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DIn Dayal Kesho Lal Vs. the Sales Tax Officer Ii and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 3417 of 1962
Judge
Reported in[1970]25STC221(All)
AppellantDIn Dayal Kesho Lal
RespondentThe Sales Tax Officer Ii and anr.
Appellant AdvocateS.N. Misra and ;Swami Dayal, Advs.
Respondent AdvocateStanding Counsel
Excerpt:
.....on 23rd of march, 1962. his order reads :whereas i am satisfied that m/s. (b) .(c) if the sales tax officer, after such enquiry as he may deem necessary, is satisfied that the information given in such statement is correct, and the fee has been correctly deposited, he shall issue an exemption certificate to the dealer. 6. a careful study of this provision reveals that in case the sales tax officer is satisfied after making such enquiry as he deems necessary that the information given in the statement by the dealer is correct and that he (dealer) has deposited the correct fee, he shall have no option but to grant an exemption certificate. the use of the words underlined* specially the words 'shall issue' clearly show that the sales tax officer has no discretion in the matter and..........referred to as the act) against the petitioner.3. admittedly the petitioner was granted an exemption certificate under rule 19 of the rules framed under the act in respect of foodgrains. the assistant commissioner, sales tax, u.p., cancelled the exemption certificate on 23rd of march, 1962. his order reads :-whereas i am satisfied that m/s. din dayal kesho lal for the year 1957-58 have contravened the provisions of rules 20b(a), 20b(c) and 20b(i) chapter v, of the u.p. sales tax rules, 1948, i, p.n. zutshi, assistant commissioner, sales tax, kanpur range, kanpur, in exercise of the power vested in me under rule 25(a) of the abovesaid rules, hereby cancel the exemption certificate issued to the abovenamed dealers in pursuance of the exemption order passed by dr. a. k. misra, the.....
Judgment:

Jagdish Sahai, J.

1. The petitioner, M/s. Din Dayal Kesho Lal (hereinafter referred to as the petitioner), has approached this court under article 226 of the Constitution of India and has prayed for the issue of 'a writ, order or direction in the nature of certiorari quashing the assessment order dated 1st August, 1962 (annexure III).'

2. The assessment order dated 1st August, 1962, has been made under Section 21 of the U.P. Sales Tax Act (hereinafter referred to as the Act) against the petitioner.

3. Admittedly the petitioner was granted an exemption certificate under Rule 19 of the rules framed under the Act in respect of foodgrains. The Assistant Commissioner, Sales Tax, U.P., cancelled the exemption certificate on 23rd of March, 1962. His order reads :-

Whereas I am satisfied that M/s. Din Dayal Kesho Lal for the year 1957-58 have contravened the provisions of Rules 20B(a), 20B(c) and 20B(i) Chapter V, of the U.P. Sales Tax Rules, 1948, I, P.N. Zutshi, Assistant Commissioner, Sales Tax, Kanpur Range, Kanpur, in exercise of the power vested in me under Rule 25(a) of the abovesaid rules, hereby cancel the exemption certificate issued to the abovenamed dealers in pursuance of the exemption order passed by Dr. A. K. Misra, the then Sales Tax Officer II, Kanpur, on 10th December, 1958, for the assessment year 1957-58.

Sd/- P. N. Zutshi

Assistant Commissioner, Sales Tax.

4. Admittedly the certificate was cancelled without affording any opportunity to the petitioner of showing cause or of being heard. The assessment proceedings under Section 21 of the Act also admittedly did take place after the exemption certificate has been cancelled. It has been contended by Sarvasri S. N. Misra and Swami Dayal, the learned counsel for the petitioner, that the assessment under Section 21 of the Act is invalid because the cancellation of the certificate itself was illegal.

5. Rule 19 deals with the grant of exemption certificate and, so far as relevant for our purposes, reads :

19. Application for certificate of exemption.--(a.) Every dealer liable to pay any fee in accordance with a notification issued under Section 4 shall deposit in treasury along with chalans the fee calculated on his turnover of the previous year in respect of the goods specified in notifications.

(b) ...

(c) If the Sales Tax Officer, after such enquiry as he may deem necessary, is satisfied that the information given in such statement is correct, and the fee has been correctly deposited, he shall issue an exemption certificate to the dealer.

(d) If the Sales Tax Officer finds that the fee deposited is less than that payable in accordance with the notification, he shall require the dealer to deposit the balance within a time to be fixed by him.

