Prakash Krishna, J. - (1.) RAISING a short but interesting controversy, the present writ petition has been filed for quashing or setting aside the proceedings initiated against the petitioner under Section 21(2) of U.P. Trade Tax Act (hereinafter referred to as the Act) relating to the assessment years 1997 -98 (both U.P. and Central) and 1998 -99 (both U.P. and central).
(2.) FACTUAL matrix, which is almost undisputed, may be noticed in brief. The petitioner, a company, incorporated under the Companies Act, is engaged in the manufacture and sale of candies, bubblegum and chewing gum. It is selling its products - toffees, bubblegum and candies within the State of U.P. On 3 -1 -2000, the Deputy Commissioner (Assessment) -IX, Trade Tax, Ghaziabad, holding that bubblegum sold by the petitioner in the State of U.P. is liable to be taxed as 'confectionery item', at the rate of 5%, passed the assessment orders. Similarly, in the next assessment also, it was held that bubblegum is liable to be taxed at the rate of 5%, The assessing authority took the above view regarding the rate of tax on bubblegum on the basis of a judgment/ order passed by the Tribunal in the case of a different assessee, but relied upon by the petitioner. Thereafter, the assessments for the above two assessment years have been sought to be reopened in exercise of powers conferred on the authority under Section 21 of U.P. Trade Tax Act. A proposal for permission to reopen was submitted on the ground that in case of Commissioner of Trade Tax v. Associated Distributors, the Tribunal has held that bubblegum and chewing gum are liable to be taxed as 'unclassified item' and they are not 'confectionery'. In other words, these items are liable to be taxed at the rate of 10%, instead of 5%. The judgment of the Tribunal in the case of M/S Associated Distributors has been set aside in TTR No. 656 of 2001 dated 9 -11 -2001 which is subject matter of appeal before the Apex Court. The Apex Court in SLP on 7 -10 -2002 having passed the following order " Stay to continue, however, the State shall not proceed against the respondent herein for the recovery of the balance of the amount due to it", there is reason to believe that chewing gum and bubblegum have been wrongly taxed at the rate of 5% while they should be taxed at the rate of 10% and as such, there is escapement of turnover. It has been further reported by the Deputy Commissioner (Assessment) IX, Trade Tax, Ghaziabad in its order dated 3 -3 -2004 while seeking permission under Sub -section (2) of Section 21 of the Act to reopen the assessment that even if it amounts to 'change of opinion' the reassessment proceedings are required to be initiated in view of the aforestated order dated 7 -10 -2002 passed by the Apex Court. The Additional Commissioner, Grade -I, Trade Tax, Sahibabad Zone, Ghaziabad in the light of the proposal sought by the assessing authority, referred to above, issued notices to the petitioner asking it to appear and show cause as to why the permission sought may not be granted.
(3.) IN reply, the petitioner submitted that it applied for and has been permitted by the Apex Court to intervene in the matter relating to SLP of CTT v. Associated Distributors. It was further pleaded that in view of the judgment of the Apex Court in the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI Cinod Secretariat, Madras : (1992) 3 SCC 1, there is a difference in between an 'interim order' and a 'final order' passed by a Court. A stay order is operative from the date of passing of the order and does not mean that the order under appeal has been wiped out from existence. It was stated that since the matter is subjudice before the Apex Court, at this juncture the permission to reopen the case under Section 21(2) of the Act would be unjust and against the spirit of law.;