A. P. MISRA, J. Heard learned counsel for the petitioner and also the learned Standing Counsel. 2. This writ petition was filed in the year 1981 and even after 13 years no counter-affidavit is filed on behalf of State of Uttar Pradesh. Hence question of granting further indulgence for filing counter-affidavit does not arise. It is unfortunate that the State Government takes its litigation so casually and callously. Thus we proceeded and heard leaned counsel for the parties in the absence of the counter-affidavit. 3. The petitioner seeks quashing of notice dated October 31, 1980, annexure 1 to the petition, letter dated January 2, 1981, annexure 2 to the writ petition, and the letter dated January 29, 1981, annexure 5 to the petition and the consequential recovery proceedings for the amount of Rs. 83,468. 65 as tax from the petitioner. 4. The petitioner-company is a Government of India undertaking and has been carrying on the business of refining and marketing various petroleum products, such as, motor spirit, diesel, kerosene, furnace oil, aviation, turbine fuel and lubricants, etc. The petitioner has got different depots throughout the country, including the one at Kathgodam, in the State of Uttar Pradesh and is a retail dealer of motor spirit and diesel oil. We are concerned in this case with the U. P. Sales or Purchase of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939 (hereinafter referred to as "the Act" ). 5. The case of the petitioner is that he has been filing the regular monthly return in accordance with the aforesaid Act, pertaining to sales at the said depot with the District Excise Officer, Nainital. The return contains complete information with regard to the opening balance, total receipts, despatches, sales, losses and closing balance. The books of accounts maintained by the petitioner have always been accepted by the excise authorities. The books of accounts maintained by the petitioner have never been rejected by the excise authorities and the monthly returns filed by the petitioner have always been accepted. In the said returns filed by the petitioner the petitioner has also shown the losses which occur on account of the various reasons, some of which are that huge quantities are stored in the petitioners tank at Kathgodam and sales of small quantities are made from those tanks. The products stored in the tanks are of highly volatile nature. In the said returns filed by the petitioner the petitioner has also shown the losses which occur on account of the various reasons, some of which are that huge quantities are stored in the petitioners tank at Kathgodam and sales of small quantities are made from those tanks. The products stored in the tanks are of highly volatile nature. The tanks breathe out air and vapour mixture, which gives rise to the evaporation losses. Similarly in the course of transportation also, there is bound to be losses during transit, de-cantation from the railway wagons and filling into the tanks. Likewise at the high altitudes, there is always a shrinkage of the petroleum products in volume whereas the weight remains the same. However the said losses differ from place to place. The petitioner received notice dated October 31, 1980 from the District Excise Officer, Nainital demanding certain amount as tax due under the Act from June 1, 1974 till May 31, 1980 which is annexure 1 to the writ petition. The said notice was on account of audit objection and was also as a consequence of the letter issued by the Excise Commissioner. According to the petitioner neither any assessment order was passed nor any opportunity was given to him. In the said notice it is mentioned that the recovery is being initiated on account of audit objection raised by the audit department. The petitioner did send its reply on November 24, 1980 specifying clearly therein that the tax had already been deposited in accordance with section 3 of the said Act on all the sales effected by it. The stand taken by the petitioner then and now is that there is no provision of levy of any tax on this loss falling under the Act and Rules. Petitioner also requested the District Excise Officer, Nainital to withdraw the notice of demand but instead of withdrawing the recovery proceedings, the District Excise Officer sent a letter on January 2, 1981 to the Tehsildar, Haldwani directing him to realise the entire amount as arrears of land revenue. The short question involved in this petition is whether the impugned notice and consequential recovery proceedings issued by the respondents is sustainable under the aforesaid Act and Rules (hereinafter referred to as "the Rules" ). Since no counter-affidavit has been filed we accept the averments made in the writ petition being uncontroverted. The short question involved in this petition is whether the impugned notice and consequential recovery proceedings issued by the respondents is sustainable under the aforesaid Act and Rules (hereinafter referred to as "the Rules" ). Since no counter-affidavit has been filed we accept the averments made in the writ petition being uncontroverted. It is significant and it cannot be disputed that even the impugned notice annexure 1 to the petition especially refers that the demand of tax under the said Act pertains to losses. 