Hon'ble Vinod Kumar Misra,J.
The petitioner is a limited company registered under the Indian Companies Act and has its registered office in Mumbai in the State of Maharastra. According to the petitioner, it has no manufacturing unit in the State of U.P.
The controversy, in the instant case, relates to the stock transfers made by the petitioner in the State of U.P. According to the petitioner, the goods were directly dispatched to its depots located in the State of U.P. and that the goods did not move in pursuance of any pre-determined contract or sale.
The present dispute relates from the assessment year 2005-06 (central) to the assessment year 2011-12 (central) with regard to stock transfers, for which separate writ petitions have been filed. For facility, the facts of the Writ Tax No. 28 of 2016 relating to the assessment year 2005-06 (Central) is being taken into consideration.
For the assessment year 2005-06 (central), the petitioner disclosed the stock transfers from its depot amounting to Rs.17,12,47,311.75 paise. The Assessing Authority rejected the contention of the petitioner and assessed the tax amounting to Rs.2,05,99,886/-. The petitioner filed an appeal alongwith a stay application. The Appellate Authority granted 60% stay of the disputed tax. Being aggrieved, the petitioner filed an appeal before the Tribunal alongwith a stay application, which was allowed in part and the Tribunal stayed the disputed tax to the extent of 60% till the disposal of the appeal. As a result of the interim order granted by the tribunal, the petitioner deposited 40% of the disputed tax in cash but was still required to furnish security for the balance 60% as per Section 10 (1) of the U.P. Trade Tax Act, which the petitioner furnished by way of a bank guarantee as it had no immovable property in the State of U.P. This bank guarantee was accepted by the Assessing Authority to the extent of 60% of the disputed tax. Eventually, the appeal was allowed on merits and the assessment order was set aside by an order of the Tribunal dated 30th October, 2015. The Tribunal, directed the Assessing Authority to pass a fresh assessment order.
Pursuant to the order of the Tribunal, the petitioner filed an application dated 05.12.2015 before the Assessing Officer for refund of the tax deposited. For the assessment year 2005-06 (Central), the petitioner had deposited the disputed tax amounting to Rs. 93,09,968/- and had furnished bank guarantee as security for Rs.1,12,89,918/-. Similarly, the petitioner had also deposited cash/fixed deposit and furnished bank guarantee for the subsequent assessment years. The petitioner also filed an application dated 11.12.2015 before the Assessing Officer for release of the bank guarantee. The petitioner pointed out that two such bank guarantees were valid till 31st December, 2015. The Assessing Officer, instead of passing orders on the two applications as stated aforesaid, issued a notice dated 15th December, 2015 directing the petitioner to renew the bank guarantee for a period of five years, i.e., till 31st December, 2020, failing which, the registration of the petitioner granted under the U.P. Trade Tax Act as well as under the Central Sales Tax Act would be cancelled. The Assessing Officer also issued a notice to the State Bank of India directing them to ensure the renewal of the bank guarantee.
The petitioner contends that based on the said notice issued by the Assessing Authority, the bank also issued a notice dated 31st December, 2015 directing the petitioner to renew the bank guarantee, failing which they would encash the bank guarantee and credit the account of the Commercial Tax Department. The petitioner contends that he was left with no choice but to renew the bank guarantee and accordingly renewed the bank guarantee for a period of one month, i.e., till 31st of January, 2016 and thereafter, has filed the present writ petition praying for the quashing of the notice dated 15.12.2015 issued by the Deputy Commissioner Commercial Tax, Ghaziabad with regard to the renewal of the bank guarantee. The petitioner also prayed for a direction to the State Bank of India restraining them from renewing the bank guarantee. The petitioner has further prayed that the amount of disputed tax deposited by them should also be refunded since there is no tax demand pursuant to any assessment order at the moment.
Since no disputed questions of fact has been raised, with the consent of the parties, we are deciding the writ petition at the admission stage itself without calling for a counter affidavit.
We have heard Sri Rakesh Ranjan Agrawal, the learned Senior Counsel alongwith Sri Suyash Agrawal for the petitioner, Sri C. B. Tripathi, the learned Special Counsel for the Commercial Tax Department and Sri Satish Chaturvedi, the leanred counsel for the State Bank of India.
