1. Heard Sri Aloke Kumar, learned counsel for the revisionist and Sri B.K. Pandey, learned counsel for the respondent.
2. The present revision petition has been filed against the order dated 18.04.2007 passed by Trade Tax Tribunal, Muzaffar Nagar Bench, Muzaffar Nagar in Second Appeal No.37 of 2006 for the assessment year 2002-03.
3. The facts of the case are that the revisionist is a limited company and is engaged in manufacture and sale of sugar, molasses, baggase, press mud etc. For the assessment year 2002-03, the books of account of the revisionist are accepted by the assessing authority, but the claim of the revisionist is that the revisionist is liable to pay tax at the rate of 2.5% instead of 8%, on the transaction covered against Form 3-B said to be issued by M/s Dhampur Sugar Mills Ltd., which claim is not accepted.
4. For the assessment year in question, sales of molasses of 29962.95 quintals were affected by the revisionist to M/s Dhampur Sugar Mills Ltd. for sum of Rs.39,69,110/- against Form 3-B. The claim of the revisionist was that since the aforesaid sales are covered against Form 3-B the revisionist, therefore, is liable to pay the tax at the concessional rate of 2.5%.
5. The assessing authority while examining and verifying the books of account and the claim of the revisionist has noticed that though the sales are affected by the revisionist to M/s Dhampur Sugar Mills Ltd. but, in fact, the purchases are affected by M/s Dhampur Sugar Mills Ltd. for its 'chemical unit' and not by the sugar mill.
6. While passing the assessment order, the assessing authority has arrived at the conclusion that the sales affected by the revisionist are liable for tax at the rate of 8% and not as so claimed by the revisionist.
7. The order of assessment was challenged under Section 9 before the first appellate authority. Vide order dated 11.11.2005, the first appellate authoirty has allowed the appeal and has set aside the order of assessment so far as it imposes of liability of tax upon the revisionist at the rate of 8% on the aforesaid transaction against Form 3-B.
8. The first appellate authority has observed that the revisionist is a company which is controlled by the Government of U.P. as such is a cooperative sugar mill and it has affected the sales of raw material to M/s Dhampur Sugar Mills Ltd. to its 'chemical unit' against Form 3-B and, in fact, no show cause notice was issued by the assessing authority to the revisionist calling for explanation or providing an opportunity, therefore, the imposition of higher tax at the rate of 8% instead of 2.5% is unjustified.
9. Before the first appellate authority, the assessee has stated that the assessee has disclosed the sale to the 'chemical unit' M/s Dhampur Sugar Mills Ltd. which cannot be denied by the department as this fact is evident from the perusal of Form-4 (return) filed by the revisionist.
10. Learned counsel for the revisionist has submitted that no inquiry was ever conducted nor any opportunity was provided to the revisionist to explain the reasons and to place the materials. The order of the assessing authority was bad as such it was against the principle of natural justice.
11. Considering the submission of the assessee, the first appellate authority has recorded a categorical finding that admittedly the claim of the revisionist is prima facie appears to be correct and, in fact, if there was any suspicion or doubt in the mind of the assessing authority, it was obligatory for him to make an inquiry from the assessing authority of the purchasing unit which the assessing authority, in fact, has admittedly not done.
12. In view of the aforesaid reasons, the first appeal was allowed by the appellate authority and the order of assessing authority has been quashed by confirming the liability of tax in the hands of the assessee/revisionist at the rate of 2.5%.
13. Aggrieved by the order of the first appellate authority, the Commissioner has filed an appeal before the Tribunal and the Tribunal has decided the appeal on the basis of available record, which was placed before the tribunal.
14. The Tribunal vide its impugned order dated 18.04.2007 allowed the appeal of the department and set aside the order of the first appellate authority while affirming the order of the assessing authority.
15. Learned counsel for the petitioner has submitted that the purchaser M/s Dhampur Sugar Mills Ltd. was holding the recognition certificate issued under Section 4-B of U.P. Trade Tax Act and, therefore, it had issued Form 3-B in favour of the applicant for the purchase of molasses while admitting the liability of tax at the rate of 2.5%. It is further submitted that the molasses, which was purchased against Form 3-B, was used by M/s Dhampur Sugar Mills Ltd./ purchaser for manufacture of chemical for which the relevant notification No.KA.NI.2-530/XI-7(159/91-U.P. Act-15-48-Order-2000 dated Lucknow: February 17, 2000 was issued and the applicant had accepted Form 3-B bonafidely.
16. Learned counsel for the revisionist has further submitted that it is an admitted fact that Form 3-B were issued to the purchaser by its assessing authority and the said Form 3-B were not declared at any point of time as invalid and/or obsolete under Sub-rule 13, and therefore, non-acceptance of the applicability of the rate of tax, as admitted by the purchasing dealer, is bad and as such was illegal.
17. Learned counsel for the revisionist has further submitted that the buyer has made the purchase from the present revisionist and has declared the same and only after declaration, the requisite Form 3-B was issued, which was for concessional rate of tax, the refusal of benefit allowable under law is nothing but clearly an eyewash at the hands of the department. He has further submitted that even the purchasing dealer M/s Dhampur Sugar Mills Ltd. has issued the certificate accepting the issuance of Form 3-B and the liability upon the said transaction covered by Form 3-B at the concessional rate at 2.5%, therefore, the imposition of tax liability at the rate of 8% is incorrect.
18. On the other hand, learned Standing Counsel has justified the order of the assessment and the order passed by the Tribunal confirming the assessment order and imposition of liability of tax at the rate of 8%.
19. Having heard the learned counsel for the parties, I find substance in the submission of learned counsel for the revisionist. It is not in dispute that the Form 3-B are duly issued by the assessing authority of the purchasing dealer M/s Dhampur Sugar Mills Ltd., which is a distillery unit. The purchases are affected against Form 3-B at the concessional rate of tax. The revisionist has charged the tax at the concessional rate at 2.5% on the pretext that sales are affected against the Form 3-B. The Form 3-B are admittedly issued by the assessing authority of the purchasing dealer M/s Dhampur Sugar Mills Ltd. There is no dispute that M/s Dhampur Sugar Mills Ltd is a big unit having different units, however, raw material is being purchased by M/s Dhampur Sugar Mills Ltd., which is being distributed to other units, which are part of the M/s Dhampur Sugar Mills Ltd. Admittedly, the purchase of molasses is being used in the chemical unit of M/s Dhampur Sugar Mills Ltd. and I find no illegality committed by the revisionist while affecting the sale to M/s Dhampur Sugar Mills Ltd. against Form 3-B which are issued by the assessing authority of the purchaser M/s Dhampur Sugar Mills Ltd. and since the sales are affected against Form 3-B, there is no wrong at the hands of the present revisionist to charge the tax at the concessional rate.
20. I find merit in the submission of learned counsel for the revisionist that before proceeding and completing the assessment proceedings/order, no adequate opportunity of hearing was provided to the revisionist in this regard nor even any show cause notice was issued.
21. In view of the aforesaid facts and upon the facts and circumstances of this case, the impugned order of the tribunal is set aside and the order passed by the first appellate authority is confirmed.
22. The revision is allowed.
Order Date :- 30.07.2018 A.Kr.*