JUDGMENT Prakash Krishna, J.
1. The petitioner, a contractor, for the assessment year 1990-91 obtained two contracts awarded by Modi Pon Fibre Company, a division of Modi Pon Ltd. for executing the work of civil nature. Under Section 7-D of the U.P. Trade Tax Act, hereinafter called the Act, power has been given to the State Government to float the scheme from time to time popularly known as compounding scheme, under which it was empowered to accept a lump sum in lieu of amount of tax that may be payable in respect of such goods or class of goods and for such period as may be agreed upon. In exercise of the powers conferred under Section 7-D of the Act the State Government issued a scheme for lump sum payment by the contractors as per Annexure-1 to the writ petition. The petitioner moved an application Under Section 7D for lump sum payment in lieu of tax before the Deputy Commissioner (Executive) Trade Tax Ghaziabad, who had the authority to consider and dispose of the application under Section 7-D of the Act. By means of order dated 7th February, 1994 passed by the Deputy Commissioner (Executive) Trade Tax he accepted the application of the petitioner for payment of tax at the rate of 1% on the payment received during the year 1990-91. Subsequently, the Deputy Commissioner (Executive) Trade Tax issued a notice purporting to be under Section 22 of the Act and by the order 6th February, 1997 cancelled the earlier order dated 7th February, 1994 passed under Section 7-D of the Act. The validity of the order dated 6th February, 1997 was the subject matter of challenge before this Court in writ petition No. 338 of 1997. A Division Bench of this Court by judgment dated 17th May, 1999 allowed the writ petition and quashed the order dated 6th February, 1997. The order of this Court has attained finality as the department has not challenged the same. Undaunted by the failure, the department issued impugned notice dated 4th Nov. 1999 purporting to be under Section 21 (2) of the Act. In this notice it is mentioned that the petitioner factually had obtained the order for job work, which was declared by him as the work of civil contract. Scheme as floated by State Government under Section 7-D covers only certain kinds of work, namely, buildings, bridges, roads, dams, barrages, causeways, spill way and diversions. The said scheme is not applicable to the contract work undertaken by the petitioner and as such the turn over of contract work undertaken by the petitioner has escaped the assessment and is liable to be taxed accordingly. Questioning the legality, validity and jurisdiction of the authority to issue the impugned notice the present writ petition has been filed for the following reliefs :-
(i) to issue a writ, order or direction, in the nature of writ of certiorari, quashing the notice dated 4.11.1999 issued under Section 21 for the assessment year 1990-91 and the entire consequent proceeding in pursuance thereof (Annexure-3 to the writ petition).
(ii) To issue a writ, order or direction, in the nature of writ of mandamus, directing the respondent to refund the excess amount for the year 1990-91 forthwith along with the interest right from the order dated 7.2.1994 passed Under Section 7D and to allow heavy cost.
(iii) To issue a writ, order or direction which this Hon'ble Court may deem fit and proper in the circumstances of the case.
And
(iv) To award the cost of the petition to the petitioner.
2. In reply the respondents have not disputed that the petitioner applied under the compounding scheme for civil contract under Section 7-D of the Act on 4.1.1992 for the assessment year. 1990-91 and had given the details of the contract entered into with M/s Modi Pon Fibre Company, Modinagar. It is also not disputed that the application for compounding of tax was accepted by the Deputy Commissioner (Executive) Trade Tax, Ghaziabad and the compounding amount at the rate of 1% on the payment received, was accepted. It has been further stated that the petitioner deposited by way of TDS certain amount towards tax out of which Rs. 1,22,430/- was to be refunded to him subject to verification of the deposit. The order for refund was passed on 21.6.1996 and the refund voucher was sent to the Deputy Commissioner (Executive) Trade Tax for counter signature as per the provisions of the Rules. The Deputy Commissioner (Executive) thereafter passed the order dated 6th February, 1997 under Section 22 of the Act and directed the Assessing Officer to assess the petitioner under the provisions of the Act. The said order dated 6th February, 1997 has been quashed by this Court in writ petition No. 338 of 1997. The case of the respondent is that the work awarded to and executed by the petitioner was mainly for the interior decoration, it is not work of civil nature, consequently, the scheme was not available to the petitioner and the application for compounding the payment of tax was wrongly allowed by the Deputy Commissioner (Executive) and thus, the initiation of proceedings under Section 21 (2) of the Act is just, legal, valid and in accordance with law.
