ASHOK BHUSHAN, MAHESH CHANDRA TRIPATHI, JJ. - (1.) THE question for consideration in this writ petition is as to whether on oxygen IP (Indian Pharmacopoeia) the tax under the U.P. Trade Tax Act, 1948 is to levy under Entry "Medicine and Pharmaceutical Preparation" or under Entry "Oxygen and other gases".
(2.) THE facts of the case as emerge from the pleadings of the parties are; the petitioner, a partnership firm, is engaged in manufacture of Oxygen gas, both for industrial use and oxygen (IP) being a drug/medicinal oxygen used in medical treatment. A licence in Form -25 from the Drug Licensing and Controlling Authority of U.P. under the Drugs and Cosmetics Rules, 1945 for manufacture of oxygen IP was obtained by the petitioner. The petitioner is registered under the U.P. Trade Tax Act, 1948 as well as under the Central Sales Tax Act, 1956. The petitioner submitted return for the years 2001 -02, 2002 -03 and 2003 -04 showing sale of both industrial oxygen and medicinal oxygen. On industrial oxygen, the liability of trade tax to the extent of 12% and on medicinal oxygen the liability of trade tax to the extent of 8% was admitted by the assessee. The assessment orders were passed by the assessing officer accepting tax liability on industrial oxygen at 12% and on medicinal oxygen at 8%. A reassessment notice under Section 21 of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the 1948 Act) for the assessment year 2003 -04 was issued to the petitioner stating that on medicinal oxygen the tax was required to be paid at 12%, hence the tax has escaped assessment. The petitioner filed reply to the notice dated 21st March, 2006 reiterating that tax has rightly been paid on the medicinal oxygen at the rate of 8% since it is a drug. The notice was withdrawn by order dated 28th September, 2006. The Deputy Commissioner (Trade Tax) sought permission from the Additional Commissioner for reassessing the assessee for the year 2002 -03, 2003 -04 stating that tax has been charged on the sale of medicinal oxygen at the rate of 8% whereas vide notification dated 29.1.2001 there was liability of 12% tax. To the notice dated 8th February, 2007, the petitioner filed his objection again reiterating that medicinal oxygen is a drug, hence tax has rightly been paid at the rate of 8%. The Additional Commissioner on 18th May, 2007 passed an order authorising the Deputy Commissioner to make reassessment. The said order noted that no one appeared on behalf of the firm. The permission for reassessment was granted for the years 2001 -02, 2002 -03 and 2003 -04 on 18th May, 2007. Thereafter orders have been passed for reassessment on 13th June, 2007 for the relevant years on the ground that on sale of medicinal oxygen the tax was to be paid at the rate of 12% whereas in the assessment orders the tax at the rate of 8% was charged, hence the tax liability was imposed. The petitioner filed this writ petition and has prayed for quashing the orders dated 18th May, 2007 passed by the Additional Commissioner and the reassessment orders dated 13th June, 2007. We have heard Sri S.D. Singh, Senior Advocate appearing for the petitioner and Sri C.B. Tripathi, Special Counsel appearing for the State - respondents.
(3.) SRI S.D. Singh, learned counsel for the petitioner submitted that assessment orders accepting the tax liability at the rate of 8% on oxygen (IP) i.e. medicinal oxygen was in accordance with the notification dated 15.1.2000 treating the oxygen (IP) as medicine and pharmaceutical preparation. He submits that liability of tax at the rate of 12% cannot be imposed under Entry 47 of the notification dated 29.1.2001 as 'oxygen and other gases'. He submits that Entry 47 covers 'oxygen and other gases' but exclude 'such other gases as are included in any other notification issued under the Uttar Pradesh Trade Tax Act, 1948'. He further submits that oxygen (IP) (medicinal oxygen) shall not be covered by Entry 47 i.e. a general entry but is covered by the Entry 'Drugs and Medicines'. He submits that assessment orders were perfectly in accordance with law. He further submits that present is not a case for initiating any reassessment proceeding since the assessing authority after considering the relevant Entries and properties of oxygen (IP) has imposed tax liability at the rate of 8%. The reassessment is nothing but change of opinion. He further submits that neither any reason has been mentioned in the order granting permission for reassessment nor in the reassessment order any reason has been given as to why medicinal oxygen is taxable at the rate of 12%. He further submits that reassessment orders have been passed without any opportunity as against the notice dated 8th February, 2007 initiating reassessment proceeding, the petitioner filed his objection and without communicating the outcome of the objection, order dated 18th May, 2007 has been served on the petitioner. It is submitted that the order mentions that firm partner namely Kamal refused to accept the notice whereas there is no such partner named Kamal in the petitioner's firm and the ex -parte order of reassessment was passed.;