JUDGMENT Rajes Kumar, J.
1. These three revisions under Section 11 of the U.P. Trade Tax Act (hereinafter referred to as the "Act") are directed against the order of the Tribunal dated 26th June, 1996 relating to the assessment years, 1984-85, 1985-86 and 1986-87.
2. Dealer/opposite party (hereinafter referred as "Dealer") was engaged in the business of manufacture and sale of DROP, DIOP, DBP and DIBP fertilizers which falls under the category of chemical fertilizer. The dealer was holding a recognition certificate under Section 4-B of the Act and purchased raw material against Form III-B and availed the benefit of confessional rate of tax. Assessing authority found that the dealer had dispatched manufactured fertilizers out of State by way of stock transfer to its consignment agents for sale in violation of Section 4-B (2) of the Act and accordingly proceeding under Section 4-b (6) of the Act was initiated. After the consideration of the reply filed by the dealer, penalty was levied under Section 4-B of the Act. Assessing authority levied the penalty under Section 4-B (6) of the Act as it stood during the relevant assessment year. First appeal filed by the dealer for the assessment year, 1984-85 was allowed and the matter was remanded back to the assessing authority. However, appeals filed for the assessment years, 1985-86 and 1986-97 have been dismissed. Dealer filed second appeal before the Tribunal. Tribunal by the impugned order allowed all the three appeals in part. Tribunal has held that the dealer had violated the provision of Section 4-B (6) of the Act and, therefore, levy of penalty under Section 4-B (6) of the Act was justified. Tribunal, however, observed that the penalty notices under Section 4-B (6) of the Act have been issued after 29.07.1987 the date on which Section 4-B (6) of the Act has been amended and, therefore, penalty was leviable in accordance to the amended provision and not under the provision as it existed during the relevant assessment year prior to 29.07.1987. Tribunal, accordingly, modified the quantum of the penalty.
3. Heard learned Standing Counsel. No one appears on behalf of the dealer inspite of the service of the notice.
4. Short question for consideration is whether in view of the fact that the notices under Section 4-B (6) of the Act were issued after 29.07.1987, amended provisions will apply or the un-amended Section 4-B (6) of the Act as it existed prior to 29.07.1987 during the relevant assessment year will apply.
5. Section 4-B (2) of the Act and Section 4-B (6) of the Act as it existed prior to 29.07.1987 and after 29.07.1987 reads as follows.
"Section 4-B (2)- Where a dealer requires any goods, referred to in Sub-section (1) for use in the manufacture by him, in the State of any notified goods or in the packing of such notified goods manufactured or processed by him, and such notified goods are intended to be sold by him in the State or in the course of inter State trade or commerce or in the course of export out of India, he may apply to the assessing authority in such form and manner and which such period as maybe prescribed, for the grant of a recognition certificate in respect thereof; and if the applicant satisfies such requirement [including requirement of depositing late fee] and conditions as maybe prescribed, the assessing authority shall grant to him in respect of such goods a recognition certificate in such form and subject to such conditions, as may be prescribed.
Explanation- For the purposes of this Sub-section;
(a) goods required for use in manufacture shall mean raw materials, processing materials machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub assemblies, fuels or lubricants; and
(b) 'notified goods' means such goods as may, form time to time, be notified by the State Government in that behalf] Section 4-B (6)(before 29.07.1987) "where a dealer, in contravention of the terms and conditions laid down in Sub-section (2) for the grant of a recognition certificate, sells or otherwise disposes of the notified goods, for the raw material, of which he has been granted such certificate, he shall be liable to pay as penalty such amount, as the assessing authority may fix, which shall be not less than the amount of tax that would have been payable under the provisions of this Act on the sale of such notified goods in the State and not more than three times the amount of such tax."
Section 4-B (6)(after 29.07.1987) "Where a dealer, in whose favour a recognition certificate has been granted under Sub-section (2), purchases any gods for use in the manufacture or packing of any notified goods without payment of tax or by paying tax at a concessional rate of less than four per cent, and such notified goods are sold or disposed of by such dealer otherwise then by way of sale in the State or in the course of interstate trade or commerce or in the course of export out of India, such dealer shall be liable to pay as penalty such amount , as the assessing authority may fix, which shall not be less than the amount of tax that would have been payable under the provisions of this Act, on the sale or purchase of such goods and not more than double the amount of such tax, less any amount which he may have actually paid as tax on the purchase of such goods."
