- (1.) A. P. MISRA, J. Heard learned counsel for the petitioner and the learned Standing Counsel. The petitioner has challenged the notice under section 21 of the U. P. Sales Tax Act, 1948. He has sought for quashing the said notice dated February 13, 1980 under section 21 of the U. P. Sales Tax Act issued by respondent No. 1, annexure 2 to the petition. Since in the aforesaid three writ petitions a common question of law has been raised and the facts and circumstances are almost identical, they are being disposed of by means of a common judgment. However, for the purpose of deciding the controversy in the said three cases we take the facts of the Writ Petition No. 152 of 1980 [harbans Lal Malhotra v. Assistant Commissioner (Assessment) II, Sales Tax, Ghaziabad] which are almost similar to other two writ petitions. In the case of [harbans Lal Malhotra v. Assistant Commissioner (Assessment II), Sales Tax], the notice issued under section 31 of the U. P. Sales Tax Act pertains to assessment year 1977-78, in the case of [indo Swing Limited v. Assistant Commissioner (Assessment II), Sales Tax], Writ Petition No. 153 of 1980 the said notice pertains to assessment year 1976-77 and in the case of [indo Swing Ltd. v. Assistant Commissioner (Assessment II), Sales Tax], Writ Petition No. 154 of 1980, the aforesaid notice pertains to assessment year 1977-78.
(2.) THE brief facts of the case are that the petitioner is a company incorporated under the Indian Companies Act, having its registered office at 13, New C. I. T. Road, Calcutta. Its factory is situated at Belur Math, district Howrah, in the State of West Bengal. It has its deposits at Ghaziabad, as well as Delhi, besides other depots in other States. THE petitioner manufactures safety razor blades at its factory at Belur from where the goods are transferred to Ghaziabad depot. THEse goods are received for distribution in major towns of the State of Uttar Pradesh. Similar distribution centre is at Delhi for supply of safety razor blades in Delhi and other adjoining northern States. THE case of the petitioner is that it has no sales organisation at Ghaziabad depot. THE petitioner has marketing arrangements of its products through four distributors, namely, M/s. Malhotra International Ltd. Bengal Saws and Steel Products Ltd. , M/s. Navin Industries and Merchantile Corporation and M/s. Supermax Marketing and Services (P.) Ltd. , under agreement entered into between these distributors and the petitioner. THE goods from the factory at Belur are received at Ghaziabad depot with the transit insurance as well as all freight, loading and unloading charges and octroi, if any are borne by the petitioner. Whenever the Delhi depot is short of stocks, it requisitions goods in bulk from Ghaziabad, which is hardly at a distance of about 20 kms. from Delhi. In short, the case of the petitioner is that the stocks are transferred to the said depots along with the relevant copies of the agreements as well as sample copies of the indents received from the distributors. For this the petitioner has filed the relevant agreement as well as sample copies of indents for proving the said mode of stock transfer. THE assessing authority after examining in great detail the various books and documents and considering the agreements so filed, by means of his order dated June 6, 1979, accepted the stock transfers. THEreafter the assessing authority has, however, served a notice dated February 13, 1980 under section 21 of the U. P. Sales Tax Act. THE said notice does not disclose any reason, hence the petitioner made an application on February 27, 1980 for disclosing the reasons on which the respondent passed the following order on April 15, 1980 : Kar mukti yadi galti se swikrit ho gai ho to voh bhi escaped turnover hi me mani jati hai (refer to section 21) Sd/- N. C. Sharma 15-4-80 " It is not a fishing enquiry. 78-79 ke vad me pragat hua ki aap ne purb nirdharit mang even samjhaute ke anupalan me stock transfer kiya hai tatha swikrit roop se yahi esthit en varson me bhi thi. Sd/- N. C. Sharma. " On these, facts, the contention is that the impugned notice is bad in law as it neither specifies whether it pertains under the U. P. or Central Sales Tax Acts, nor it discloses any reason and secondly even if the reason is disclosed which is quoted above, could it be said to any reason is disclosed which is quoted above, could it be said to be any reason but on the facts and circumstances of this case it is a case of change of opinion, hence the same is liable to be set aside. We have perused the assessment order originally passed by the assessing authority for the relevant year. It records the earlier assessment order as already having been passed by the assessing authority under the U. P. Sales Tax Act. While examining the various documents of the petitioner pertaining to transit/transfer, the same is scrutinised in detail and then a finding is recorded in para 4 that the petitioner has given details regarding the stock transfers in form F showing the transfers of the goods from the factory to Ghaziabad and from there to the Delhi depot incorporating the details of the insurance policy pertaining to the said transfer. It further recorded that all the goods received at the Delhi depot were not sold but only part of the same were sold and rest remained with the depot and after detailed scrutiny it came to the conclusion that the said transfers amounted to stock transfer. Firstly the question is whether the impugned notice discloses any reason for issuance of such a notice and secondly whether on the facts and circumstances of the present case, it could be a case of charge of opinion. Section 21 (1) of the U. P. Sales Tax Act says that if the assessing authority has reason to believe that the whole or any part of the turnover of a dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under-assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary to assess or assess the dealer or tax according to law. Firstly we find that the impugned notice is silent in this regard. It is only when the petitioner has made an application on February 27, 1980 the reasons were supplied which are quoted above. Reason disclose that they are more in the nature of defence rather than substantial reason. It starts with the sentence "it is not a fishing enquiry". Even later part states that during the proceeding for the assessment year 1978-79 (in subsequent years) you have transferred in pursuance of demand under the agreement that may be the position for this year in question hence the notice. In other words though nothing was found for the year in question there might be transfer by the petitioner similarly in the year in question in pursuance of earlier demand.
(3.) WE find in the present case as observed above the original assessment order disclosed the detailed scrutiny of all the documents of the petitioner including the agreement in question and the very basis of the assessment was on arriving at a conclusion that the documents on record reveal that the transfer of the goods amounts to stock transfer. After recording this finding, the present notice amounts to re-examining the same matter again the make a fresh enquiry in the same matter. Admittedly, nothing has been found by the authorities for the year in question, thus it would only amount to change of opinion. The authority cannot issued any notice on account of change of opinion nor in the absence of any material for the year in question. This principle is well-settled. It has been held in the case of Commissioner of Sales Tax v. Gopalji, Varanasi 1974 UPTC 277. In this case the Sales Tax Officer got second though about the applicability or effect of the survey and hence notice under section 21 was issued. It was held this would not constitute reason to believe within the meaning of section 21 of the said Act. Hence notice under section 21 was held invalid.;