Hon'ble Subhash Chandra Nigam,J.
Rejoinder affidavit filed today may be taken on record.
Heard Sri Alok Kumar, learned counsel for the petitioner and the U.K. Pandey, Standing Counsel.
The petitioner is carrying on the business of sweeten Supari and admitted the tax at the rate of 4 on its turnover, which has been accepted by the assessing authority in the assessment order passed for the assessment years 2000-01 and 2001-02. The Additional Commissioner Grade I, Trade Tax, Agra Zone, Agra, issued notices under Section 21(2) for the assessment years 2000- 01 and 2001-02, which is Annexure '3' to the writ petition, on the ground that on sweeten Supari the tax at the rate of 4% has been wrongly assessed, while it should be taxed at the rate of 10% as an unclassified item.
Learned counsel for the petitioner submitted that the apex Court in the case of Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise, Tirupathi & another reported in (2007) 4 S.C.C. 155 has held that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent, etc. did not result in a new and distinct product having a different character and use. Therefore, it remains betel nuts and has been rightly assessed to tax at the rate of 4%, which is applicable to the betel nuts. He further submitted that without any material notices under Section 21(2) have been issued. He further submitted that following the decision of the apex Court in the case of the petitioner itself the Tribunal for the assessment years 2002-03, 2003-04 and 2004-05 and the Joint Commissioner (Appeals), Commercial Tax, Agra, for the assessment year 2005-06 have assessed sweeten betel nuts at the rate of 4% treating it as betel nuts and, therefore, the notices under Section 21(2) issued by the Additional Commissioner are liable to be quashed. Copies of the orders of the Tribunal and the Joint Commissioner (Appeals) have been filed as Annexures 'RA-1' and 'RA-2' to the rejoinder affidavit.
Learned Standing Counsel is not able to dispute the submissions of learned counsel for the petitioner.
In the case of Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise, Tirupathi & another (Supra) the Apex Court held that the process of cutting betel nuts into small pieces and addition of essential/non-essential oils, menthol, sweetening agent, etc. did not result in a new and distinct product having a different character and use. Before the Apex Court also the question of taxbility of sweeten betel nuts was involved. The Apex Court was of the view that the sweeten betel nuts remain betel nuts. Perusal of the notices under Section 21 (2) also reveals that no material has been stated on the basis of which an opinion has been formed that the sweeten Supari has been wrongly assessed to tax @ 5% and is liable to tax as unclassified item. The notices have been issued merely on account of change of opinion. It is well settled principle of law that the proceeding under Section 21 cannot be initiated unless there is a material to form a believe that there is an escaped assessment. In the present case, no material has been brought on record.
In view of the aforesaid fact we are of the view that the notices under Section 21(2) for the assessment years 2000-01 and 2001-02 (Annexure '3' to the writ petition) are not sustainable and are liable to be quashed.
In the result the writ petition is allowed and the notices under Section 21(2) for the assessment years 2000-01 and 2001-02 (Annexure '3' to the writ petition) are hereby quashed.
Order Date :- 21.1.2010 PG