Research › Search › Judgment

Allahabad High Court · body

2015 DIGILAW 4130 (ALL)

Shree Cement Limited v. State of U. P.

2015-12-22

TARUN AGARWALA, VIVEK KUMAR BIRLA

body2015
JUDGMENT Tarun Agarwala, J. -- All the three petition raises the same controversy and are being decided altogether by a common judgment. For facility, the facts of the writ petitions are being taken into consideration. 2. We have heard Sri Bharat Ji Agrawal, the learned Senior Advocate along with Sri Shubham Agrawal, the learned Counsel for the petitioner in Writ Tax No. 398 of 2013 and Sri Piyush Agrawal, the learned Counsel for the petitioners in the connected writ petitions and Sri C.B. Tripathi, the learned Special Counsel for the State. 3. The State Government promulgated U.P. Tax On Entry Of Goods Into Local Areas Act, 2007 (hereinafter referred to as the 'Act'). The petitioner challenged the levy of entry tax under the provisions of this Act. The Court by a judgment dated 23rd of December, 2011 dismissed the writ petition and upheld the vires of the Act, against which the petitioner preferred a Special Leave Petition in which an interim order dated 18th January, 2012 was passed by the Supreme Court staying the operation of the judgment of the High Court subject to the condition that the petitioner would deposit 50% of the accrued lax liability/arrears under the Act of 2007 and furnish bank guarantee for the balance amount. The petitioner was also required to deposit 50% of the tax liability/arrears including interest and penalty and furnish bank guarantee for the balance amount as and when a demand notice was issued under the U.P. Act of 2007 for the past period. The petitioner was also directed to pay the tax at the prevailing rates for the future period. For facility, the interim order of the Supreme Court dated 18th of January, 2012 is extracted hereunder: "Upon hearing Counsel the Court made the following ORDER SLP (C) Nos. 124, 125, 131, 137, 139, 177, 180, 181, 194, 198, 200, 244, 246, 282-286, 531, 544, 1119-1123, 1219-1222, 1230, 1504 and 1519 of 2012: Application(s) for exemption from filing Official Transaction is allowed. Notice to the respondents. Learned Counsel appears and accepts notice on behalf of all the respondents in all the matters. Leave granted. In these civil appeals, the appellants and others are questioning the correctness or otherwise of the common judgment and order passed by the High Court of Judicature at Allahabad in Writ Tax No. 1484 of 2007 etc. Dated 23rd December, 2011. Learned Counsel appears and accepts notice on behalf of all the respondents in all the matters. Leave granted. In these civil appeals, the appellants and others are questioning the correctness or otherwise of the common judgment and order passed by the High Court of Judicature at Allahabad in Writ Tax No. 1484 of 2007 etc. Dated 23rd December, 2011. In the Special Leave Petitions filed, the appellants and others had questioned the constitutional validity of the U.P. Tax on Entry of Goods Into Local Areas Act, 2007 ('U.P. Act, 2007' for short) We have heard learned Counsel for the parties on the prayer made for grant of interim relief and also perused the records. We are not inclined to grant the blanket stay order as prayed for by the appellants. Accordingly, we pass the following order: The operation of the impugned judgment and order is stayed subject to the appellants in each case depositing 50% of the accrued tax liability/arrears under the U.P. Act, 2007 and furnish bank guarantee for the balance amount within four weeks from today. It goes without staying, that the aforesaid deposit shall be made after adjusting the amount(s) paid or deposited during the pendency of the writ petitions before the High Court. The appellants are directed to keep the bank guarantee(s) alive during the pendency of these appeals. The amount(s) so deposited/paid and the bank guarantee(s) furnished is subject to the result of the appeals. The appellants shall also deposit 50% of the tax liability/arrears, including interest and penalty, and furnish guarantee for the balance amount as and when demand notices are issued under the U.P. Act, 2007 for the past period. In default, the interim order(s) granted by this Court shall automatically stands vacated. In case the State of Uttar Pradesh loses the matters at the time of final hearing, it shall refund to the appellants the amount deposited with interest at the rate which may be fixed by this Court. It is also made clear that in case the appellants loses the matters, the Department is at liberty to encash the bank guarantee(s) offered by the appellants and also issue demand notice(s) demanding interest, and penalty on the amount outstanding as arrears of tax. The appellants shall continue to pay the tax at the prevailing rate(s) for the future period as applicable to each one of the assessees. The appellants shall continue to pay the tax at the prevailing rate(s) for the future period as applicable to each one of the assessees. In view of the