JUDGMENT M. Katju, J.
1. This writ petition has been filed for a writ of mandamus directing the Senior Regional Manager, Food Corporation of India, Lucknow to refund the amount of tax realised over and above two per cent from the petitioner at the time of purchase of wheat by them against form III-B and for which form III-C(2) had been issued to the petitioners.
2. We have heard the learned counsel for the parties.
3. The petitioners are companies registered under the Indian Companies Act which carry out the business of crushing wheat, manufacture of atta, maida, suji and bran in their mills. The petitioners are registered under the U.P. Trade Tax Act and Central Sales Tax Act and are holders of valid recognition certificates under Section 4-B of the U.P. Trade Tax Act, 1948.
4. The petitioners purchased wheat from the Food Corporation of India (hereinafter referred to as "the FCI") against form III-B which is the prescribed form as wheat purchased by them is raw material for the purpose of wheat products. It is alleged in paragraph 3 of the writ petition that wheat is a commodity of special importance under Section 14 of the Central Sales Tax Act, 1956 and as such the tax on purchase of such wheat cannot be more than four per cent.
5. Under the notification dated May 21, 1994 issued under Section 4-B(1) of the U.P. Trade Tax Act, 1948 it was declared that the holders of recognition certificate would be entitled to purchase commodities after paying purchase tax at the rate of two per cent only. True copy of the notification dated May 21, 1994 is annexure 1 to the writ petition.
6. It is stated in paragraph 5 of the writ petition that at the time of purchase of wheat from the FCI advance III-B forms are given to the FCI and the FCI sells wheat to the petitioner accordingly. At the end of each month whatever purchases are made by the petitioners from the FCI are mentioned by the FCI in one form III-B. In the invoices given by the FCI to the petitioners there is no mention that the FCI ever charges tax on the purchase price of wheat separately, rather in the purchase price tax on wheat is included. For the assessment year 1994-95 the rates per quintal by the FCI ranged from Rs. 410 to Rs. 490 per quintal. These rates were subject to change at the instruction of Regional Office of the FCI, Lucknow. Similarly for the assessment year 1995-96 the rate of wheat was fixed at Rs. 415 per quintal and for assessment year 1996-97 it ranged from Rs. 441 to 490 per quintal.
7. Under Section 3-D of the U.P. Trade Tax Act, 1948 wheat is liable to be taxed at the first point of purchase. Accordingly, the tax is payable on the cost of wheat purchased. It is alleged in paragraph 7 of the writ petition that until and unless the dealer are verifiable, the petitioner would not be in a position to make entry in the account books of the cost of wheat but in fact a lump sum tax has been charged on the wheat per quintal which is contrary to Section 3-D.
8. In paragraph 9 of the writ petition it is alleged that the respondent No. 1 issued form III-C(2) to the petitioners for such purchases made from the FCI. Form III-C(2) is a certificate to be issued by the dealer who is not the first purchaser within the State and claims exemption from payment of tax. True copy of such form is annexure 6 to the writ petition. It is alleged in paragraph 10 of the writ petition that from a perusal of form III-C(2) it is apparent that the FCI did not pay any tax as first purchaser rather it purchased tax-paid wheat. Hence, the question of charging any form III-B by the FCI from the petitioners does not arise.
9. A notification under Section 4-B of the U.P. Trade Tax Act, 1948 with effect from June 1, 1994 was issued by means which recognition certificate holders were to pay tax at the rate of two per cent on the purchase of raw material. It is alleged in paragraph 13 of the writ petition that in view of this notification dated May 21, 1994 the petitioners were liable to pay tax at not more than two per cent on the purchase of raw material, i.e., the wheat purchased by the petitioners from the FCI. However, since the FCI issued form III-C(2) the question of making any sale by the FCI to the petitioners against form III-B does not arise.
