# M/s Shree Gorakhnath Food(P) Ltd v. The Commissioner, Commercial Taxes, U.P., Lko

- **Citation:** (2023) 1 ILRA 1296
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-01-03
- **Case number:** Sale/Trade Tax Revision No. 486 of 2011
- **Bench:** Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-shree-gorakhnath-food-p-ltd-v-the-commissioner-commercial-taxes-u-p-lko-49586
- **Pages:** 6

## Headnote

Civil Law - U.P. Value Added Tax Act, 2008
- Sections 58 & 21- Challenge to order
dismissing second appeal and rejecting books of
accounts on grounds of excessive electricity
consumption - Assessing Authority's finding on
increased consumption without corresponding
production rise - Precedents establish excessive
electricity use alone insufficient for book
rejection.

Revision dismissed. (E-9)

List of Cases cited:

## Text

1296 INDIAN LAW REPORTS ALLAHABAD SERIES

13. Let the amount of refund due to
the petitioner be now paid within a period
of four weeks along with interest due in
terms of Section 29(2) of the Act of 1948.
The interest shall be calculated from
January, 2018 onwards at the rates
specified in Section 29(2) of the Act of
1948.

14. As apparently in the case in hand
the delay in grant of refund to the petitioner
is patently illegal in view of the order
passed by respondent no. 3, the State shall
be at liberty to recover the amount of
interest to be paid to the petitioner from the
officer(s) concerned, as public exchequer
should not be burdened on account of
illegal action by the officer(s) of the
Department.

15. The writ petition is allowed with
costs of ₹ 10,000/- to be paid along with
the amount of refund.
----------
(2023) 1 ILRA 1296
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 03.01.2023

BEFORE

THE HON'BLE ROHIT RANJAN AGARWAL, J.

Sale/Trade Tax Revision No. 486 of 2011
alongwith
Sale/Trade Tax Revision No. 490 of 2011

M/s Shree Gorakhnath Food(P) Ltd.
 ...Applicant
Versus
The Commissioner, Commercial Taxes,
U.P., Lko. ...Respondent

Counsel for the Applicant:
Sri Aditya Pandey, Sri Bharat Ji Agarwal, Sri
Shubham Agrawal

Counsel for the Respondents:
C.S.C.

Civil Law - U.P. Value Added Tax Act, 2008
- Sections 58 & 21- Challenge to order
dismissing second appeal and rejecting books of
accounts on grounds of excessive electricity
consumption - Assessing Authority's finding on
increased consumption without corresponding
production rise - Precedents establish excessive
electricity use alone insufficient for book
rejection.

Revision dismissed. (E-9)

List of Cases cited:

1.
Mahabir
Prasad
Jagdish
Prasad
Vs
Commissioner of Sales Tax, U.P., 1971 U.P.T.C.
43

2. M/s Mahashakti Oil Mills, Bisheshargani,
Varanasi Vs The Commissioner of Sales Tax,
U.P., Lucknow, 1972 U.P.T.C. 361

3. M/s Sunita Ispat Pvt. Ltd. Vs Commissioner,
Commercial Tax, U.P., VSTI 2016 (27) B-1272

4. M/s Abhinav Steels Pvt. Ltd. Vs The
Commissioner, Commercial Tax, U.P. Lucknow,
2017 U.P.T.C. 344

5. M/s Melton India, Gautambudh Nagar Vs The
Commissioner, Trade Tax, U.P. Lucknow 2005
NTN (26) 507

(Delivered by Hon'ble Rohit Ranjan
Agarwal, J.)

1. Heard Sri Shubham Agrawal,
learned counsel for the revisionist and Sri
Rishi Kumar, learned Standing Counsel for
the State.

2. These revisions under Section 58 of
the U.P. Value Added Tax Act, 2008
(hereinafter called as "Act of 2008") have
been filed assailing the order dated
12.05.2011
passed
by
the
Tribunal
dismissing the second appeal of the
Assessee being Second Appeal No.104 of
1 All. M/s Shree Gorakhnath Food(P) Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lko. 1297
2011 and allowing Second Appeal No.38 of
2011 and Second Appeal No.47 of 2011
filed by the Revenue.

