- (1.) By means of the present writ petition the petitioner seeks a writ order or direction in the nature of certiorari quashing the order/circular dated September 26, 2002, issued by the Commissioner of Trade Tax so far as it relates to fixation of cash security at the rate of Rs. 120 per metric ton for the issue of declaration form for the import of coal by railways. Briefly stated the facts giving rise to the present writ petition are as follows: The petitioner is a proprietorship firm of which Sri Sanjay Kumar Khetan is the proprietor. It acts as a coal agent and imports coal on behalf of various persons and supply them on the purchase rate plus commission. The railway freight on coal is separately charged and paid to the transporter. For the import of coal from outside the State of Uttar Pradesh, the petitioner requires form of declaration for import which was earlier called as form XXXI. The said declaration form was issued to the petitioner by the assessing authority, namely, the Trade Tax Officer, Siddhartha nagar, respondent No. 3. The petitioner is required to file monthly return under rule 41 of the U.P. Trade Tax Rules, disclosing its turnover and liability of tax. Tax due on the turnover is also required to be deposited. The petitioner is regularly filing its monthly return as required under rule 41. The coal is a declared commodity under section 14 of the Central Sales Tax Act, 1956 under which its liability to pay tax at four per cent at the single point. Under the Uttar Pradesh Trade Tax Act coal is liable to tax at four per cent at the point of manufacturer or importer. The petitioner purchases coal from collieries as well as from traders of Bihar and Madhya Pradesh. According to the petitioner it has purchased coal at Rs. 994.07 per metric ton over which freight comes about Rs. 528.17 per metric ton. After charging commission the petitioner supplies coal at Rs. 1,100 per metric ton excluding freight which is separately charged. According to the petitioner its liability to pay tax is on the value of coal as the amount of freight is separately charged and paid to the transporter by the purchaser. After including the amount of freight total value of the coal comes to about Rs. 1,628 per metric ton. Trade tax at four per cent on the consideration of the coal at Rs. 1,100 per metric ton comes to Rs. 44 and if freight is included then it comes to Rs. 65.12 per metric ton. The Commissioner of Trade Tax had issued a circular dated September 26, 2002 under section 8C(3A) of the U.P. Trade Tax Act, 1948 (hereafter referred to as, "the Act")- In the said circular the petitioner is required to deposit a sum of Rs. 120 per metric ton as security for import of coal from railways. According to the petitioner it sells 5000 metric ton coal in a year on which tax liability comes of Rs. 2,20,000 wherein it is required to deposit security of Rs. 6,00,000. The grievance of the petitioner is that it is a small trader and the entire capital would be wiped off if the petitioner is asked to deposit security at 120 per metric ton on the purchase of coal for issuance of declaration form. The validity of security has been challenged on the ground that the Commissioner of Trade Tax, respondent No. 2 cannot fix the amount of cash security as required under section 8C(3A) of the Act arbitrarily and it has to be a reasonable nexus with the value of goods. The amount of Rs. 120 per metric ton has no reasonable nexus with the amount of tax payable and it is arbitrary and confiscatory in nature as it is much higher than the actual tax liability.
(2.) In the counter-affidavit filed by Sri D.K. Gupta, Assistant Commissioner, Trade Tax, Siddharthanagar on behalf of the respondents, the demand of security for issuance of declaration form at 120 per metric ton for import of coal by railways has been justified as the circular has been issued by the Commissioner in exercise of power conferred under section 8C(3A) of the Act. The demand of security by the earlier circular issued for import of coal has been upheld in several cases. Further the amount has been justified on the ground that selling rate of various qualities of coal by collieries has increased and a comparative study has shown that the rates have increased for coal at about Rs. 300 per metric ton which is about 15 per cent and after taking into consideration the increase in the rate of freight and sale prices of coal the cash security was increased by 20 per cent only.
(3.) We have heard the learned counsel for the parties. We find that under section 8C (3A) of the Act the Commissioner has been empowered to issue general order in writing directing cash security required to be furnished by a dealer for issue of the form prescribed under the Act. Declaration form for import of goods from other States is one of the forms prescribed by the Rules framed under the Act. We may mention here that coal has been notified as one of the notified goods by the State Government where under the Commissioner can issue a general order requiring the dealer to furnish cash security for obtaining declaration form. It is not in dispute that by circular dated March 8, 2001 cash security for importing coal by road was fixed at Rs. 125 per metric ton. The rates of coal as obtained from the collieries has increased by Rs. 300 per metric ton which comes to about 15 per cent in the year under consideration. Moreover freight has also increased by about 25 per cent. Selling price of coal in Uttar Pradesh has correspondingly increased by about 25 per cent as against which increase of security is only by about 20 per cent, i.e., Rs. 150 fixed by the impugned circular in respect of the coal to be imported by road. The demand of cash security in respect of the coal to be imported by railways is only Rs. 120 per metric ton.;