IMPORTANT POINT
While amending or cancelling a Recognition Certificate, the Assessing Authority is also required to give reasons for amending or cancelling existing Recognition Certificate or for deleting an item therefrom.

Headnote:Central Sales Tax Act, 1956- Section 7 - Uttar Pradesh Trade Tax Act, 1948- Section 4-B- Respondents manufacturers of notified goods were been given central registration under Section 7 of Act, 1956, and also Recognition Certificate under Section 4-B of Act, 1948, for purchase of high speed diesel oil at concessional rate- Issuance of circular by Additional Commissioner, Trade Tax, Meerut, Uttar Pradesh that benefit of Form III-B for purchase of HSD to be used in Diesel Generating Sets in the factory should not be given the benefit of concessional rate since such HSD was not directly used in the manufacture of notified goods –Pursuant to said circular all Trade Tax Authorities of State, who, at the relevant time, were under the administrative control of Commissioner, issued notices for deletion of HSD, an item mentioned in the Company’s Recognition Certificate-Writ Petitions thereagainst-High Court held that it was not open to Department to delete HSD, furnace oil, liquid fuels or aseous fuels from the Recognition Certificate as such oil [HSD] constituted a fuel required for the manufacture of chemicals in terms of the Explanation to Section 4-B(2) of 1948 Act- Appeals- Instantly Department submitted, that, by mistake, HSD had been included in the List and that Department sought to rectify that mistake- Under Section 4-B(4)(ii) of 1948 Act, the Assessing Authority is vested with discretionary power to amend a Recognition Certificate granted under sub-section (2) of Section 4-B of 1948 Act either on it’s own motion or on the application of the dealer for any sufficient reason- This pre-condition of “sufficiency of reasons” requires a show-cause notice to be given to the dealer in whose favour a Recognition Certificate exists calling upon him to show-cause as to why an item should not be deleted in a given case- Hence each case needs to be examined by the Assessing Authority if it seeks to exercise it’s authority to delete an item from a Recognition Certificate- Same is the position if Assessing Authority seeks to cancel a Recognition Certificate for the reasons indicated in the said sub-section. Not only that, while amending or cancelling a Recognition Certificate, the Assessing Authority is also required to give reasons for amending or cancelling existing Recognition Certificate or for deleting an item therefrom-Again when a Recognition Certificate is issued, a benefit of concessional rate of tax is given to the dealer- Therefore, that benefit cannot be withdrawn retrospectively- Such benefit can be withdrawn,at the highest, from the date of the show-cause notice when the Assessing Authority proposes to delete an item from the Recognition Certificate- Matters remitted to Assessing Authority with a direction to treat the show-cause notice(s) issued for the purposes of amending the existing Recognition Certificate(s)-Appeals disposed of (Paras 10 to 16)
       Facts of the Case :
        Respondents manufacturers of notified goods were been given central registration under Section 7 of Act, 1956, and also Recognition Certificate under Section 4-B of Act, 1948, for purchase of high speed diesel oil at concessional rate herein in the instant case. A circular was issued by Additional Commissioner, Trade Tax, Meerut, Uttar Pradesh that benefit of Form III-B for purchase of HSD to be used in Diesel Generating Sets in the factory should not be given the benefit of concessional rate since such HSD was not directly used in the manufacture of notified goods .Pursuant to said circular all Trade Tax Authorities of State, who, at the relevant time, were under the administrative control of Commissioner, issued notices for deletion of HSD, an item mentioned in the Company’s Recognition Certificate.On Writ Petitions thereagainst, High Court held that it was not open to Department to delete HSD, furnace oil, liquid fuels or aseous fuels from the Recognition Certificate as such oil [HSD] constituted a fuel required for the manufacture of chemicals in terms of the Explanation to Section 4-B(2) of 1948 Act.
        2. Present appeals have been filed against said order of High Court.
       Findings of the Court :
        Instantly Department submitted, that, by mistake, HSD had been included in the List and that Department sought to rectify that mistake. Under Section 4-B(4)(ii) of 1948 Act, the Assessing Authority is vested with discretionary power to amend a Recognition Certificate granted under sub-section (2) of Section 4-B of 1948 Act either on it’s own motion or on the application of the dealer for any sufficient reason. This pre-condition of “sufficiency of reasons” requires a show-cause notice to be given to the dealer in whose favour a Recognition Certificate exists calling upon him to show-cause as to why an item should not be deleted in a given case. Hence each case needs to be examined by the Assessing Authority if it seeks to exercise it’s authority to delete an item from a Recognition Certificate. Same is the position if Assessing Authority seeks to cancel a Recognition Certificate for the reasons indicated in the said sub-section. Not only that, while amending or cancelling a Recognition Certificate, the Assessing Authority is also required to give reasons for amending or cancelling existing Recognition Certificate or for deleting an item therefrom.Again when a Recognition Certificate is issued, a benefit of concessional rate of tax is given to the dealer. Therefore, that benefit cannot be withdrawn retrospectively. Such benefit can be withdrawn,at the highest, from the date of the show-cause notice when the Assessing Authority proposes to delete an item from the Recognition Certificate. Hence Matters remitted to Assessing Authority with a direction to treat the show-cause notice(s) issued for the purposes of amending the existing Recognition Certificate(s).Appeals were disposed of
       Result : Appeals disposed of