interim order passed by us, we expect that the Department shall not resort to coercive steps to recover the amounts due to the Department. In SLP (C) Nos. 244/2012 and 246/2012, learned Counsel for the petitioners mentioned that orders in these SLPs have already been made on 10th January, 2012 and no orders in these SLPs are required. Later, it was mentioned by the learned Counsel for the petitioners that inadvertently it was mentioned before the Court and the orders are required on these petitions as well. Accordingly, orders in SLP (C) Nos. 244/2012 and 246/2012 are made. Rest of the matters We will permit such of those assessees who have not filed affidavits pursuant to our order dated 5th January, 2012 to file affidavits/additional affidavits, if any, before this Court within two days, after serving the copies of the said affidavits/additional affidavits on the learned Counsel appearing for the respondent/State. If such affidavits are filed, the Registry is directed to list those matters before this Court for consideration of the interim prayer on Monday, the 23rd January, 2012." 4. Prior to the interim order, the High Court had also passed an interim order directing the petitioner to furnish bank guarantee, which they did. Upon dismissal of the writ petition on 23rd of December, 2011, the respondents enchashed the bank guarantee on 31st of December, 2011. In so far as the petitioner is concerned, a sum of Rs. 4.46 crores was furnished as bank guarantee, which was enchased. 5. For the assessment year 2008-09, the liability of entry tax imposed upon the petitioner was Rs. 4,63,92,299/-. The interest imposed was Rs. 2,27,12,897/- Total tax liability including the interest worked out to Rs. 6,91,05,196/- As per the order of the Supreme Court, 50% of the tax liability/arrears including interest and penalty was required to be deposited in cash and the balance amount by way of bank guarantee. 50% of the tax liability including interest for the assessment year 2008-09 came to Rs. 3,46,00,000/- (approx.) which according to the petitioner, had been deposited in full since its bank guarantee of Rs. 3,64,00,000/- had been enchased on 31st of December, 2011. 50% of the tax liability including interest for the assessment year 2008-09 came to Rs. 3,46,00,000/- (approx.) which according to the petitioner, had been deposited in full since its bank guarantee of Rs. 3,64,00,000/- had been enchased on 31st of December, 2011. By the impugned demand notice dated 5th of March, 2013, the petitioner was directed to deposit Rs. 2,27,12,897/- towards interest failing which, the two bank guarantees of Rs. 1,13,56,500/- each deposited by the petitioner would be enchashed. The petitioner being aggrieved by the aforesaid demand notice dated 5th March, 2013 has filed the present writ petition. 6. Sri C.B. Tripathi, the learned Counsel submitted that the interest was being demanded as per interim order of the Supreme Court dated 18th January, 2012 and contended that only the accrued tax liability/arrears were stayed to the extent of 50% but the petitioner was required to pay the tax at the prevailing rate for the future period. The learned Counsel contended that in the instant case, the assessment order was passed on 24th of February, 2012 for the assessment year 2008-09 and therefore, the tax interest demanded would come under the category of 'future period' as per the interim order of the Supreme Court. 7. Having heard the learned Counsel for the parties, we find that when the writ petition was filed by the petitioner before the High Court the tax that being demanded was for the assessment year 2008-09. The words, "future period" in the order of the Supreme Court would denote any tax liability that would arise or accrue after the date of the order passed by the Supreme Court, i.e., after 18th of January, 2012. 8. We also make it clear that even if any assessment order is passed after 18th of January, 2012 but relates to any assessment year prior to 18th of January, 2012 would come under the category requiring the accrued tax liability/arrears to be paid up to 50% and the balance 50% by way of bank guarantee. The words "future period" would include such demand for the period subsequent to 18th of January, 2012. 9. The words "future period" would include such demand for the period subsequent to 18th of January, 2012. 9. In the light of the aforesaid interpretation, we find that in the instant case the petitioner has already deposited 50% of the accrued tax liability along with interest for the assessment year 2008-09 and therefore, was not required to pay any further amount as per the interim order of the Supreme Court. Consequently, the impugned demand notice requiring the petitioner to pay further amount towards the interest compound is patently misconceived and based on wrong interpretation of the interim order of the Supreme Court. 10. Consequently, for the reasons stated aforesaid, the impugned orders cannot be sustained and are hereby quashed. 11. All the writ petitions are allowed.