- (1.) Heard counsel for the parties. The writ petition has been filed for quashing the circular dated 31.3.2007 issued by Commissioner, Trade Tax, U.P. (respondent-2), order dated 30.8.2007/5.9.2007 passed by Additional Commissioner (respondent-3) granting sanction for reassessment for the assessment year 2003-04, order dated 20.11.2007 passed by Additional Commissioner (respondent-3) rejecting the recall application and the order dated 29.2.2008 passed by Deputy Commissioner (respondent-4) making reassessment for the assessment year 2003-04.
(2.) It has been stated that the petitioner was a society, registered with U.P. Khadi Gram Udyog Board, Lucknow and engaged in business approved by Khadi Gram Udyog Board. It is registered also under the provisions of U.P. Trade Tax Act as well as Central Sales Tax Act. State of U.P., in exercise of powers under Section- 4(b) of the Act, issued Notification No. 7037 dated 31.1.1985 granting exemption from sales tax liability on the sale of various goods mentioned in the list, by the units of Khadi Gram Udyog Board. Clause 10 of Entry No. 3 of this Government Order provides i.e. "hulling, cutting/trimming, processing, packaging and marketing of cereals and pulses, spices, condiments and masalas". This notification has been amended by Notification No. 709 dated 27.2.1997 and Entry No. 3 has been amended as i.e. "processing, packaging and marketing of cereals, pulses, masalas and chhonks". The petitioner has been claiming exemptions from sales tax under the aforesaid Government Orders on the sale of rice. The petitioner was assessed for the Assessment Year 2003-04, and the Assessing Officer has granted exemption on purchase and sale of paddy and rice. Subsequently, by the Government Order dated 3.9.2004, clause-38 of Entry No. 3 has been amended as i.e. "manufacture of rice and it's other by-products from paddy" are excluded from this Entry. On the basis of the aforesaid Government Order, the Trade Tax Commissioner U.P. issued Circular No. 2320 dated 31.3.2007, clarifying that manufacture of rice from paddy does not amounts to processing of paddy as such no exemption is granted on the sale of rice under the aforesaid Government Order.
(3.) Thereafter, respondent-2 sanctioned for reassessment under Section 21(2) of the Act for the Assessment Year 2003-04, mentioning therein that as per Notification No. 2792 dated 30.9.2004, the rice manufactured out of paddy from the unit of the petitioner was not liable for exemption from the trade tax, as such, the exemption granted to the petitioner amounted to escaped assessment. On the basis of the sanction granted by respondent-2, re-assessment has been done by respondent-3. The order granting sanction for re-assessment and reassessment order have been challenged by the petitioner on the ground that reassessment proceeding has been started on the basis of Notification dated 30.9.2004, which will apply prospectively and not retrospectively. Accordingly, reassessment for the Assessment Year 2003-04 is illegal.;