3. Heard Sri Krishna Agrawal, learned counsel for the petitioner and Sri S.P. Kesharwani, learned Standing Counsel for the department.
4. Learned counsel for the petitioner submitted that the order passed under Section 7 D of the Act accepting the compounding application of the petitioner is still intact and has not been set aside or modified by any authority. Resultantly, the petitioner is liable to pay trade tax at the rate of 1% on the sum received during the year. The department accepted the application of the petitioner with wide open eyes and it is not a case, where the petitioner has concealed or made any false declaration and as such the order/agreement dated 7.2.1994 under Section 7D of the Act is binding on the department. This Court in writ petition No. 338 of 1997 has quashed the subsequent order dated 6th February, 1997 passed under Section 22 of the Act meaning thereby the order dated 7.2.1994 is still operative. The issuance of notice and initiation of proceedings under Section 21 (2) of the Act by means of impugned notice during the existence and currency of the order dated 7.2.1994, passed under Section 7-D of the Act is totally without jurisdiction and as such the impugned notice is liable to be quashed.
5. In reply the learned Standing Counsel submitted that by no stretch of imagination the application for compounding filed under Section 7D of the Act could have been accepted, thus the order of the Deputy Commissioner (Executive) accepting the application under Section 7-D of the Act is on the face of the scheme is incorrect and as such the turn over of the petitioner has escaped assessment and, therefore, the action of the department is fully justified. The learned Standing Counsel argued that the nature of work undertaken by the petitioner does not fall under the nature of the work enumerated in the said scheme issued under Section 7-D of the Act. However, it was submitted by him that in view of the plain language of Section 7-D of the Act, the grant of application of the petitioner was subject to the scheme and as such the assessing officer could very well initiate the proceedings under Section 21 (2) of the Act, notwithstanding the order dated 7.2.1994 passed on the compounding application.
6. Having heard the learned counsel for the parties we find that the entire controversy raised in the present writ petition revolves around the interpretation of Section 7-D of the Act which provides for composition of tax liability. It is reproduced below :-
"7-D. Composition of tax liability -Notwithstanding anything contained in this Act, but subject to directions of the State Government, the assessing authority may agree to accept a composition money either in lump sum or at any agreed rate on his turnover in lieu of tax that may be payable by a dealer in respect of such goods or class of goods and for such period as may be agreed upon :
Provided that any change in the rate of tax which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force.
Explanation - For the purposes of this section the assessing authority includes an officer not below the rank of Trade Tax Officer Grade II posted at a checkpost."
7. To resolve the controversy it is essential to examine the nature of an order passed Under Section 7D of the Act. A plain reading of Section 7-D shows that the option has been given to a dealer who is covered by the scheme issued by the State Government from time to time to opt for payment of a lump sum amount in lieu of the amount of tax. The Supreme Court has examined a similar kind of provision under the Andhra Pradesh Entertainment Tax Act in the case of Venkateshwara Theatre v. State of Andhra Pradesh, AIR 1993 SC 1947. The State Government provided that instead of payment of entertainment tax on the basis of actual number of cinema goers, the proprietor of a cinema hail may opt to pay consolidated levy on the basis of gross collection capacity per show. The validity of the said provision came up for consideration before the Supreme Court and in that connection. The Apex Court has observed as follows :-
".............(Compounded payment of entertainment tax) is a more convenient mode of levy of the tax inasmuch as it dispenses with the need to verify or enquire into the number of persons admitted to each show and to verify the correctness or otherwise of the returns submitted by the proprietor containing the number of persons admitted to each show and the amount of tax collected".