6. The question arising for consideration is whether a tax can be imposed on the petitioner under the said Act when losses incur. Section 3 of the U. P. Sales or Purchase of Motor Spirit, Diesel Oil and Alcohol Taxation Act, 1939, is quoted as under : " 3. Levy of tax.- (1) (a) There shall be levied on the first sale of motor spirit in the State, a tax at the rate of ten per cent ad valorem, and such tax shall be payable to the State Government in the prescribed manner by the dealer effecting such sale; (b) There shall be levied on the first sale of diesel oil in the State, a tax at the rate of eight per and from the date notified by the State Government for the purpose, at the rate of twelve per cent ad valorem and such tax shall be payable to the State Government in the prescribed manner by the dealer effecting such sale. (c) There shall be levied at the point of first purchase of alcohol in the State a tax at the rate of 40 paise per litre for the first million litres and at the rate of 20 paise per litres for the remainder payable by the purchaser, and such tax shall be collected and paid in the prescribed manner to the State Government. " 7. In the present case we are only concerned with the motor spirit and diesel oil, levy of tax on motor spirit under section 3 (1) (a) is on the first sale of the motor spirit and under sub-section (b) is the levy of tax on the first sale of diesel oil, sub-section (c) refers to levy of tax on the purchase and sale of alcohol which is not relevant for the purpose of this case. Thus it is clear that the levy of tax both for motor spirit and diesel oil is on the first sale and the sale is defined under section 2 (d) of the said Act which is quoted as under - " (d) sale with its grammatical variations and cognate expressions means transfer of motor spirit, or diesel oil or alcohol or all the three by a dealer for cash or deferred payment or for other valuable consideration, and includes transfer of motor spirit or diesel oil or alcohol or two or more of them by a society or club or any other association of persons to its members, but does not include a mortgage, hypothecation, charge or pledge. Exp. A sale of (motor spirit or diesel oil or both) by a co-operative society, a club, a firm or any association to one of its members for consumption is a retail sale within the meaning of this clause. " 8. This is transfer of motor spirit and diesel oil by the dealer for a cash or deferred payment or for a valuable consideration. Therefore, for the respondents to impose tax under the said Act there has to the sale of diesel oil and motor spirit by the dealer. In the present case the impugned notice which refers the audit objection does not refer to any sale but refers to the loss incurred during the period in question of the said commodities. Accordingly, the attempt was made for the said loss being payable by the respondents. According to the petitioner as stated in the writ petition which remains uncontroverted the sale effected by the petitioner has been shown even in the monthly return and the respondent-authorities have accepted the same. It is significant to note that never in the past the petitioners account was ever rejected or return has not been accepted. No authority is competent to realise and impose the tax on the the basis of the audit objection unless the authority comes to the conclusion himself after satisfaction on the facts of each case. Petitioners contention further is that neither any order has been passed assessing the said amount of loss by the respondent-authorities nor any notice prior to it has been given. After perusing the said Act we do not find any provision enabling respondents to levy tax on the losses. Petitioners contention further is that neither any order has been passed assessing the said amount of loss by the respondent-authorities nor any notice prior to it has been given. After perusing the said Act we do not find any provision enabling respondents to levy tax on the losses. We accordingly held imposition of tax on the losses is unsustainable. Consequential recovery for the aforesaid amount thus is also unsustainable. Learned Standing Counsel for the State could not point out any provision to justify the imposition of this tax. 9. In view of the aforesaid finding we allow this writ petition with costs and quash the impugned notice dated October 31, 1990 (annexure 1 to the petition), the letter dated January 2, 1981 (annexure 2 to the petition) and letter dated January 29, 1981 (annexure 5 to the petition) and further the consequential recovery of the amount of Rs. 83,468. 65 from the petitioner. Writ petition allowed .