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Vee Kay Oils (P.) Ltd. Vs. Excise and Taxation Commissioner and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 1770 of 1982
Judge
Reported in[1983]54STC204(P& H)
AppellantVee Kay Oils (P.) Ltd.
RespondentExcise and Taxation Commissioner and anr.
Appellant Advocate H.S. Sahni, Adv.
Respondent Advocate P.S. Kang, Adv. for;Adv.-General
DispositionPetition allowed
Excerpt:
.....the assessing authority was not satisfied with the correctness of the returns and wanted proof in support of the facts mentioned in the return, he had to serve a notice on the petitioner-firm......1979, (annexure p-1) in exercise of powers conferred on him by sub-section (5) of section 8 of the central sales tax act, 1956 (for short 'the central act'), directing that the tax payable by any dealer having his place of business in the state of punjab in respect of the sales made by him of edible oils from any such place in the course of inter-state trade or commerce to any registered dealer having his place of business in any other state or union territory in india, shall be calculated at the rate of one per cent of his turnover in so far as the turnover or any part thereof relates to such sales, subject to the production by him of declaration in form c as prescribed under sub-section (4) of section 8 of the central act. according to the petitioner-firm, the rice bran oil is an.....
Judgment:

Sukhdev Singh Kang, J.

1. Messrs. Vee Kay Oils Private Limited, Mandi Ahmedgarh, Sangrur (hereinafter called the petitioner-firm), have filed this writ petition under Articles 226/227 of the Constitution of India for issuance of a writ of certiorari for quashing paragraph 3 of the notice dated 23rd December, 1981, issued by Shri B.R. Sharda, Excise and Taxation Officer (Enforcement), Patiala Division, Patiala, issued to the petitioner-firm. (A copy of this notice is annexure P-3 appended to the petition).

2. Briefly stated the facts of the case are that the petitioner-firm is a manufacturer of edible oils and is running a factory at Ahmedgarh for this purpose. The petitioner-firm manufactures rice bran oil. He sells it to registered dealers having their place of business in other States or Union Territories on the basis of form C in the course of inter-State trade or commerce. The Governor of Punjab issued a notification dated 11th January, 1979, (annexure P-1) in exercise of powers conferred on him by Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956 (for short 'the Central Act'), directing that the tax payable by any dealer having his place of business in the State of Punjab in respect of the sales made by him of edible oils from any such place in the course of inter-State trade or commerce to any registered dealer having his place of business in any other State or Union Territory in India, shall be calculated at the rate of one per cent of his turnover in so far as the turnover or any part thereof relates to such sales, subject to the production by him of declaration in form C as prescribed under Sub-section (4) of Section 8 of the Central Act. According to the petitioner-firm, the rice bran oil is an edible oil and its sale is covered vide notification, annexure P-1. It is exigible to sales tax at the rate of 1 per cent only. The petitioner-firm has been filing its sales tax return regularly and paying the sales tax on its sales in the course of inter-State trade or commerce on edible oils at the rate of 1 per cent regularly. The petitioner-firm was surprised to receive a show cause notice dated 23rd December, 1981, from the Excise and Taxation Officer (Enforcement), Patiala Division, Patiala, requiring it among other things to deposit sales tax at the rate of 4 per cent on the sales of 'non-edible oil' against C form in the course of inter-State trade or commerce and to produce the receipt for the same. It was also mentioned that the sales tax on the sales of rice bran oil in the course of inter-State trade or commerce is leviable at the rate of 4 per cent and not 1 per cent, as paid by the petitioner-firm. The petitioner-firm was directed to appear before the Excise and Taxation Officer on 4th February, 1982 and produced a receipt in proof of payment of the tax.

3. Mr. H.S. Sahni, the learned counsel for the petitioner-firm, has argued :

(i) that the petitioner-firm is aggrieved by paragraph 3 of the show cause notice, annexure P-3, dated 23rd December, 1981. The Excise and Taxation Officer has completed the assessment of the petitioner-firm without summoning him or hearing it. The order is in flagrant violation of the provisions of Section 11(2) of the Punjab General Sales Tax Act, 1948 (for short 'the Punjab Act')

4. There is merit in this contention. Though on the face of it annexure P-3 purports to be a show cause notice the assessing authority vide paragraph 3 of this letter (annexure P-3) has actually completed the assessment of the petitioner-firm ex parte and has determined that the sales tax on the sale of rice bran oil in the course of inter-State trade or commerce to dealers outside the State was exigible to sales tax at the rate of 4 per cent. It was further directed that the petitioner-firm should pay the remaining tax immediately and to produce the receipt for the same. It is apparent from this order that the assessment has been completed and nothing remains to be done. The Assessing Authority has not complied with the provisions of Section 11(2) of the Punjab Act, which reads as under :

11. (2) If the Assessing Authority is not satisfied without requiring the presence of dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete, he shall serve on such dealer a notice in the prescribed manner requiring him, on a date and at place specified therein, either to attend in person or to produce or to cause to be produced any evidence on which such dealer may rely in support of such returns.

5. If the Assessing Authority was not satisfied with the correctness of the returns and wanted proof in support of the facts mentioned in the return, he had to serve a notice on the petitioner-firm. He had then to hear the evidence produced by the petitioner-firm and then frame assessment. The order of the Assessing Authority is in flagrant violation of this statutory provision.

6. Mr. Sahni also argued :

(ii) that rice bran oil sold by the petitioner-firm was edible oil. It did not contain more than 8 per cent free fatty acids and 16 per cent acid-value and could not be declared as inedible oil even according to the standards laid in letter dated 4th February, 1982, of the Excise and Taxation Commissioner (annexure P-2)

7. There is no sufficient material on the file to decide the question as to whether rice bran oil sold by the petitioner-firm was edible oil or inedible oil. Even the constituents of the oil have not been brought out on the file by the parties. It is not disclosed as to which component or components of the rice bran oil, individually or collectively, is/are inedible or makes/make the whole oil inedible. So, this question could not be decided on the meagre data, which is available.

8. However, the petitioner shall be at liberty to urge this point before the Assessing Authority, if and when the occasion arises.

9. For the foregoing reasons I allow this writ petition and quash paragraph 3 of the notice dated 23rd December, 1981 (copy of which is annexure P-3). No costs.


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