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IN THE HIGH COURT OF ALLAHABAD
K. C. Agarwal and R. P. Singh, JJ.
INDO LUBE REFINERIES - Appellant
Versus
SALES TAX OFFICER - Respondents
Civil Miscellaneous Writ 605 Of 1986
Decided On : 09/23/1986
SALES TAX - SECTION 35 - INTERPRETATION - ORDER OF COMMISSIONER UNDER SECTION 35 - FINALITY - SCOPE - DOES NOT AFFECT VALIDITY OR OPERATION OF EARLIER ORDERS PASSED BY ASSESSING AUTHORITY.
Fact of the Case:
The petitioner, a registered dealer under the U.P. Sales Tax Act, obtained a provisional registration and a recognition certificate as a manufacturer. For the assessment year 1981-82, the petitioner filed a return and moved an application before the Commissioner, Sales Tax, under Section 35 of the Act, claiming that the trade in which it was engaged did not amount to a process of manufacture and hence no sales tax was leviable. The Commissioner upheld the petitioner's contention. Subsequently, the petitioner received notices from the Sales Tax Officer for the months of April to September 1985, requiring it to show cause why the provisional assessment for those months should not be made. The petitioner filed a writ petition challenging the notices.
Finding of the Court:
The court held that the order of the Commissioner under Section 35 was final and binding on the Revenue and the petitioner, but it did not affect the validity or operation of any earlier orders passed by the assessing authority. The court further held that the Sales Tax Officer was not estopped from taking a stand contrary to the order of the Commissioner, as the petitioner had never been assured that no tax would be chargeable from it even if it was payable under the law.
Issues: Whether the order of the Commissioner under Section 35 of the U.P. Sales Tax Act was final and binding on the Revenue and the petitioner.
Ratio Decidendi: The court interpreted Section 35 of the U.P. Sales Tax Act and held that the order of the Commissioner under Section 35 was final and binding on the Revenue and the petitioner, but it did not affect the validity or operation of any earlier orders passed by the assessing authority. The court further held that the Sales Tax Officer was not estopped from taking a stand contrary to the order of the Commissioner, as the petitioner had never been assured that no tax would be chargeable from it even if it was payable under the law.
Final Decision: The writ petition was dismissed, and the stay orders passed by the court were vacated. The Sales Tax Officer was entitled to proceed with the assessment proceedings for the years 1981-82, 1982-83, and 1983-84.
( 1 ) THIS petition under Article 226 of the Constitution has been filed by Indo Lube Refineries, g-21, Industrial Area, Gorakhpur, for quashing the notice issued by the Sales Tax Officer, Sector i, Gorakhpur, for passing assessment order for the year 1981-82 and for prohibition restraining the Sales Tax Officer from making assessment in respect of the years 1981-82, 1982-83 and 1983-84.
( 2 ) FOR deciding the controversy involved in this petition, since it is not necessary for us to express our opinion on the merits, we confine ourselves to the facts notes for discussion to decide about the interpretation of Section 35 of the Sales Tax Act.
( 3 ) THE petitioner is a registered dealer under the U. P. Sales Tax Act, having been granted a provisional registration under Section 8-B of the Act with effect from 20th June, 1981. It was also granted a recognition certificate as a manufacturer to make purchases of raw materials. For the assessment year 1981-82, the petitioner filed return. While the proceedings of the aforesaid assessment year were pending, the petitioner moved an application before the Commissioner, sales Tax, under Section 35 of the Act on 20th August, 1982, claiming decision from the commissioner that the trade in which the petitioner was engaged did not amount to a process of manufacture, hence no sales tax was leviable. The Commissioner, Sales Tax, upheld the contention of the petitioner by the order dated 20th November, 1982. His finding was that : lubricating oil purchased locally and sold within the State by the applicant after purification would not be liable to tax under the U. P. Sales Tax Act.
( 4 ) THE aforesaid order was produced before the Sales Tax Officer in the assessment proceedings for the year 1981-82. It was, therefore, that the petitioner received six notices under Rule 41 (5)of the Rules framed under the U. P. Sales Tax Act for the months of April, May, June, July, august and September, 1985 requiring the petitioner to show cause as to why the provisional assessment for the aforesaid months of the year 1985 be not made against the petitioner. The petitioner filed a reply but, subsequently, assessment orders were made. The petitioner filed Writ no. 1037 of 1985 in this Court. Since in this petition no prayer restraining the Sales Tax Officer from passing any assessment order for the assessment years 1981-82, 1982-83 and 1983-84 had been made, the petitioner filed the present writ petition in respect of the aforesaid three years. Earlier, Writ No. 1037 of 1985 was dismissed by this Court on the ground of alternative remedy as against the assessment orders.
( 5 ) THROUGH this petition, the petitioner claimed that the order under Section 35 of the U. P. Sales tax Act passed by the Commissioner, Sales Tax, holding that after purification there was no liability of tax, had become final, hence proceedings in respect of the aforesaid three assessment years were liable to be decided in favour of the petitioner and as the Sales Tax Officer made some observations which created an apprehension that the order of the Commissioner will not be accepted, the petitioner was compelled to file the present writ petition.
( 6 ) THE relevant portion of Section 35 of the U. P. Sales Tax Act is reproduced below: if any question arises, otherwise than in a proceeding pending before a court or before an assessing authority under Section 7 or Section 21, whether, for the purposes of this Act. . . the person or the dealer concerned may, after depositing the fee specified in Section 32, submit an application to the Commissioner of Sales Tax, along with such documents as may be prescribed.
( 7 ) SUB-SECTION (2) of Section 35 confers power on the Commissioner, Sales Tax, to decide the question after affording opportunity to the two sides. Sub-section (3) of Section 35, which is material for our purposes, reads : no decision of the Commissioner of Sales Tax under this section shall affect the validity or oper
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