10. In paragraph 14 of the writ petition it is alleged that on the one hand the FCI had issued form III-C(2) to the petitioner claiming sale of wheat to be tax-paid and was not taxable in their hands on the other hand they made sales against form III-B supplied by the petitioners solely with a view to get the refund of tax at the rate of two per cent which was deposited by the dealers who paid tax as first purchaser on the purchase of wheat and sold the same to the FCI.
11. In paragraph 15 of the writ petition it is alleged that the Deputy Manager, FCI, Lucknow on November 16, 1994 wrote a letter to all the District Managers of the FCI to the effect that form III-B collected from the Roller Flour Mills against the sale of wheat may be sent to the Regional Office with a view to enabling them to file the same along with the monthly return for seeking refund of excess tax. True copy of the letter dated November 16, 1994 is annexure 7 to the writ petition. He also gave directions to all the District Managers of the FCI to charge two per cent tax against form III-B from the Roller Flour Mills instead of four per cent. In paragraph 16 of the writ petition it is alleged that the U.P. Roller Flour Mills Association on May 15, 1995 wrote a letter to the members for expediting the action on the pending issues concerning refund of excess sales tax realised from them and also to allow the rebate of two per cent for which the FCI is collected form III-B from the Roller Flour Mills. True copy of the letter dated May 15, 1995 is annexure 8 to the writ petition. True copy of the letter of the Secretary of the Roller Flour Mills Association dated May 30, 1995 is annexure 9 to the writ petition.
12. Thereafter the petitioners made applications to the Senior Regional Manager, FCI, Lucknow claiming refund of the trade tax on the purchase of wheat against form III-B under the open sale scheme during the assessment years 1994-95, 1995-96 and 1996-97. True copies of the applications are annexures 10 to 13 to the writ petition. In paragraph 19 of the writ petition it is stated that form III-B supplied by the petitioners against the purchase of wheat to the FCI have been furnished by the FCI to its assessing authority. Similar form III-C(2) which has been issued by the FCI to the petitioner have also been issued by the assessing officer.
13. In paragraph 20 of the writ petition it is stated that FCI has realised more than two per cent trade tax on the purchase price of wheat which should be refunded to the petitioner. . Representations of the petitioners in this connection have not yet been decided. In paragraph 23 of the writ petition it is stated that the rate of wheat fixed by the FCI includes the amount of trade tax. Once form III-C(2) is issued, to the petitioners the question of charging any tax from the petitioners does not arise nor are they entitled to form III-B from the petitioners in view of the fact that form III-C(2) was issued by the FCI which proves that the wheat supplied by the FCI was four per cent tax paid. The petitioner has prayed for refund of two per cent tax to be made to the petitioners.
14. A counter-affidavit has been filed by the FCI and we have perused the same. In paragraph 5 of the same it is stated that under Section 15 of the Central Sales Tax Act, wheat is a declared commodity and only four per cent tax is chargeable as per relevant notification. There is a provision for seller to avail two per cent rebate on his first purchases subject to obtaining III-B forms from the Roller Flour. Mills so that there is no tax more than four per cent under the Central Sales Tax Act. The FCI has issued form III-C(2) declaring that the goods sold is tax-paid goods and the purchaser, i.e., the petitioners have no further liability to pay tax on the wheat purchased by the petitioners. As per notification dated May 21, 1994 the collection of form III-D is mandatory in the sale of wheat to the dealer holding recognition certificate under Section 4-B.
