KOTHARI CONTRACT INTERIORS Vs. TRADE TAX OFFICER

JUDGEMENT

(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 :

(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.