3. The revision No.486 of 2011 was
admitted on 07.07.2011 on the question,
"whether on account of higher consumption
of electricity during the period 01.01.2008
to 31.03.2008, the books of account of
Assessee-revisionist could be rejected?"

4. Revision No.490 of 2011 was
admitted on the question "whether on
account
of
higher
consumption
of
electricity during the Assessment Year
2008-09, the books of account of Assesseerevisionist could be rejected?"

5. The Assessee before this Court had
established a factory for manufacturing of
Flour, Maida and Sooji. The matter relates
to Assessment Year 2007-08 for the period
01.01.2008 to 31.03.2008, and Assessment
Year 2008-09. The Assessee had disclosed
total purchase of Rs.99,80,498/- and sale of
Rs.1,20,78,303/- for the period 01.01.2008
to 31.03.2008. During the assessment
period of 2007-08, a show cause notice was
issued to the Assessee and the same was
replied on 28.04.2010. The Assessing
Authority rejected the books of accounts
vide order dated 15.06.2010 and enhanced
the turn over on the ground of excessive
consumption of electricity. Aggrieved by
the order, a first appeal was preferred
before
the
Additional
Commissioner,
Grade-II
(Appeals),
Commercial
Tax,
Gorakhpur. The appeal was allowed vide
order dated 15.11.2010 and the quantum of
tax was reduced. Against the order dated
15.11.2010, the Department filed Second
Appeal No.38 of 2011. The Tribunal
allowed the appeal of the Department while
rejected the appeal of the Assessee. During
the assessment proceedings for the year
2008-09, the Assessing Authority found
that there was consumption of 26.351 units
of electricity for production of 1 quintal of
flour against the disclosed consumption of
8.840 unit of electricity by the Assessee.
The first Appellate Authority reduced the
tax liability imposed by the Assessing
Authority in the first appeal relying upon
the consumption of electricity for the
earlier year 2007-08 at 20.887 units per
quintal. Against the order of first Appellate
Authority, one appeal was filed by the
Assessee being Second Appeal No.104 of
2011 and the other appeal filed by the
Revenue being Second Appeal No.47 of
2011. Hence the present revisions.

6. Both the revisions are being heard
together with the consent of counsel for the
parties and are being decided by the
common order.

7. Sri Shubham Agrawal, learned
counsel for the revisionist submitted that
the Assessing Authority as well as Tribunal
could not have rejected the books of
accounts only on the ground of excessive
consumption of electricity. He submitted
that no adverse inference was drawn by the
Assessing Authority with regard to filing of
monthly return. According to learned
counsel, books of accounts cannot be
rejected simplicitor on the ground of
excessive consumption of electricity. The
Assessee had furnised an explanation that
due to the fact that plants and machineries
were sufficiently old and maintenance and
repairing of the plants and machineries was
not done, and also the electricity of
residential quarter of the officials of the
Company was supplied through factory
premises, where Air Conditioners were
installed
and
due
to
which,
the
consumption of electricity was higher.
Reliance has been placed upon Division
1298 INDIAN LAW REPORTS ALLAHABAD SERIES
Bench judgment of this Court in M/s
Mahashakti Oil Mills, Bisheshargani,
Varanasi vs. The Commissioner of Sales
Tax, U.P., Lucknow, 1972 U.P.T.C. 361;
Mahabir Prasad Jagdish Prasad vs.
Commissioner of Sales Tax, U.P. 1971
U.P.T.C. 43 and decision of co-ordinate
Bench of this Court in M/s Abhinav Steels
Pvt.
Ltd.
vs.
The
Commissioner,
Commercial Tax, U.P. Lucknow, 2017
U.P.T.C. 344 and M/s Sunita Ispat Pvt.
Ltd. vs. Commissioner, Commercial Tax,
U.P., VSTI 2016 (27) B-1272.

