S.K. TRADERS Vs. ADDITIONAL COMMISSIONER

JUDGEMENT

(1.) BY means of the present writ petition filed under Article 226 of the Constitution the petitioner M/s S.K. Traders through its proprietress Smt. Kavita Maheshwari, seeks the following relief:

(2.) THE brief facts of the case giving rise to the present petition are as follows: The petitioner is a registered dealer under the provisions of U.P. Trade Tax Act, J 948 (hereinafter referred to as the Act) and is engaged in the business of broken glass, which has been carried in its own account as well as in commission agency. For the assessment year 1994 -95 the petitioner had sold broken glass for Rs. 1,30,27,655.45 which it had purchased within the State of Uttar Pradesh from unregistered dealers in its commission agency business. According to the petitioner, complete details relating to sales of broken glass in its commission agency, which were purchased in Uttar Pradesh from unregistered dealers were disclosed in the course of assessment proceedings. The Assistant Commissioner (Assessment), Trade Tax, Modinagar, Ghaziabad - respondent No. 2, who was the assessing authority of the petitioner while making the assessment after examination of the transactions exempted the turnover of such broken glass on the ground that liability of tax was at the point of manufacturer or importer and not at the point of the petitioner. Thereafter the respondent No. 2 sought permission from the Additional Commissioner, Grade -1, Trade Tax, Zone, Ghaziabad -respondent No. 1 for reopening the assessment under the provisions of Sub -section (2) of Section 21 of the Act. A notice dated 18th April, 2001 was issued by the respondent No. 1 calling upon the petitioner to show cause as to why permission be not granted. The permission was granted by the respondent No. 1 vide order dated 1st June, 2001. The respondent No. 2 issued notice dated 4th March, 2002 under Sub -section (2) of Section 21 of the Act proposing reopening of the assessment in view of the decisions of this Court in the case of Commissioner of Sales Tax, U.P. v. Kabar Khana, Turkmanpur 1985 A.L.J. 73 wherein it has been held that the goods purchased from the Kabaries is not exempt and liable to tax as old unserviceable goods and further as the name and address of the principals are not mentioned, the entire transaction is to be taxed at the hands of the petitioner in view of the definition of word 'manufacture' given in Section 2(ee) of the Act. The order dated 1st June, 2001 passed by the respondent No. 1 as also the notice dated 4th May, 2002 issued by the respondent No. 2 are under challenge in the present writ petition on the ground that neither any satisfaction nor any reason has been recorded while granting of the approval for reopening the proceedings beyond the period of limitation and the same has been passed illegally and without application of mind. The factual matrix on which the notice dated 4th March, 2002 has been issued is also non -existence as the petitioner has not collected broken glass through I Kabaries but has sold them in its commission agency purchased within the State of Uttar Pradesh from unregistered dealer and the petitioner cannot be treated as dealer or importer. There was no fresh material on the basis of 'which a reasonable belief about escaped assessment could be formed and the entire proceedings having being initiated merely on account of change of opinion is 'unwarranted. The decision in the case of Kabar Khana, Turkmanpur (supra) relied upon by the respondent No. 2 is not applicable in the present case. In the counter affidavit filed by Sri P.K. Goel, Assistant Commissioner (Assessment), Trade Tax, Modinagar, Ghaziabad, it has been staled that the decision in the case of Kabar khana, Turkmanpur (supra) was not taken into consideration at the time of passing of the assessment order and, therefore, the respondent No. 1 had rightly authorized the respondent No. 2 to initiate proceedings under Sub -section (2) of Section 21 of the Act. The notice dated 4th March, 2002 has rightly been issued. The old broken glass is liable to tax at the point of sale to consumer vide Notification No. ST -II -5785/X(10)(1) dated 7.9.1981 and as such the petitioner was liable to pay tax @ 5% which was completely over looked due to non application of mind by the respondent No. 2 and thus there was prima facie reason to believe that the turnover of the petitioner has escaped assessment to tax and as such the impugned show cause notice has been issued under Section 21(2) of the Act. The petitioner is required to give explanation/reply to the respondent No. 2, which shall be considered in accordance with law. The proceedings under Section 21(2) of the Act has been justified on the ground that it can be initiated even on a change of opinion. RIVAL SUBMISSIONS:

(3.) LEARNED Counsel for the petitioner submitted that the petitioner had disclosed the sale of broken glass for Rs. 1,30,27,655.45 purchased from unregistered dealer within the State of Uttar Pradesh in its commission agency account which was duly examined and verified by the respondent No. 2 in the course of assessment proceedings as would be clear from the assessment order dated 18th November, 1996, a copy of which has been filed as Annexure 1 to the writ petition. According to him the respondent No. 2 has categorically held that the aforesaid transactions is liable to tax on the point of manufacturer/importer and therefore, there is no liability of tax upon the petitioner. He, thus, submitted that the present proceedings under Section 21(2) of the Act have been initiated without application of mind and there was no material on the basis of which the respondent could have any reason to believe that the turnover had escaped assessment of tax. He further submitted that the respondent No. 1 had accorded sanction without any application of mind as in the order dated 1st June, 2002 no reason has been assigned as to why he is satisfied that the proceedings under the provisions of Section 21(2) of the Act are warranted. He further submitted that the petitioner cannot be treated as a manufacturer within the meaning of Section 2(ee) of the Act. In support of his various pleas, he has relied upon a recent decision of the Apex Court in the case of Jhunjhunwala and Ors. v. State of U.P. and Ors. 2007 U.P.T.C. 11