M/S FAIZAL CHEMICALS V. THE COMMISSIONER COMMERCIAL TAX

STRE/338/2012

AI Insights

The case involves multiple sales/trade tax revisions filed by M/S Faizal Chemicals and M/S Ujala Chemicals against the orders of the Commercial Tax Tribunal, Bareilly. The revisions were consolidated due to the similarity in the controversy and facts involved. The primary legal issues revolved around the affirmation of a remand order by the Tribunal and the competence of the appellate authority to adjudicate the facts. The revisions challenged the reassessment proceedings initiated on the grounds that the tax could not be levied on essential oil and questioned the acceptance of purchases made on behalf of Ex. U.P. Principals. The High Court found that the Tribunal erred in its approach and remanded the matter for a fresh decision.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 695737 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 06-04-2022
• Assessment Year: misc
• Other Referred Cases: Jute Corporation of India Limited vs. Commissioner of Income Tax and another, Tata Iron & Steel Company Limited vs. Commissioner of Trade Tax U.P. Lucknow
• Laws Referred To: Central Sales Tax Act, U.P. Trade Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: C S C
• Assessee Lawyers: RAKESH AGRAWAL; SUYASH AGARWAL
• Keywords: Change of opinion; Commission agent; Reassessment; Remand order; Sales/Trade Tax Revision; Essential Oil
• Section: 9; 21

Judgement Text

"1 Court No. - 1 1. Case :- SALES/TRADE TAX REVISION No. - 338 of 2012 Revisionist :- M/S Faizal Chemicals Opposite Party :- The Commissioner Commercial Tax Counsel for Revisionist :- Rakesh Ranjan Agrawal,Suyash Agarwal Counsel for Opposite Party :- C.S.C. 2. Case :- SALES/TRADE TAX REVISION No. - 336 of 2012 Revisionist :- M/S Ujala Chemicals Opposite Party :- The Commissioner Commercial Tax 3. Case :- SALES/TRADE TAX REVISION No. - 339 of 2012 Revisionist :- M/S Faizal Chemicals Opposite Party :- The Commissioner Commercial Tax 4. Case :- SALES/TRADE TAX REVISION No. - 337 of 2012 Revisionist :- M/S Ujala Chemicals Opposite Party :- The Commissioner Commercial Tax Hon'ble Piyush Agrawal,J. Since the controversy and facts involved in the aforesaid connected sales/trade tax revisions are the same, therefore, they are being deciding together by a common order. Heard Sri Suyash Agarwal, learned counsel for the revisionists and Sri A.C. Tripathi, learned Standing Counsel for the State. The present revisions have been filed against the order dated 25.2.2012, passed by Commercial Tax Tribunal, Bareilly in Second Appeal Nos 347 of 2011 (Assessment Year 2001-02), 348 of 2011 (Assessment Year 2002-03), 349 of 2011 (Assessment Year 2003-04) and in Sales/Trade Tax Revision No. 336 of 3012, Second Appeal Nos. 320 of 2011 (Assessment Year 2001-02), 321 of 2011 (Assessment Year 2002- 03), 322 of 2011 (Assessment Year 2003-04, 321 under the Central Sales Tax Act. In all the appeals, common questions of law have been framed which are as under: “(i) Whether on the facts and in the circumstances of the case the Tribunal was right in affirming the remand order passed by the Additional Commissioner, Grade-2 (Appeal)-H, Commercial 2 Tax Bareilly dated 27.5.2011 for Assessment Year 2001-02 (Central) ignoring that the assessing authority while passing the original assessment order dated 08.12.2004 has accepted the purchases amounting to Rs. 66,79,530/- as purchase on behalf of the Ex. U.P. Principals and Central sale of essential oil covert against 4 Form C for Rs. 35,63,969/- no fresh material has been brought on the record, as such the reassessment proceeding is change of opinion. (ii) Whether, in any view of the matter the remand order passed by the appellate authority dated 27.5.2011 was rightly sustained by the Tribunal without adjudicating the subject matter of appeal raised in the memorandum of Second Appeal specially when the assessing authority travelled beyond the subject matter of the sanction order dated 15.9.2006 in so far as rejection of Central Sale against Form-3 amounting to Rs. 33,13,969/-.” Learned counsel for the revisionists submits that the second round litigation as the Tribunal has already remanded the matter. Now, it is a second remand order. He further submits that the applicants had purchased goods on behalf of Ex. U.P. Principals. The goods were purchased as per the purchase order and the goods were sent within three days as availability of vehicle and has only charged his commission. This fact is well established from the assessment order. The reassessment proceedings were only initiated on the ground that tax could not be levied on the essential oil. He also submits that all documents and materials were available on record which shows otherwise there is no fresh material and, therefore, it is a change of opinion which is not permissible under section 21 of the Act. He further submits that the Tribunal has erred in remanding the matter holding that the First Appellate Authority is not competent to look into the facts and verify the books of accounts of the applicants. In support of his contention, learned counsel for the applicants has placed reliance upon the judgement of Apex Court in Jute Corporation of India Limited vs. Commissioner of Income Tax and another, 1991 3 Supp. (2) SCC 744. So far as remand is concerned he relied upon the judgement of this Court in Tata Iron & Steel Company Limited vs. Commissioner of Trade Tax U.P. Lucknow, 2006 NTN (Vol.30)-399. He prays for allowing the revisions. Per contra, the Standing Counsel supports the order passed by the authorities below. He submits that the dealer has failed to bring on record the material to justify the purchases for goods on behalf of the Ex. U.P. Principals. He submits that on the essential oil the central tax could not be levied as the provision of the Act and, therefore, the reassessment proceedings have been rightly initiated. He further submits that since the dealer has failed to show the purchases for goods on behalf of the Ex. U.P. Principals as the reassessment order was passed ex-parte. In the interest of justice, the matter was remanded back in favour of the dealer to justify his case. In support of his claim he prays for dismissal of the revisions. After hearing the parties, the Court has perused the records. Admittedly, the dealer has acted as a commission agent for purchase of goods for and on behalf of Ex. U.P. Principals to which the various agreements have been referred in the original assessment order. The Tribunal being the last court of fact ought to have considered on legal issues as well as on the fact. This proceeding is not the original proceeding but it is a reassessment proceeding. The burden is heavily on the revenue to prove its case. The reassessment order was passed against the dealer. Against which the first appeal was preferred and the matter was remanded. Against the second remand, the assessee has already filed materials to prove its case though it is incumbent upon the Tribunal to have decide the issue itself. It is not the case that the dealer has failed to product material to prove its case. The Tribunal has further erred in holding that under Section 9 of U.P. Trade Tax Act the first appellate authority is not competent to look into the facts of the case. In view of the aforesaid facts and circumstances of the case and without going into the merits of the case, the impugned orders passed by 4 the Commercial Tax Tribunal, Bareilly is set aside. The revision is allowed. The matter is remanded back to the Tribunal to decide the issue afresh only on the basis of material available before the Tribunal. The matter is remanded back to the Tribunal to decide the issue as observed above. It is expected that since the matter is very old, the Tribunal may take all possible effort to decide the same within a period of three months from the date of receipt of a copy of this order. The revisionists undertake to serve the copy of this order within a fortnight. In the event of failure on the part of the revisionists, benefit of this order shall not be accorded to the revisionists. The questions of law are answered accordingly. Order Date :- 6.4.2022 Puspendra Digitally signed by PUSPENDRA NARAYAN SINGH Date: 2022.04.08 12:44:18 IST Reason: Location: High Court of Judicature at Allahabad "