8. The aforesaid judgment has been followed by the Supreme Court in the case of State of Kerala and Anr. v. Builders Association of India and Ors., 1997 U.P. Tax Cases 12. It was held that payment of alternate method of taxation is a convenient, hassle free and simple method of assessment. The relevant portion is quoted below :-
"Thus impugned sub-
have evolved a convenient, hassle free and simple method of assessment just as a system of levy of entertainment tax on the gross collection capacity of the cinema theatre.
It is only an alternative method of ascertaining tax payable which may be availed of by a contractor if he thinks it advantageous to him Several taxing enactments contained provisions for composition of tax liability which may some times to be in the interest of both revenue and the assessee."
8. The object of levy of compounded payment of tax is not to increase the revenue. The legislatures provide alternate method of taxation with a view to realize the tax with least discomfort to the assessee. It is only a convenient mode of realization of tax. It also ensures the fixed amount of payment of tax to the Government irrespective of the fact that the business of the assessee earned any profit or not."
9. A Division Bench of this Court in Sri Durga Brick Field v. State of U.P. 1991 UPTC 510 has held that where a dealer elects to pay the sales tax in lump sum under Section 7-D it is not open to him to contend that the agreement or the election is not binding on him, because the unit was lying closed or the turn over turned out to be either nil or inadequate on account of various factors. It will not be open to the dealer to pay a reduced amount on the ground that the unit did not work or the turn over was less than anticipated. In a case where option is exercised for payment of sales tax in lump sum under Section 7-D, the demand is not based on the turn over but on the agreement to pay the tax in lump sum i.e. the demand is not relatable to the actual turnover.
10. Thus the payment of compounded tax is a convenient hassle free and simple method of assessment. A dealer who has opted for payment of lump sum amount in lieu of tax is not required to file monthly or quarterly returns of the turnover. A dealer has to pay a fixed sum of money as tax as agreed upon by the department. It is the choice of a dealer to opt for compounded payment of tax. If the said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. The department as well as the dealer both are bound by the said agreement. The necessary collary of this is that a dealer whose application for compounding has been accepted can, not turn around and urge that he is not liable to pay any tax for any reason, such as closure of business or low turnover etc.
11. Moreover Section 7D starts with a non-obstanate clause and it excludes the applicability of other provisions of the Act which deals with the assessment and payment of tax. A non obstanate clause as observed by the Supreme Court in the case of State of Bihar v. Bihar M.S.K.K. Mahasangha and Ors. 2004 AIR SCW 7151 is generally appended to a section with a view to give the enacting part of the Section in case of conflict, an overriding effect over the provision in the same or other Act mentioned in the obstanate clause. It is equivalent to saying that in respect of the provisions or Act mentioned in the non obstanate clause the provision following it will have its full operation or the provisions embraces in the non obstanate clause will not be an impediment in the operation of the enactment or the provisions in which non obstanate clause occurs.
12. A dealer who has opted to pay the tax in lump sum under Section 7-D of the Act and the said option has been accepted by the department, the demand for that period is not relatable to the actual turn over but to the sum agreed upon. In other words, the department as well as the, dealer both know the amount payable and receivable by each other. The determination of the lump sum in lieu of tax, displaces the requirement of regular assessment proceedings. The qualification of tax liability is by agreement as per terms of the scheme, which would bind both the parties. The object of introducing such scheme under the Taxing Statute is well established, as so many advantages are attached to such schemes, besides being hassle free to the dealer, it also avoids unnecessary litigation. The department in its turn receive a fixed amount as tax without undertaking the assessment work and thus saves a lot of time. It also facilitates the speedy recovery of tax. In this background we have to answer the issues raised in the writ petition.