In so far as the refund of the disputed tax is concerned, the learned Senior Counsel has relied upon a decision of a Division Bench of this Court in Reva Enviro Systems Private Limited, Bareilly Vs. State of U.P. And Others, 2006 U.P.T.C. 351, a decision of the Supreme Court in Commissioner of Income Tax Vs. Chittoor Electric Supply Corporation and another, Volumn 212 ITR 404 and a decision of this Court in Modi Industries Limited, Modinagar Vs. Commissioner of Sales Tax, U.P., Lucknow and Others, 1982 U.P.T.C.-1097.
Learned counsel contended that the decision of the two Division Bench of this Court has not been considered by the Full Bench in Lucent Technologies Pvt. Ltd. Vs. Commissioner, Trade Tax, U.P., Lucknow, [2015] 82 VST 371 [FB] and, therefore, expressed a desire that the matter should be referred to a Larger Bench.
Having heard the learned Senior Counsel on this issue at some length, we are of the opinion that the matter relating to refund of the tax deposited is squarely covered by a decision of the Full Bench of this Court in Lucent Technologies Pvt. Ltd. (supra). We also find that it is not necessary for this Court to refer the matter again to a Larger Bench as the decision of the Division Bench in M/S Reva Enviro Systems (P) Limited, Bareilly (supra) did not notice the decision of the earlier Division Bench in M/S Indodan Milk Products Ltd. Vs. State of U.P. And Another, 1983 U.P.T.C. 583, which decision was noticed and affirmed by the Full Bench in Lucent Technologies Pvt. Ltd (supra). The Full Bench has also taken into consideration the decision of the Supreme Court in Commissioner of Sales Tax, U.P. Vs. M/S Hind Lamps Ltd. 2008 U.P.TC 978. The Full Bench, thereafter, concluded that where the case is remanded back by the Appellate Authority to the Assessing Authority under Section 9 or Section 10 of the U.P. Trade Tax Act after setting aside the assessment order without any specific direction to refund the amount, in that eventuality, it was not obligatory on the part of the Assessing Officer to refund the amount.
In the light of the aforesaid decision, until and unless there is an adjudication and an authority finds that the amount is refundable, no amount can be refunded to the petitioner at this stage since we find that the assessment proceedings are still pending before the Assessing Officer.
In view of the aforesaid, the prayer for refund of the disputed tax pursuant to the setting aside of the assessment order cannot be granted to the petitioner at this stage.
With regard to the release of the bank guarantee is concerned, we find that the same was furnished by the petitioner towards security of the stayed amount of disputed tax under Section 10 (8) of the U.P. Trade Tax Act. For facility, the said provision is extracted hereunder:-
" (8) Where the Tribunal passes an order under this section for the stay of recovery of any tax, fee or penalty or for the stay of the operation of any order appealed against and such order of the Tribunal results in the stay of recovery of any tax, fee or penalty, such stay order of the Tribunal shall not remain in force for more than thirty days unless the appellant furnishes adequate security to the satisfaction of the Assessing Authority concerned for the payment of the outstanding amount."
A perusal of the aforesaid provision indicates that where the Tribunal has stayed the recovery of any tax, such stay order of the Tribunal could not remain in force for more than 30 days unless the assessee furnishes adequate security of the balance amount to the satisfaction of the Assessing Authority .
In the instant case, the Tribunal had stayed 60% of the outstanding amount and accordingly, the petitioner deposited 40% in cash and was required to furnish security of the balance 60%, if it wanted the stay order to continue beyond 30 days. Since the petitioner has no immovable property in the State of U.P. which he could offer as security, the petitioner, accordingly, furnished a bank guarantee which was accepted by the Assessing Authority.
Having heard the learned counsel for the parties on this issue, we find that once the assessment order is set aside by the Appellate Authority, the security relating to the demand comes to an end. Once the assessment order is set aside, there is no requirement for the assessee to continue to furnish security or in the instant case, the back guarantee.
Consequently, we are of the opinion that the Assessing Officer could not insist the petitioner to extend the bank guarantee for a period of five years nor could it direct the State Bank of India to ensure that the bank guarantee is extended nor could it direct the bank to encash the bank guarantee.
In the light of the aforesaid, the impugned notice dated 15.12.2015 directing the petitioner to extend the bank guarantee can not be sustained and is quashed. The petitioner is entitled to get its bank guarantee released.
In the light of the aforesaid, the present writ petition and connected writ petitions partly succeed and are allowed in part. The relief with regard to the refund of the tax deposited is rejected. The petitioner is, however, entitled for release of the bank guarantee.
Considering the facts and circumstances that have been brought on record, we also direct the Assessing Officer to complete the assessment proceedings within six months from the date of production of a certified copy of this order provided that the petitioner co-operates in the assessment proceedings.