6. So far as the default and levy of penalty is concerned, there is no difference in the amended and un-amended provisions. Both the provisions contemplate penalty in a situation where the dealer in whose favour recognition certificate has been granted under Sub-section (2) sells or dispose of notified goods in contravention of terms and condition. Section 4-B (2) of the Act shall be liable to pay penalty. The only difference is in quantum of penalty.
7. Perusal of the provision of Section 4-B (6) of the Act shows that the penalty is leviable in a situation when a notified goods are sold or disposed of by such dealer "otherwise than by way of sale in the State or in the course of inter-State trade or commerce or in the course of export out of Country". The point of default is disposal of notified goods, which occurred during the relevant assessment year. Thus, in my opinion, the law which was available on the date of default is to be applied and not the date on which penalty proceeding was initiated.
8. Section 271(1)(c) of the Income Tax Act contemplates penalty for concealment of income. In the case of Brij Mohan v. CIT reported in 120 ITR page 1, the Apex Court held that there can be no doubt that the law applicable to penalty proceeding under Section 271(1)(c) is the law as enforced on the date on which the offending return has been filed. Similar view has been taken by the Apex Court in the Case of B. N. Sharma v. Commissioner of Income Tax reported in 226 ITR, 442, the Apex Court held as follows.
"This appeal has to be allowed following the decision of this Court in CIT V. Onkar Saran and Sons (1992) 195 ITR 1. The question referred for the opinion of the High Court under Section 256(2) of the Income-tax Act was (see (1977) 110 ITR 538, 539:
"Whether the amount of penalty imposable should have been worked out on the basis of the law in force at the time the return was filed and the delinquency of excluding the part of the income bad been committed?"
The High Court has answered the said question holding (at page 540) :
"Our answer therefore, to the question is: The amount of penalty imposable is to be worked out on the basis of the law in force on the date the Income-tax Officer directed initiation of the proceeding under Section 271(1)(c) of the Act."
It is, however, held by this Court in Onkar Saran and Sons' case (1992) 195 ITR 1, that in such cases it is the law obtaining on the date of the filing of the return which contains the concealment or misstatement, as the case may be, that is relevant and not the date on which the penalty proceedings are initiated. Accordingly, the question is answered in the following words :
"The amount of penalty imposable should be worked out on the basis of the law in force at the time of filing of the return whether original and/or revised which contained the alleged concealment or misstatement".
The appeal is allowed in the above terms. No costs
9. Similar view has also been taken in the case of Varkey Chacko v. Commissioner of Income-tax reported in 203 ITR 885. In the case of Commissioner of Sales Tax v. Paras Nath & Sons reported in 1980 UPTC page 969, learned Single Judge of this Court held that the law as applicable on the date of the default occurred could be applied. It has been further observed that the default occurred when the concealment of particular in the return was committed. Decisions referred by the Tribunal are not relevant to the present case. The decision in the case of Aysha Rani Dubey v. Commissioner of Income-tax reported in 157 ITR 330 , relates to the penalty under Section 271(1)(c) of the Income-tax Act which contemplates to penalty for late filing of return. The decision of this court in the case of Rampur Finance Corporation v. CIT, reported in 1991 UPTC, 1000 is not applicable, in as much as the principle laid down in the said judgment has been subsequently over ruled by the Apex Court in the case of CIT v. Dadi Sahu, reported in 199 ITR, 610 , which has been subsequently followed in Sadhu Ram v. CIT, reported in 247 ITR, 809.
10. For the reasons stated above, I am of the view that the provisions of Section 4-B (6) of the Act as it stood during the relevant assessment years, in which the default has been committed is applicable and not the provisions of Section 4-B (6) as it stood on the date of issue of the notice under Section 4-B (6) of the Act. In the circumstances, Tribunal is directed to determine the quantum of the penalty in the light of provisions of Section 4-B (6) of the Act as it stood during the relevant assessment years.
11. In the result, all the three revisions are allowed. Order of the Tribunal is set aside and the matter is remanded back to the Tribunal to decide the appeal afresh in the light of the observation made above.