SHIKHA STEEL CO Vs. STATE OF U P

JUDGEMENT

(1.) By these proceedings under Article 226 of the Constitution, the petitioner has sought to question the legality of an order dated 24 March, 2011 passed by the Additional Commissioner, Commercial Tax, Grade-I, Ghaziabad Zone-II, Ghaziabad (third respondent) granting approval for reopening of the assessment for the Assessment Year 2004-05 under the proviso to Section 21(2) of U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Trade Tax Act'). The petitioner also questions notices dated 19 October 2013 issued by the Assistant Commissioner-respondent no.4 in connection with the application filed under Section 30 of the Trade Tax Act for 2004-05 and 2005-06 as well as the notices which have been issued for a regular assessment for Assessment Year 2005-06 and 2006-07.

(2.) By an order dated 5th January 2007 the regular assessment for 2004-05 was completed on the basis that the petitioner had effected sales in the total sum of Rs.54,114/- and purchases of Rs.1,22,512/-. The third respondent, while granting approval under the proviso to Section 21(2), recorded that during the search conducted in the premises of M/s. Parmarth Iron Pvt. Ltd., Bijnor, electronic records maintained by the aforesaid company indicated that the petitioner had engaged in transactions of sales and purchase with the aforesaid company to the extent of Rs.4.31 crores during the year 2004-05. On 17 March 2011 a notice was issued to the petitioner in response to which the petitioner submitted that it had no dealing of purchase and sale with M/s. Parmarth Iron Pvt. Ltd. and the latter being a manufacturing entity was solely responsible for payment of tax. The third respondent has noted that there was reason to believe that there had been an escapement of tax, consequent upon which action for reassessment under Section 21 was warranted. In pursuance of the notice, a reassessment took place by which the turnover of sales/purchases was assessed at Rs.10 crores and a demand of Rs.40 lacs was levied. This order was admittedly passed ex-parte. A fresh notice has now been issued to the petitioner for reassessment for 2004-05 coupled with notices for regular assessment for 2005-06 and 2006-07.

(3.) Learned counsel appearing on behalf of the petitioner submits that by virtue of an exemption notification which has been issued under Section 3-A of the Trade Tax Act, tax is liable to be computed at the rate of 4% but the liability to bear the tax is that of the manufacturer or as the case may be, of the importer. It has been urged that the expression 'importer' is defined in Section 2(e) to mean the dealer who makes the first sale of such goods after their import into the State, while the expression 'manufacturer' is defined in Section 2(ee) to mean a dealer who makes the first sale of the goods in the State after their manufacture.