13. It is not in dispute that the order dated 7th February, 1994, passed by the Deputy Commissioner (Executive) Trade Tax accepting the payment of tax at the rate of 1% on the amount received during 1990-91 still subsists and unsuccessful attempt was made to cancel the order dated 7.2.1994. The question which arises whether in such circumstances the Trade Tax Officer could issue the impugned notice dated 4.11.1999 under Section 21 (2) of the Act. Section 21 of the Act deals with the assessment of tax on the turn over not assessed during the year. In other words it talks about the reassessment of the turn over which has escaped the assessment. The Assessing Authority has been empowered to issue notice under Section 21 of the Act, if he has reason to believe that whole or any part of the turn over of the dealer has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under the Act or any deduction or exemptions have been wrongly allowed in respect thereof. Learned Standing Counsel submitted that it is a case of escaped assessment of the turn over of the petitioner as the petitioner carried on the work of interior decoration, which was not covered by the scheme issued under Section 7-D of the Act and in any view of the matter the turn over of the petitioner has been under assessed by extending the umbrella of Section 7-D of the Act. The said argument of the learned Standing Counsel is misconceived. Power vested with any authority under various provisions of law can be exercised only for the stated purpose and for no other purpose. All acts by authorities must be in conformity with or according to the intent of the Act and not for any other collateral purpose. It is not in dispute that besides the contracts with Modi Pon Fibre Company, the petitioner has not undertaken any other contract work.
14. It is not the case of the department that the petitioner did not truly and correctly disclosed the nature of the contract work undertaken by him. It has come on record that the Deputy Commissioner (Executive) Trade Tax examined the contract awarded to the petitioner. After examination of the two contracts he accepted the application for compounding with his wide open eyes. There is not even a slightest whisper either in the impugned notice or in the counter affidavit that the petitioner is guilty of concealing any material fact or has not truly and correctly disclosed the contract work undertaken by him. There is no allegation that the petitioner by playing fraud obtained the order dated 7th February 1994 by which the application wider Section 7-D of the petitioner was accepted. This Court in the case of Ram Prakash Vijay Kumar Pvt. Ltd. Saharanpur v. Deputy Commissioner (Executive) 1996 UPTC 998 has held that Deputy Commissioner (Executive) can not review its order unless the dealer has misrepresented any fact or suppressed any information. The legal effect of the order dated 7th February, 1994 is that the petitioner is liable to pay lump sum i.e. 1% of the sum received by him during the assessment year in question to which the department also agreed. The said agreement is valid and binding on both the parties. In the absence of any material to show that the order dated 7.2.1994 was tainted on account of fraud or concealment of material fact, it is not open to the department to initiate the reassessment proceedings under Section 21 of the Act as it would amount the ignoring of the order dated 7.2.1994. Where the application under Section 7-D is allowed there is no assessment as it is commonly understood in Taxing Statutes. The question of escapement of turn would hardly arise in such cases. The demand, as held by this Court in the case of Sri Durga Bricks Field (supra), "is not relatable to the actual turn over". Section 7 D opens with non obstanate clause. It gives an over riding effect over the provision in the same or the other Act mentioned in the obstinate clause. It is equivalent to saying that inspite of the provisions or the Act mentioned in the non obstanate clause, the provision following it will have its full operation or the provisions embraced in the non obstanate clause will not be impediment in the operation of the enactment or the provision in which the non obstanate clause occurs.
