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2000 DIGILAW 12 (ALL)

HIRA LAL RATANLAL v. COMMISSIONER OF SALES TAX

2000-01-06

P.K.JAIN

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P. K. JAIN, J. ( 1 ) HEARD Sri Shashi Kant Gupta, learned counsel for the revisionist and Sri Arvind Kumar, learned Standing Counsel. ( 2 ) REGULAR assessment for the assessment year 1973-74 was passed on March 28, 1978. The assessee aggrieved by the order filed first appeal which was allowed on September 2, 1981. Department felt aggrieved and filed second appeal before the Tribunal which was dismissed on august 17, 1988. Simultaneously, while passing the assessment order the assessing authority issued notice under Section 21 on March 28, 1978 itself and the assessment order was passed on february 28. 1979. The dealer filed first appeal and the first appellate authority remanded the matter to the assessing authority. Tribunal dismissed second appeal of the revisionist. This order of the Tribunal has been challenged in the revision, under Section 11 of the U. P. Trade Tax Act. ( 3 ) SRI Shashi Kant Gupta, learned counsel for the revisionist submits that there was no material before the assessing authority, on the date of issuing of the notice under Section 21 and this aspect of the matter has not been considered by the first appellate authority as well as by the tribunal. It is further pointed out that the Tribunal has taken a wrong view that by issuance of notice under Section 21 the original assessment order is wiped out. Learned Standing Counsel submits that the assessee had claimed exempt from payment of tax in respect of certain purchases but on subsequent verification it was found that some of the purchases were taxable and the assessing authority rightly initiated proceedings under Section 21. ( 4 ) FROM perusal of the order of the assessing authority it transpires that the list of the various declarations submitted by the assessee at the time of assessment was sent for verification on march 28, 1978 itself ; the informations were received on November 25, 1978. In this view of the matter learned counsel for the revisionist is right in submitting that there was no material on march 28, 1978 before the assessing authority to issue notice under Section 21 to initiate proceedings under Section 21. If at all a notice was to be issued, it could have been issued after receipt of informations on November 25, 1978 and December 13, 1978. If at all a notice was to be issued, it could have been issued after receipt of informations on November 25, 1978 and December 13, 1978. Both the first appellate authority and the Tribunal has not considered this aspect of the matter. ( 5 ) TRIBUNAL in its order has observed that with the issuance of the notice under Section 21 the original assessment order is wiped out. The Tribunal placed reliance upon the decision of the honourable Supreme Court in Kundal Lal Srikishan v. Commissioner of Sales Tax, U. P. [1987] 65 STC 62 ; 1987 UPTC 404. It may, however, be pointed out that the above situation may arise only when a valid notice is issued. If the notice itself is invalid and not in accordance with law such a notice will not wipe out the original assessment order. Besides this the Sales Tax Act has been amended and explanation III has been added to Section 21 with retrospective effect by U. P. Act No. 28 of 1991 with effect from March 1, 1973. It is also very strange that the department did not point out at the stage when first appeal and the second appeal were heard by the first appellate authority and the Tribunal against the original assessment order that proceedings under section 21 have already been initiated or that the same have been finalised by order dated february 28, 1979. In any case in view of the finding that the assessing authority himself observed in the order under Section 21 that list were sent for verification on March 28, 1978 itself there was no material before the assessing authority to initiate proceedings under Section 21 for issuing notice on March 28, 1978. ( 6 ) IN view of the discussions made above, the revision is allowed. Impugned orders passed by the first appellate authority and the Tribunal are set aside. The order of the assessing authority is also set aside. .