(e) If the Sales Tax Officer finds that the fee deposited by the dealer exceeds the amount payable, he shall order the excess to be refunded.

6. A careful study of this provision reveals that in case the Sales Tax Officer is satisfied after making such enquiry as he deems necessary that the information given in the statement by the dealer is correct and that he (dealer) has deposited the correct fee, he shall have no option but to grant an exemption certificate. The use of the words underlined* specially the words 'shall issue' clearly show that the Sales Tax Officer has no discretion in the matter and is bound to grant an exemption certificate.

7. The Sales Tax Officer cannot reject the application for the exemption certificate on the ground that the fee deposited is deficient because as provided in Clause (d) of Rule 19 he is bound to give the dealer time to deposit the balance of fee. These provisions, therefore, clearly show that a dealer has certain rights in the matter and is entitled to exemption certificate as of right provided he satisfies the Sales Tax Officer that the information furnished by him (the dealer) is correct and that the fee deposited by him is also proper.

8. The result of the grant of exemption certificate under Rule 19 is that the tax liability of a dealer is considerably reduced.

9. Rule 22 deals with grant of fresh certificate and reads :

The exemption certificate granted under Rules 19, 20 or 21 shall remain valid till the expiry of the assessment year in respect of which it is granted. A fresh certificate shall be obtained for each subsequent year for which application shall be made within thirty days of the commencement of such year. To any such application the provision of Rule 19 or 21 shall, mutatis mutandis, apply. (Underlined by us)

10. Clearly this provision makes it a mandatory rule that the exemption certificate granted shall remain valid till the expiry of the assessment year. In other words, the life of an exemption certificate is one year and that life is granted not by the order of the Sales Tax Officer, but by the statutory provisions contained in the rules themselves. Once a certificate has been granted, it remains in effective force for the period of one year, that is, till the expiry of the assessment year in respect of which it is granted. That effective force cannot be capriciously destroyed or curtailed. A certificate can be cancelled only under Rule 25 of the rules, which reads :

25. Cancellation of certificates.-(a) The exemption certificate may be cancelled by the Assistant Commissioner (Executive) if he is satisfied that the dealer has contravened any of the provisions of this chapter.

(b)...

11. The words used in this provision are significant. Firstly, as opposed to 'is of the opinion' the words that have been used are 'if he is satisfied'. The test, therefore, is clearly objective. Secondly, a cancellation can be made only on the ground that any provisions have been contravened. This would again show that the test is objective and the Assistant Commissioner *Here italicised. must proceed objectively and not only on the basis of his subjective satisfaction. It is well settled, in fact it is trite, that if law requires an objective approach to a matter, the party against whom proceedings have been taken should be heard. It is true that unlike the Indian Income-tax Act there is no provision in the Act or the rules requiring a notice to be given for an opportunity of being heard, but inasmuch as the statute makes the certificate valid for a period of one year and lays down an objective test, the hearing of the petitioner was implicit in the proceedings to be initiated under Rule 25 of the rules. The matter is so well settled that no authority need be cited.

12. We have already held earlier that admittedly the petitioner has not been given an opportunity of being heard nor was it heard. Consequently the cancellation of the exemption certificate of the petitioner was illegal.

13. The result of the cancellation of the exemption certificate has been tremendous on the proceedings under Section 21 of the Act. Transactions, which had already taken place in the year 1957-58 when the petitioner held a valid exemption certificate, have been reopened without the certificate having been legally or properly cancelled.

14. Mr. Ram Manohar Sahai contended that the petitioner has an alternative remedy of filing an appeal against the order passed under Section 21 of the Act and for that reason the petition should not have been entertained. In our opinion the submission cannot be accepted. Our reasons are :-

(i) That admittedly no appeal lies against the cancellation of an exemption certificate under Rule 25, with the result that the validity of that order could not have been tested in the appeal filed against the assessment order made under Section 21 of the Act.

(ii) The writ petition was admitted by this court on 8th November,. 1962, and was pending decision till this day. Even if an appeal has been filed before the Assistant Commissioner (Judicial) that cannot provide an alternative adequate remedy to the petitioner.

15. We are, therefore, satisfied that the order passed under Section 21 of the Act suffers from a mistake of law apparent on the face of the record The result is that we quash that order. In the circumstances of the case the parties shall bear their own costs. Inasmuch as Mr. Swami Dayal has made a statement before us that he will not press his appeal before the Assistant Commissioner (Judicial), the stay order dated 8th October, 1964, is vacated.


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