Hon'ble Subhash Chandra Nigam,J.
Heard Sri S.D. Singh on behalf of the petitioner and Sri U.K.Pandey learned Standing Counsel on behalf of State of U.P.
In the present case the petitioner seeks the following relief :- "Issue a writ, order or direction in the nature of certiorari and to quash the orders dated 22.8.08 and 28.8.08 (Annexure-9 and 10) passed by the Additional Commissioner Grade 1, Commercial Tax, Kanpur Zone Kanpur and consequent reassessment proceedings initiated against the petitioner by respondent no. 3 for the A Y 2001-02 and Central) vide notices dated 3.9.08 (Annexure-11) and all consequential proceedings and orders passed therein." Learned counsel for the petitioner submitted that the petitioner is carrying on the business of paddy etc. It is submitted that out of the total purchases made on commission basis for Rs. 79, 81, 983.15, the purchases on behalf of the Ex U.P. Principal were to the extent of Rs. 18,05,025.95, which includes purchases of paddy at Rs. 14,98,186.30 for M/s Amir Chand Jagdish Kumar Rudrapur and at Rs.3,23,789.96 for M/s Bansal Overseas Karnal Haryana. These two ex- U.P. dealers were also manufacturer exporters. They have issued Form H, bill of lading and purchase orders which were filed during the course of assessment proceedings. It is claimed that the complete details of the purchases namely, 6R, 9R the date of purchases and date of despatches to the Ex- U.P. Principals were also submitted. The assessing authority had examined the transactions and granted exemption both under the U.P. Trade Tax Act (hereinafter referred to as the 'Act') and under the Central Sales Tax Act (hereinafter referred to as the 'Central Act'). Thereafter the Additional Commissioner Commercial Tax Kanpur issued notices under section 21 (2) for granting approval to initiate the proceedings under section 21 on the ground that the exemption has been wrongly allowed on such purchases both under the 'Act' and 'Central Act' in view of the decision of the Supreme Court in the case of Monga Rice Mills Vs. State of Haryana reported in 2004 NTN Vol. 24, 545.
The petitioner filed reply and thereafter the orders under section 21 (2) were passed on 28th August, 2008 and in pursuance thereof the notices under section 21 (1) had been issued by the assessing authority both under the Act and Central Act.
Learned counsel for the petitioner submitted that the exemption could not be allowed under section 5 (3) of the Central Sales Tax Act, in view of the decision of the Apex Court in the case of Monga Rice Mills (supra) but he submitted that the exemption on the turn over has been granted in the original assessment order not only on the basis of Form H, bill of lading under section 5 (3) of the Central Act but on the ground that the purchases were made in commission agency on behalf of the Ex- U.P. Principal, as purchases in the course of the inter State purchases and in this respect there is no material to reopen the proceedings under section 21 in as much as nothing has been said in this regard, in the notices under section 21 (2) and when the petitioner had raised a plea in this regard, in reply to the notices under section 21 (2) in the orders passed under section 21 (2), the said plea has been rejected on the ground that it was a new plea. The submission of the learned counsel for the petitioner is that since there is no material on record to dispute the claim of exemption on the purchases made in commission agency on behalf of Ex-U.P. Principal, being purchases in the course of inter State, therefore, the orders passed under section 21 (2) and consequential notice issued under section 21 (1) are liable to be set aside.
Learned Standing Counsel submitted that in the original assessment order the exemption on the alleged purchases was granted on the basis of Form H bill of lading and export purchase orders under section 5 (3) of the Central Sales Tax Act not on the ground that the purchases were in the course of inter State purchases and, therefore, the argument of the petitioner has no substance. He submitted that since the exemption has been wrongly allowed in view of the decision of the Apex Court in the case of Monga Rice Mills (supra), wherein it has been held that if dealer purchases paddy and sells it to the exporter Rice Miller and such rice miller exports rice procured out of such paddy the dealer purchaser of paddy would not be exempted and provisions of Section 5 (3) of Central Act would not apply.
We have considered the rival submission of the parties and perused the original order dated 15.1.2004, passed under Rule 41 (8) of the Rules and under section 9 (2) of the Central Sales Tax Act. It is true that in the assessment orders there is observation that the petitioner has declared the alleged purchases on commission on behalf of Ex- U.P. Principal but there is no finding that the petitioner has made any claim of exemption of such purchases on the ground that the purchases were in the course of inter State purchases. Further there is no finding in the order that the purchases were made on behalf of the Ex-U.P. Principal and such purchases were in the course of inter State purchases and exempted from tax. The order reveals that the exemption had been granted on the basis of Form H, Bill of lading, and purchase orders in as much as these documents were required for the purposes of exemption u/s 5 (3) of the Central Act. In this view of the matter we are of the view that the present is not a case where the order under section 21 (2) has been passed without any material of escaped assessment. The decision of the Apex Court constitutes material to form the believe of escaped assessment. Hon'ble Supreme Court in the case of Monga Rice Mills Vs. State of Haryana (supra) has held as follows :-
Para- 9 "To constitute a purchase, exempt from State purchase tax, the purchase must occasion export. The question which we have to decide in these civil appeals is: whether purchase of paddy by the appellant (miller), who procures rice from it and sells the rice to the exporter is purchase which occasions export or is it a purchase for export? Section 5 (1) of 1956 Act exempts export sales. There are three categories of sales, namely, local sale, inter State sale and export sale. Section 5 (1), therefore, covers direct export whereas Section 5 (3) covers last sale or purchase preceding direct export which is deemed to be in the course of export. The last sale or purchase preceding the direct export is deemed to be in the course of export as the two are so closely connected that breach of one may result in breach of the composite contract. It is for this reason that Section 5 (3) inter alia requires such sale or purchase transactions being entered into after and in compliance with the export order being placed by the foreign buyer. The underlying rationale of Section 5 (3) is that such penultimate sale or purchase must occasion export in order to constitute sale or purchase in the course of export. Section 5 (3) does not cover the penultimate transaction which occasions sale in the local market, nor does it cover sale for export." Para -10 "Clause (ca) of section 15 inter alia states that where a tax on purchase of paddy is leviable under the state law and the rice procured out of such paddy is exported, then for the purposes of section 5 (3), paddy and rice shall be treated as a single commodity. As stated above clause (ca) contains a limited deeming fiction which only applies to sale of rice by the exporter. This fiction is attached to the purchased commodity which is paddy from which rice is processed and not the exported commodity. Clause (ca) equates the two commodity only in cases where rice is procured from paddy is exported and not to any other case. Accordingly, we hold that the purchase of paddy by the appellant in these case is not exempt from the levy of a tax. Such purchase do not fall within section 5 of 1956 Act. The sale by the exporter is however, exempt under section 5 (1) and the purchase of paddy by the miller cum exporter is covered under section 5 (3) of 1956 Act".
In view of above we do not see any merit in the present case. No interference under Article 226 of the Constitution of India is called for by this court. The writ petition is devoid of merit and is dismissed accordingly. However, it is made clear that in case any assessment order has been passed the same may be served to the petitioner forthwith, so that the petitioner may get an opportunity to file an appeal and to seek appropriate remedy.
Order Date :- 28.1.2010 KCS