15. In paragraph 10 of the counter-affidavit it is stated that no trade tax on sale of U.P. procured wheat has ever been charged by FCI being first purchaser in U.P. It is not admitted that four per cent tax has been included in the price of sale of such wheat as Government of India used to fix single price for sale of wheat of any category. Since the stock procured from outside U.P. attracts four per cent trade tax in U.P. in the hands of the first purchaser, the FCI is charging two per cent tax against form III-B in view of notification dated May 21, 1994. Since no trade tax on U.P. procured wheat is applicable on its sales as per U.P. Trade Tax Act, no tax has ever been charged and form III-B has been obtained in view of the above notification, which shows that this rebate is applicable to the seller on its first purchase if such stock is sold to registered dealer under Section 4-B. In paragraph 11 of the counter-affidavit it is stated that regarding the wheat received from outside the State, the FCI is charging the tax but in respect of wheat which has been purchased or procured from within the State the FCI is not charging any tax. In U.P. there are three destinations of FCI, i.e., Lucknow, Kanpur and Varanasi. The selling rate of wheat from these centers has been fixed by the FCI headquarter at New Delhi. The price per metric ton charged from these centers is the same whether such wheat is purchased by FCI within U.P. or from outside the State of U.P. In case the wheat has been purchased by the FCI from outside the U.P. the same shall be sold on the price fixed plus tax at the rate of four per cent without form III-B and two per cent with form III-B. Photocopy of the circular in this connection is annexure C.A.-1. In paragraph 14 of the counter-affidavit it is stated that notification dated May 21, 1994 allows rebate of two per cent to the seller on the first purchase if the stock is sold to registered dealers having recognition certificate under Section 4-B and if submitted in form III-B. Whenever the FCI has sold the wheat to a dealer holding a recognition certificate under Section 4-B the petitioners have been granted benefit of concessional rate of tax at two per cent in respect of such wheat.
16. Amendment application and rejoinder affidavit have also been filed and we have perused the same. In paragraph 6 of the rejoinder affidavit it is stated that the petitioners have limited their claim to U.P., wheat only, and it is in respect of U.P. wheat only that the petitioners are claiming refund of the excess tax for which the FCI has been granted concession as per G.O. dated May 21, 1994. The wheat which has been supplied to the petitioners includes the tax and nothing has been placed, on record which can establish the fact that the price of wheat supplied to the petitioners does not include the trade tax. It is incorrect that supply of form III-B was a pre-condition for sale of wheat to the petitioners. The G.O. dated May 21, 1994 does not require this. Rule 25-B' of the U.P. Trade Tax Rules, 1948 provides that for availing the relief under Section 4-B the holder of recognition certificate will have to furnish to the selling dealer form III-B. This implies that the benefit has to be extended to the manufacturer of those commodities for which recognition certificate has been granted. Thus form III-B is a pre-condition only in such circumstances where the ultimate benefit is to be made available to that class of manufacturers. In paragraph 8 it is stated that the respondent has accepted form III-B for U.P. wheat also and after accepting this form they have denied the concession to which the petitioners are entitled.
17. The petitioners purchase wheat from FCI against form III-B for manufacture of atta, maida, etc. The petitioners are holding a valid recognition certificate on the basis of which they can purchase the wheat, if it is taxable as first purchase in the hands of the petitioners against form III-B.
18. In our opinion, if the wheat is not taxable at the hands of the petitioners as first purchase, then the petitioner cannot be asked to give form III-B, but if FCI has realised the tax from the petitioner in respect of such U.P. purchased wheat, as alleged by the petitioner, it shall be entitled for refund of the said tax, provided FCI has not deposited it with the assessing authority of the Trade Tax Department. If the FCI has deposited it with the Trade Tax Department the petitioner can apply for refund to the department and the department shall give the refund forthwith.
19. However, in paragraphs 5 and 7 of the counter-affidavit, it has been stated by the FCI that FCI did not charge any trade tax from the petitioners on the wheat procured from within the State of U.P. on which tax stood paid at the time of purchase.
20. In paragraphs 6 and 8 of the rejoinder affidavit it has been denied that the petitioners are claiming any refund for wheat purchased by the FCI from outside U.P. and sold against form III-B.
21. Hence, this controversy as to whether the tax has been realised by FCI on U.P. purchased wheat from the petitioner and the same has been deposited by the FCI with the assessing authority has to be decided. Since this is a factual controversy we cannot decide it in writ jurisdiction. It should be decided by the assessing authority of FCI to whom the petitioners may make an application as mentioned above and it must be decided very expeditiously. If it is decided in favour of the petitioner the petitioner should be given refund forthwith.
22. The petition is disposed of accordingly.