JUDGMENT

S.H. Kapadia, J.

1. Heard learned counsel on both sides. Delay condoned. Leave granted in the special leave petition.

2. In all these matters, respondents are manufacturers of notified goods. These respondents have been given central registration under Section 7 of the Central Sales Tax Act, 1956, and also Recognition Certificate under Section 4-B of the Uttar Pradesh Trade Tax Act, 1948, for purchase of high speed diesel oil at concessional rate. These certificates have been given on different dates by the appellants.

3. The lead matter is State of Uttar Pradesh & Ors. vs. M/s. Vam Organic Chemicals Limited [Civil Appeal No.1929 of 2004].

4. M/s. Vam Organic Chemicals Limited is a public limited company incorporated under the Indian Companies Act, having it’s registered office at Amroha, Uttar Pradesh. It has established a continuous process chemical industry for the manufacture of Vinyl Pyridine, Picoline, etc. [for short, ‘chemicals’]. The said Company is registered under the Uttar Pradesh Trade Tax Act, 1948 [for short, ‘1948 Act’], as well as under the Central Sales Tax Act, 1956 [for short, ‘1956 Act’], as a dealer.

5. M/s. Vam Organic Chemicals Limited [for short, “Company”] was granted a Registration Certificate under Section 7 of 1956 Act in which a List of Items was annexed. As per the said List, the Company was entitled to purchase goods under 1956 Act. The Company was also granted a Recognition Certificate under Section 4-B of 1948 Act authorizing it to purchase goods on concessional rates. On the basis of the Recognition Certificate granted by the State, the Company became entitled to purchase various goods against Form III-B, which was issued by the Assessing Authority on payment of concessional rate of tax. Since the Company had obtained Registration Certificate under Section 7 of 1956 Act, it purchased high speed diesel oil [‘HSD’, for short] against Form-C from Indian Oil Corporation Limited. The Company had also bought HSD against Form III-B from Indian Oil Corporation Limited under which Indian Oil Corporation Limited charged the tax at the rate of two per cent against Form III-B.

6. On 12th June, 2000, a meeting was organized by the Principal Secretary, Finance, Uttar Pradesh, in which a decision was taken that the benefit of Form III-B for purchase of HSD to be used in Diesel Generating Sets in the factory should not be given the benefit of concessional rate since such HSD was not directly used in the manufacture of notified goods [chemicals]; rather, it was used for generating electricity in the Generating Set which electricity was then captively used for manufacturing chemicals. On the basis of the said decision dated 12th June, 2000, the Additional Commissioner, Trade Tax, Meerut, Uttar Pradesh, issued a Circular on 20th June, 2000, to all the subordinate officers for it’s implementation and, accordingly, all Trade Tax Authorities of the State, who, at the relevant time, were under the administrative control of the Commissioner, issued notices for deletion of HSD, an item mentioned in the Company’s Recognition Certificate. It is this show-cause notice which came to be challenged by M/s. Vam Organic Chemicals Limited and others by filing writ petitions in the Allahabad High Court.

7. In the writ petition filed by the Company, it was submitted that HSD was a fuel, which was absolutely essential for operating the Diesel Generating Set [D.G. Set] in the factory as the Company’s factory was engaged in a continuous process chemical industry and, in the absence of HSD, the D.G. Set would become non-functional and if electricity cannot be generated, it would be impossible to produce chemicals. According to the Company, HSD is used in D.G. Sets to generate electric energy which is required for chemical industry. In this connection, reliance was placed on Explanation to Section 4-B of 1948 Act. In reply, it was the case of the Department that HSD is used in the D.G. Set for generating electric energy w

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2010 Supreme(SC) 197

IMPORTANT POINT While amending or cancelling a Recognition Certificate, the Assessing Authority is also required to give reasons for amending or cancelling existing Recognition Certificate or for deleting an item therefrom.

IMPORTANT POINT
While amending or cancelling a Recognition Certificate, the Assessing Authority is also required to give reasons for amending or cancelling existing Recognition Certificate or for deleting an item therefrom.