8. Per contra, learned Standing
Counsel while opposing the revision,
submitted that the Assessing Authority had
recorded a finding that for the period
01.4.2007 to 31.12.2007, the electricity
consumption of revisionist's Unit was
8,55,375 units. Further, during this period,
the Assessee had purchased 96728.21
quintals of wheat and the total wheat
grinded was 96760.05 quintals. Thus,
electricity consumed per quintal of wheat
was 8.840 units. On the other hand, for the
period 01.01.2008 to 31.03.2008, the total
electricity consumed was 1,83,625 units
and total grinding of wheat, which was
done, was 8791.14 quintals. Thus, the
electricity consumed for each quintals of
wheat was 20.887 units. He further
contended that the Tribunal had rightly
rejected the appeal of the Assessee for the
Assessment Year 2008-09 and allowed the
appeal of the Tribunal as during the period
the Assessee had disclosed lessor turn over
in
spite
of
higher
consumption
of
electricity.

9. According to learned Standing
Counsel, the Assessing Authority as well as
Tribunal after recording a finding that for
the period 01.04.2007 to 31.12.2007, the
consumption per quintal for grinding wheat
was 8.840 units while for the period
01.01.2008 to 31.03.2008 was 20.887 units
which is more than double and it cannot be
believed
that
such
high
electricity
consumption was because of the Air
Conditioners working at the residential
quarters of the officials. Emphasis was laid
that no Air Conditioners are used during the
winter season especially in the city of
Gorakhpur where it is an extreme cold
climate. Reliance has been placed upon a
decision of this Court in M/s Melton
India, Gautambudh Nagar vs. The
Commissioner, Trade Tax, U.P. Lucknow
2005 NTN (26) 507, which was affirmed
by Hon'ble Apex Court in Civil Appeal
No.373 of 2007 (Melton India vs.
Commissioner Trade Tax, U.P.) reported
in 2007 N.T.N. (33) 169.

10. Having heard the respective
counseld for the parties and from perusal of
record, it transpires that the sole question,
which needs to dealt with is, "whether the
books of accounts can be rejected by the
Assessing Authority on the basis of
excessive consumption of electricity?"

11. This question has been directly
and indirectly under consideration of this
Court as well as Hon'ble Apex Court for a
long time. The Division Bench of this
Court in Mahabir Prasad Jagdish Prasad
(supra) was of the view that high
consumption of electricity may be a
circumstance
justifying
action
under
Section 21 of U.P. Sales Tax Act, 1948
(hereinafter called as "Act of 1948"), but,
the Court was of the view that high
consumption of electricity by itself is no
material for rejecting the books of accounts
of the Assessee. The judgment of Mahabir
Prasad Jagdish Prasad (supra) was
followed by another Division Bench in M/s
Mahashakti Oil Mills, Bisheshargani,
1 All. M/s Shree Gorakhnath Food(P) Ltd. Vs. The Commissioner, Commercial Taxes, U.P., Lko. 1299
Varanasi (supra) wherein the proceedings
were under Section 21 of Act of 1948 and
the Court was of the view that if no
material was brought by the taxing
authorities on record, there was no
justification for rejecting the books of
accounts.

12.

The
said
judgment
was
subsequently followed in M/s Sunita Ispat
Pvt. Ltd. (supra) and the Court found that
excessive electricity consumption cannot
be a ground for rejection of books of
accounts.

13. In M/s Abhinav Steels Pvt. Ltd.
(supra) also the coordinate Bench of this
Court, following the earlier decisions, had
found that the books of accounts cannot be
discarded only on the ground of excessive
use of electricity. The Court further held
that excess consumption of electricity, can
at best given rise to suspicion so as to
warrant examination of other materials.

14. In both the judgments of M/s
Sunita Ispat Pvt. Ltd. (supra) and M/s
Abhinav Steels Pvt. Ltd. (supra), no
material was brought before the Tribunal or
the Court so as to demonstrate that the
production was not commensurate with the
use of electricity and the Court in general
held that excessive use of electricity cannot
be a ground for rejection of books of
accounts.

