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1982 Supreme(All) 542
IN THE HIGH COURT OF ALLAHABAD
K. N. Seth and R. R. Rastogi, JJ.
DEEP CHAND GOYAL - Appellant
Versus
THE SALES TAX OFFICER - Respondents
Civil Misc. Writ Petition 342 Of 1977
Decided On : 07/30/1982
BHARATJI AGARWAL
The exemption granted to cotton seed under Section 4 of the U.P. Sales Tax Act was withdrawn with effect from 5th April, 1975, and the petitioners were therefore liable to pay tax on the sale of cotton seed for the assessment years 1975-76, 1976-77, and 1977-78.
Headnote:
U.P. SALES TAX ACT - SECTION 4, 3-D - EXEMPTION - CATTLE FODDER - COTTON SEED - NOTIFICATION - INTERPRETATION - WITHDRAWAL OF EXEMPTION - PENALTY PROCEEDINGS - VALIDITY - SINGLE NOTICE FOR MULTIPLE ASSESSMENT YEARS - LEGALITY.
Fact of the Case:
The petitioners challenged a notice issued by the Sales Tax Officer under Section 15-A (1) (a) of the U.P. Sales Tax Act for initiating penalty proceedings for the assessment years 1973-74 to 1977-78. The petitioners claimed that cotton seed was exempt from tax under Section 4 of the Act and that the notice was invalid for being issued for multiple assessment years.
Finding of the Court:
The court held that cotton seed was exempted from tax under Section 4 of the Act with effect from 1st April, 1956, and that this exemption continued until 5th April, 1975, when the definition of cattle fodder was amended to exclude cotton seed. The court further held that the initiation of penalty proceedings under Section 15-A (1) (a) of the Act was valid for the assessment years 1975-76, 1976-77, and 1977-78, but not for the assessment years 1973-74 and 1974-75. The court also held that the issuance of a single notice for multiple assessment years was not illegal.
Issues: 1. Whether cotton seed was exempt from tax under Section 4 of the U.P. Sales Tax Act. 2. Whether the notice issued under Section 15-A (1) (a) of the Act was valid for the assessment years 1973-74 to 1977-78. 3. Whether the issuance of a single notice for multiple assessment years was illegal.
Ratio Decidendi: 1. The court held that cotton seed was exempted from tax under Section 4 of the Act with effect from 1st April, 1956, and that this exemption continued until 5th April, 1975, when the definition of cattle fodder was amended to exclude cotton seed. The court relied on the fact that the exemption granted to cotton seed under the notifications of 1956 was not withdrawn until the amendment of the definition of cattle fodder in 1975. 2. The court held that the initiation of penalty proceedings under Section 15-A (1) (a) of the Act was valid for the assessment years 1975-76, 1976-77, and 1977-78, but not for the assessment years 1973-74 and 1974-75. The court reasoned that the exemption granted to cotton seed under Section 4 of the Act was withdrawn with effect from 5th April, 1975, and that the petitioners were therefore liable to pay tax on the sale of cotton seed for the assessment years 1975-76, 1976-77, and 1977-78. 3. The court held that the issuance of a single notice for multiple assessment years was not illegal. The court reasoned that there was no provision in the Act that prohibited the issuance of a single notice for multiple assessment years, and that the facts and circumstances relating to these years being common, the issuance of one notice was not improper.
Final Decision: The petitions were allowed in part. The impugned notices issued under Section 15-A (1) (a) of the U.P. Sales Tax Act for the assessment years 1973-74 and 1974-75 only were quashed, and the petitions were dismissed for the assessment years 1975-76, 1976-77, and 1977-78. Parties were directed to bear their own costs.
( 1 ) THIS bunch of writ petitions can be conveniently taken up and disposed of together. These petitions seek to challenge the notice dated 21st July, 1977, issued by the Sales Tax Officer, sector II, Budaun, in respect of the assessment years 1973-74 to 1977-78 for initiating penalty proceedings under Section 15-A (1) (a) of the U. P. Sales Tax Act, hereafter "the Act".
( 2 ) THE facts set out in the petitions are almost similar. We would set out the facts contained in writ Petition No. 333 of 1977. Petitioner No. 1, M/s. Deep Chand Goyal, Babrala, Budaun, is a registered firm of which petitioner No. 2, Deep Chand Goyal, is one of the partners. This firm is engaged in carrying on business in purchase and sale of binaula, which is a cotton seed. The turnover in respect of sales of cotton seed had been exempted under Section 4 of the Act. But, by means of Notification No. ST II-2526/x--6 (8)-73 dated 1st May, 1973, issued under Section 3-D of the Act, oil-seeds had been made liable to tax at the point of first purchase. For the assessment year 1973-74 the Sales Tax Officer, Sector II, Budaun, respondent No. 1, exempted the turnover of cotton seed sold by the petitioner. However, on 21st July, 1977, he issued a notice under section 15-A (1) (a) of the Act requiring the petitioners to show cause as to why penalty should not be imposed for not depositing the tax on the turnover of cotton seed in view of the notification aforesaid. This notice has been issued for the assessment years 1973-74 to 1977-78. The petitioners challenged this notice, inter alia, on the grounds that since the turnover in respect of binaula stood exempted under Section 4 of the Act, the petitioners were not required to deposit any tax in respect thereof and respondent No. 1 had no jurisdiction to initiate penalty proceedings under Section 15-A (1) (a) of the Act. Another ground, on which the notice has been challenged, is that a single notice for the assessment years 1973-74 to 1977-78 is illegal and bad.
( 3 ) A counter-affidavit has been filed on behalf of the respondents in which by reference to the various notifications it has been sought to make out that the turnover in respect of sales of cotton seed was exempt up to 30th April, 1973. Thereafter from 1st May, 1973, to 4th April, 1975, the sales were exempt but first purchases were taxable at 3 per cent under Section 3-D of the Act. The same position continued up to 1st October, 1975, and thereafter from 2nd October, 1975, to 31st January, 1978, the turnover of sales of cotton seeds was made taxable at 4 per cent and thereafter up till now again purchase tax is payable at 4 per cent. It is thus claimed that the impugned notice was legal and valid.
( 4 ) THE Uttar Pradesh Sales Tax Act, as originally enacted, provided for the levy of tax on the sale of goods in Uttar Pradesh. Section 3 of the Act provided for liability of tax under the Act while section 4 provided for exemption from tax. This section, as it stood before its substitution by the uttar Pradesh Sales Tax (Amendment) Act, 1974, with retrospective effect from 31st March, 1956, stood as under: 4. (1) No tax under this Act shall be payable on-- (a) the sale of water, milk, salt, newspapers and motor spirits as defined in the U. P. Sales of Motor Spirit and Diesel Oil Taxation Act, 1939, and any other goods which the State Government may, by notification in the official Gazette exempt; (b) The sale of any goods by the All India Spinners Association or Gandhi Ashram, Meerut, and their branches or such other persons or class of persons as the State Government may from time to time exempt, on such conditions and on payment of such fees, if any, not exceeding four thousand rupees annually, as may be specified by notification in the official Gazette. (2) The provisions of Sub-section (1) shall not apply to transactions of forward contracts referred to in Section 3-B.
( 5 ) SECTION 3-D was inserted in the Act by the Amendment Act 19
