B.S.CHAUHAN,J. - (1.) This writ petition has been filed for quashing the circular dated June, 2003 (annexure 1), issued by the Commissioner, Trade Tax, U. P., restraining respondent No. 3, the assessing authority, from imposing any tax on the child parts supplied by the customer to the petitioner -manufacturer free of cost or on the amortisation cost in respect of moulds and toolings given by the customer for the manufacturing of parts; and for quashing the consequential notices dated November 27, 2003 for the assessment year 2001 -02 and dated December 27, 2003 for the assessment year 2003 -04, issued by the assessing authority.
(2.) THE facts and circumstances giving rise to this case are that the petitioner, a company registered under the Indian Companies Act, 1956, is a manufacturer of plastic automobile components. The petitioner is also manufacturing parts for use in the Honda Car being manufactured in India by Honda Siel Cars India Limited (hereinafter called, 'the customer'), as per the designs and specifications given by it. The customer supplies tools, dyes, moulds and some child parts free of cost to the petitioner to enable it to manufacture motor parts for the customer. The customer retains the rights to inspect and verify the condition of such moulds, dyes and tools in the premises of the petitioner and the goods are manufactured exclusively for the said customer. For the year 2000 -01, a final assessment order was passed on October 29, 2002 under the provisions of the U. P. Trade Tax Act, 1948 (hereinafter called, 'the Act'). Thereafter, a notice under Section 21 of the Act was issued by the assessing authority for reassessment, to which the petitioner submitted reply. While passing the reassessment order dated September 30, 2003, tax has also been imposed on the amount of amortisation costs, on the ground that the sale price of the finished goods should be the same which was the assessable value for the purpose of Central Excise Act. Being aggrieved, the petitioner preferred an appeal under Section 9 of the Act. However, the petitioner apprehends that ignoring the agreement between the petitioner and the customer, the assessing authority under the Act would again impose liability on the cost of child parts and amortisation cost, in view of the impugned circular. Hence this petition. Shri Bharat Ji Agarwal, learned Senior Counsel appearing for the petitioner, has submitted that as per Rule 6 of the Central Excise (Valuation) Rules, 2000 (hereinafter called 'the Rule 2000'), for determining the assessable value for imposing the excise duty, cost of goods, namely, moulds, dyes, tools and child parts supplied to the petitioner, free of cost for the manufacturing of the goods for the customer is also to be included. In view of the impugned circular, the petitioner is liable to include the amortisation cost and value of child parts, etc., for bearing the liability under the Act, though it has neither been charged by the petitioner nor it is paid to the petitioner. It cannot be treated as part of sale price, nor it could form part of the turnover of the petitioner. The petitioner has entered into a contract with the customer that the moulds, dyes, tools and child parts supplied by the customer shall be exclusively used in manufacturing the parts which would be sold only to the customer. Thus, the ownership of the same remains with the customer. Addition of amortisation cost and value of child parts for the purpose of imposing sales tax is illegal. The impugned circular is binding upon the assessing authority. Thus, the assessment is bound to be in accordance with the said circular. It is, therefore, liable to be quashed.
(3.) SHRI Kesarwani, learned Standing Counsel appearing for the respondents, has vehemently opposed the petition contending that the writ petition is premature. The petitioner must avail the remedy of appeal and revision. The writ is not maintainable against a show cause notice, as it is not the petitioner's case that show cause notice has been issued by the authority having no competence. Such a colourable device of tax planning can neither be entertained nor encouraged nor it can be judicially approved. Supply of the moulds, tools, etc., free of cost is nothing but a novel device of tax evasion. Amortisation cost is to be included while fixing the tax liability of the petitioner. Therefore, the petitioner is bound to pay the tax in terms of the circular.;