1. By means of this writ petition, the petitioner-M/s Devyani Foods Ltd. has prayed for quashing of the order dated 14.01.2005 passed by Commissioner, Trade Tax No.578 after summoning the original order and notices issued by the Deputy Commissioner (Assessment), Trade Tax-10, Agra dated 27.01.2005 (Annexure-2 and 3A to 3J). The petitioner has further sought a direction in the nature of mandamus to restrain the opposite parties from demanding the interest in terms of the aforesaid notices issued by the Deputy Commissioner (Assessment), Trade Tax-10, Agra in compliance of the orders of the Commissioner, Trade Tax, Lucknow dated 14.01.2005.
2. Undisputed facts are that the petitioner was the manufacturer of ice cream and was doing business in the style of M/s Devyani Foods Limited, Agra. The petitioner was a registered dealer and applied for eligibility certificate under Section 4-A of the Uttar Pradesh Trade Tax, 1948 (hereinafter referred to as 'the Act') for the aforesaid business. The eligibility certificate was granted to the petitioner in terms of Government Order dated 31.03.1995 being Eligibility Certificate No.203 dated 16.04.2002 effective w.e.f. 31.10.1996 to 31.10.2006. The petitioner after grant of eligibility certified applied for deferment facility under Section 8 (2-A) of the Act on 26.04.2002 to the Commissioner Trade Tax, U.P. Lucknow. The application to this effect was received in the office of Commissioner on 13.05.2002. The Joint Commissioner of the area recommended for the deferment vide letter dated 22.05.2002. When the application for deferment was under consideration, the petitioner sold out its unit to one M/s Universal Dairy Products Private Limited by a deed of assignment dated 23.12.2002 and M/s Universal Dairy Products Private Limited take over the possession of the unit. While taking over the possession of the unit by the M/s Universal Dairy Products Private Limited, it was also informed that the petitioner's unit was actually closed down on 23.12.2002. While dealing with the application of deferment, the Commissioner vide its order dated 17.06.2004 after exercising powers under Section 8(2-A) of the Act read with Rule 43 made under the Act known as U.P. Trade Tax Rules, 1948 and also in terms of the provisions contained in Section 4-A of the Act allowed the deferment in place of exemption in tax on the manufactured products during 31.10.1996 to 22.12.2002 but directed to deposit the admitted tax in terms of sub-rule 4 (b) of Rule 43 within three months from 23.12.2002, the day on which the unit was closed down. The deferment facility, however, was extended to the petitioner only till 23.12.2002. It was also mentioned in the order itself that on account of closure of business on 23.12.2002, the facility of deferment automatically comes to an end and tax amount ought to have deposited. It was also directed that if the amount is not deposited in terms of the aforesaid Rule, the Assessing Officer shall recover the entire amount of interest and tax. It was also not in dispute that the entire amount of admitted tax of Rs.25,68,833.55 till 23.12.2002 was deposited on 30.06.2004 by treasury challans as is evident from Annexure-17 of the writ petition. After deposit of the entire tax under the deferment scheme as stated above, the department issued notices demanding interest for not depositing the amount within three months from the date of its accrual i.e. from the date of closure of the business on 23.12.2002 till the date of actual payment of the tax. Aggrieved by these notices of demand, this writ petition has filed along with the order passed by Commissioner, Trade Tax, Uttar Pradesh vide its letter dated 14.01.2005.
3. Heard Sri Naresh Chandra Mishra, learned counsel for the petitioner and Sri H.P. Srivastava, learned Additional Chief Standing Counsel for the respondents.
4. Learned counsel for the petitioner would submit that the petitioner has deposited the amount of entire tax due within three months from the date of order of the Commissioner allowing his application for deferment till 23.12.2002 which was communicated to the petitioner in the month of June, 2004, therefore, the liability to pay the interest is not upon the petitioner.