15. Thus, the argument of the learned Standing Counsel that the scheme was subject to such direction as the State Government may front time to time issue in that behalf, and the petitioner's work contract being beyond the scope of the scheme, the order passed by the Deputy Commissioner (Executive) accepting the compounding application is liable to be ignored has no substance. Moreover, it could not be disputed by him that the Deputy Commissioner (Executive) is a higher officer than the Trade Tax Officer who issued the impugned notice and the order dated 7th February, 1994 has been passed by the Deputy Commissioner (Executive) in exercise of powers vested in him under Section 7D of the Act. In any administration it is essential for a junior officer to obey and follow and give due weight to an order which has been validly passed by an officer who is higher in rank, otherwise there would be chaos in the administration. It is not open to an officer who is junior in rank to give a complete go bye to such an order passed by his superior. The order passed by the superior unless varied, modified or vacated, is an order binding on a junior officer and he has to obey it. The Apex Court in the case of Authorised Officer (Land Reforms) v. M.M. Krishnamurthy Chatty. 1998 (9) SCC 138, has held that it is well settled that even order which may not be strictly legal become final and are binding between the parties if they are not challenged before the superior court. This may instantly cause some prejudice to the Revenue but the remedy is to take appropriate steps within the frame work of the statute. It may be recalled here that an attempt was made by the Deputy Commissioner (Executive) to rectify the order dated 7th February, 1994 by order dated 6th February, 1997. The order dated 6th February, 1997 has been quashed by this Court. The relevant portion of the judgment reads as follows:-
"The impugned order shows that there was no allegation of misrepresentation or suppression of fact by the petitioner while making the application Under Section 7D of the Act. It appears that the said order was passed on change of opinion by the Assessing Authority. In that view of the matter we do not think that the order dated 6.2.1997 can be sustained. We accordingly quash the order dated 6.2.1997.
In the result, the writ petition succeeds and is allowed. There shall be no order to costs."
16. The scheme of the Trade Tax Act shows that ample power has been conferred on the authorities to take appropriate action in appropriate cases when the order is prejudicial to the interest of Revenue. Besides power of the rectification under Section 22 of the Act the power of revision under Section 10-B of the Act, is there. The power in appropriate could be exercised under Section 10-B of the Act by way of revision by the Commissioner of Trade Tax. The Commissioner of Trade Tax under Section 10-B has been empowered to call for and examine the record relating to any dealer passed by any officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of such order. The power being there under Section 10-B of the Act, we find no force in the argument of the learned Standing Counsel that in such circumstances the only remedy open to the department is to initiate reassessment proceedings under Section 21 of the Act.
17. It could not be disputed by the learned Standing Counsel that the judgment delivered in writ petition No. 338 of 1997 on 17th May, 1999 by this Court has attained finality. This Court has found that the order dated 7.2.1994 was sought to be cancelled by way of rectification by the order dated 6.2.1997 on the ground of change of opinion. This finding has attained finality and no reassessment proceedings can validly be initiated in the face of the aforesaid finding of this Court.
18. Learned Standing Counsel has placed reliance on the following three cases; Son Pal Sanjay Kumar v. STO 1997 UPTC 73, Kalpana Kala Kendra v. STO 1989 UPTC 397 and Shyam Babu Vaishya and Co. v. Asstt. Commissioner of Trade Tax 2004 UPTC 210. We have carefully considered these cases and find hardly any application to the controversy involved in the present writ petition. The fact situation was different in all these cases.
19. It has come on the record that the Assessing Officer passed a miscellaneous order for refunding the excess amount to the petitioner and prepared the refund voucher which was sent for counter signature of the Deputy Commissioner (Executive) as per the rules. Thereafter the proceedings under Section 22 of the Act and the impugned notice was issued. Consequently, the refund voucher prepared by the Assessing Officer was not counter signed by the Deputy Commissioner (Executive). Since the notice under Section 21 (2) of the Act has been held to be wholly illegal and without jurisdiction, there is no legal hurdle for the Deputy Commissioner (Executive) Trade Tax or any other concerned officer to refund the excess amount to the petitioner.
20. For the reasons given above, we are of the opinion that the impugned notice is totally without jurisdiction. The Assessing Officer has no jurisdiction to initiate reassessment proceedings under Section 21 of the Act for the assessment year in respect of which an order for compounding tax has been passed and is in operation.
21. In view of the above discussion the impugned notice dated 4th November, 1999 for the assessment year 1990-91 issued under Section 21 (2) of the Act, filed as Annexure-3 to the writ petition is quashed. The writ petitiori is allowed with costs. The respondents are directed to refund the excess amount realized by them over and above the lump sum amount payable by the petitioner under Section 7-D of the Act with interest in accordance with law.