the assessing authority shall made all endevour to decide the case within another period of three months.
18. Any amount deposited by the revisionist shall be subject to the outcome of the fresh order passed by the assessing authority.
19. Accordingly, the revision is allowed.
20. The questions of law are answered accordingly.
Order Date :-19.5.2025
Rahul Dwivedi