5. Learned Additional Chief Standing Counsel vehemently opposed the contention raised by learned counsel for the petitioner on the ground that mere pendency of application for deferment will not give any right to the petitioner to take advantage of deferment beyond the date of closure of unit i.e. 23.12.2002. He further submits that in terms of eligibility certificate, the benefit of deferment could at the most be given till the date of closure of unit and not beyond that. Therefore, the Commissioner has rightly passed the order dated 17.06.2004. It was incumbent upon the petitioner that as soon as the petitioner closed his business, petitioner ought to have deposited the entire tax within three months in terms of Rule 43(4) because the petitioner was fully aware that in view of the provisions contained in the Act and the Rules, the deferment period cannot be extended beyond the date of closure of the unit and eligibility certificate granted under Section 4-A ceased to be operative. So, mere pendency of the application for deferment will not give any reason to extend the period for depositing of the amount which admittedly due after closure or discontinuance of business of the unit.
6. Before further proceeding in the matter, it is necessary to have a look of Rule 43 of U.P. Trade Tax Rules, 1948:
"43. Conditions for grant of moratorium under section 8(2-A) - The Commissioner, on application of a manufacturer may, in lieu of exemption under section 4-A grant moratorium for payment of tax admittedly playable by such manufacturer on sale of goods manufactured by him beyond the period prescribed in rule 41 subject to the following conditions, namely -
(1) The facility shall be available only to the manufacturer who is registered under the Act and has been granted an eligibility certificate under section 4-A and has filed the returns of his turnover as per rules.
(2) The facility shall be available-
(a) only for the period for which exemption from or reduction in rate of tax is admissible according to eligibility certificate issued under section 4-A of the Act,
(b) for the amount upto which exemption from or reduction in rate of tax is admissible according to the eligibility certificate plus fifty per cent of the fixed capital investment mentioned in the eligibility certificate.
(3) The moratorium for payment of tax admittedly payable for each of the assessment years may be granted for a period of five years, the computation of which shall be done from the last date for furnishing the last return according to sub-rule (1), (2) or (3) of rule 41 for the assessment year concerned. The amount of tax admittedly payable for each assessment year shall be paid by the manufacturer in a lump sum within one month of the expiry of the period of moratorium.
(4) The moratorium shall cease and the total amount of the tax admittedly payable shall become payable:
(a) on the date of discontinuance of business, where the manufacturer discontinues bushiness, within the meaning of sub-section (1) of Section 18 of the Act,
(b) on the date on which the unit becomes ineligible for exemption under section 4-A; and the amount shall be paid in lump sum within three months of its so becoming payable.
(5) The facility shall not be admissible in respect of the amount of tax assessed in excess of the tax admittedly payable by the manufacturer on the turnover admitted by him in the returns filed or in any proceeding under the Act, whichever is greater, whether the excess tax so assessed is due to detection of any evasion of tax made, or disallowance of any exemption claimed, by such manufacturer, or for any other reason, and the amount of tax so assessed in excess shall be paid in accordance with the provisions of the Act and rules.
(6) The facility shall be available to the manufacturer on creating first or second charge on its property in favour of the State Government, sufficient to cover the amount of tax in respect of which moratorium has been granted.
(7) If the amount in respect of which moratorium has been granted is not paid within the period specified in clause (3) or (4), as the case may be, the manufacturer shall in addition to any penalty, which the assessing authority may deem fit to impose under section 15-A, be liable to pay interest in accordance with sub-section (1) of Section 8 for the entire period during which the amount remain deferred and subsequently till the time of its payment.
(8) A manufacturer, who has availed the facility of exemption from or reduction in the rate of tax, whether wholly or in part, under section 4-A, shall not be entitled to the grant of moratorium."
6. In the light of the admitted facts stated hereinabove, it was incumbent upon the petitioner to deposit the entire amount of tax till 23.12.2002 of all the previous years in which the manufacturing process continued. The Assessing Authority has already granted the benefit of deferment of all the previous years till the date of closure of the unit and only asked the interest after three months from the date of closure of the unit till the date of actual deposit of tax by the petitioner. The benefit of deferment has already been extended by the Assessing Authority in terms of order of Commissioner dated 17.06.2004 to the petitioner. Therefore, the petitioner is liable to pay tax after closure of the unit in terms of sub-rule 4 of Rule 43 along with interest.
7. In view of above, we do not find any illegality, infirmity or jurisdictional error in asking the petitioner for the payment of interest by the impugned orders and the recovery sought to be made cannot be said to be against the provisions of the Act or the Rules made thereunder.
8. The writ petition lacks merit and is accordingly dismissed.
Dated: 27th March, 2014 akverma