Shanti Pulses vs Commissioner, Trade Tax

Pankaj Mithal J.

Heard Sri Aditya Pandey, advocate, holding brief of Sri Piyush Agrawal, learned counsel appearing for the assessee-revisionist and the learned standing counsel for the Department.

In this revision u/s 11 of the U.P. Trade Tax Act preferred by the assessee-revisionist against the order of the Tribunal dated November 28, 2006, the following question of law has been raised:

Whether in view of the judgment of this court in the case of Anand Gramodyog Samiti v. Commissioner, Trade Tax, M.R. Soap Pvt. Ltd. v. Assistant Commissioner (Assessment) Trade Tax, Ghaziabad [1991] UPTC 517 and Modi Industries Limited v. State of U.P. [1991] UPTC 266, the order which has merged in the appellate order can be reopened u/s 22 by the assessing authority ?

The brief facts giving rise to this revision are that an order of assessment was passed against the assessee-revisionist on August 25, 1998 imposing tax liability of Rs. 8,73,852 for the assessment year 1993-94. The circular of the Commissioner, Trade Tax dated June 28, 1999 provided for remission of tax paid on Besan manufactured from tax-paid chana. Accordingly, the assessing authority vide order dated July 3, 1999 granted remission of Rs. 4,81,238.50 with interest thereon for the period April 1, 1993 to May 31, 1994 on turnover of besan as it was manufactured out of tax-paid chana.

The refund of the aforesaid amount was denied vide order dated November 6, 1999. The said order was assailed by the assessee-revisionist before the Trade Tax Tribunal by means of a second appeal. The appeal was allowed by the Tribunal on April 19, 2002. The said order was taken in revision by the Department before the High Court and the same has ultimately been dismissed on January 22, 2010. In this way, the order of the assessing authority dated July 3, 1999 and that of the Tribunal dated April 19, 2002 have attained finality.

Despite the fact that the above orders became final and conclusive, the assessing authority vide order dated May 28, 2002 in exercise of power u/s 22 of the Act re-opened the matter and rectified the order dated July 3, 1999 which order has been affirmed in first appeal as well as in second appeal.

Assailing the above orders, the submission of learned counsel for the assessee-revisionist is that the authorities committed a jurisdictional error in reopening/rectifying the order dated July 3, 1999 when the same has already merged in the appellate order and had seized to have an independent existence.

There is no dispute that the order of the assessing authority dated July 3, 1999 had stood merged in the order of the Tribunal dated April 19, 2002 which was later on affirmed by the High Court. Once the said order had merged in the appellate order, it had seized to have an independent existence and the assessing authority became functus officio to revise the same on any ground.

In M.R. Soap (Pvt.) Ltd., Modi Nagar, Ghaziabad v. Assistant Commissioner (Assessment), Trade Tax, Modi Nagar, Ghaziabad [1991] UPTC 517 by a Division Bench of this court held that where the assessment order passed by the assessing authority merges in the appellate order, the assessing authority has no jurisdiction even to issue notice u/s 22 which follows that the power of the assessing authority to re-open the assessment u/s 22 of the Act comes to an end in such a situation.

The above view was followed by the Division Bench with approval in the case of Modi Industries Ltd. Modinagar, Ghaziabad v. State of U.P. [1991] UPTC 266.

Another Division Bench of this court in the case of Ram Das Gupta and Company, Banda v. Sales Tax Officer, Sector-1, Banda [1992] UPTC 281 following the ratio laid down in M.R. Soap Pvt. Ltd., Modi Nagar, Ghaziabad [1991] UPTC 517 reiterated that the Sales Tax Officer cannot exercise jurisdiction u/s 22 of the Act when the appeal against the order of assessment has been decided and the said order had merged in the appellate order.

In view of the above legal position, the controversy arising in this revision stands clearly covered by the above decisions. Accordingly, I hold that once the order of the assessing authority had merged in the order of the Tribunal, in view of the above decisions, the assessing authority is left with no jurisdiction to reopen it in exercise of power u/s 22 of the Act.

The revision is, therefore, allowed and the order passed by the Tribunal dated November 28, 2006, first appellate order dated February 27, 2003 and that of the assessing authority dated May 28, 2002 are set aside. The revision is allowed.