15. The Division Bench of this Court
was also of the view that only when the
material has been brought on record to
justify the rejection of books of accounts
then only the high consumption of
electricity can be considered.

16. In the case in hand, there is no
denial of the fact that for nine months
starting from 01.04.2007 to 31.12.2007, the
total electricity consumption was 8,55,375
and total grinding of wheat, which was
done, was 96760.05 quintals, while for the
remaining
period
i.e.
01.01.2008
to
31.03.2008, only 8791.14 quintals of wheat
was grinded consuming 1,83,625 units of
electricity, which comes to 20.887 units of
electricity per quintal compared to the
earlier period, where the consumption was
8.840 units per quintal. The difference
between consumption of electricity for the
period
01.4.2007
to
31.12.2007
and
01.01.2008 to 31.03.2008 is about 2.5 times
high, for which justification given by the
Assessee to the extent of electricity being
consumed
by
the
officials
at
their
residential
premises
for
running Air
Conditioners, fans and light, cannot be
accepted,
as
the
period
for
which
explanation has been given is the winter
time when there is no use of Air
Conditioners
and
the
domestic
consumption cannot be believed on such a
higher side.

17. In Melton India (supra), the
Apex Court while considering the case of
excessive consumption of electricity, when
compared to production, found that when
electricity
consumption
goes
up,
a
reasonable inference can be drawn that
production have gone up. If the electricity
consumption
is
going
up,
but
the
production is seen to be going down, a
reasonable inference can, prima facie, be
drawn that there was suppression of
production and consequently suppression
of sales in order to avoid sales tax.
Relevant paras 9, 10 and 12 of the
judgment are extracted hereas under :

"7. In this connection we may refer to
the electricity consumption and production
in the appellant's factory for the three
1300 INDIAN LAW REPORTS ALLAHABAD SERIES
assessment years in question, which are as
follows:

Assessment Year Production
 Electricity consumed

2001-01 402 MT 5,13,596

2001-02 268 MT 6,38,164
 2002-03 314 MT6,68,736

10. A perusal of the above figures
shows
that
while
the
electricity
consumption has clearly been going up, the
production has gone down from 402 MT to
314 MT. Ordinarily, when electricity
consumption
goes
up,
a
reasonable
inference can be drawn that the production
will also have gone up. If the electricity
consumption is going up but the production
is seen to be going down, a reasonable
inference can, prima facie, be drawn that
there was suppression of production and
consequently suppression of sales in order
to avoid sales tax.

11. ....

12. In view of the above, we agree with
the High Court that excessive power
consumption, prima facie, establishes the
assessee's
intention
to
suppress
the
production and the turn over."

18. Reliance placed by the Assessee
counsel on the report of M/s Flour Mill
Engineers
and
Consultants
dated
20.06.2010 before the first Appellate
Authority wherein it was stated that an
inspection of the factory was done on
10.06.2010
and
it
was
found
that
machinery was old and there was fault in
the electricity being supplied to the
factory. This report is of the year 2010
filed before the first Appellate Authority
and that too by a private person. The
report cannot be taken into account as the
relevant
period
is
01.01.2008
to
31.03.2008. Subsequent report after two
and a half years cannot be taken into
account and the findings recorded by the
first Appellate Authority relying upon
said report was rightly negated by the
Tribunal.

19. Thus, in the light of the constant
view of this Court and Hon'ble Apex
Court, it is apparent that the Assessing
Authority had rightly rejected the books
of accounts on the basis of high
consumption of electricity after dealing
with each aspect of the case and
recording a categorical finding as to the
production of flour made from the wheat
during the relevant period of assessment
year in question. The earlier Division
Bench and coordinate Bench of this Court
had only held that rejection of books of
accounts cannot be done on the basis of
high consumption when there was no
material on record. However, in the
present case, the Assessing Authority has
demonstrated how the electricity was
consumed by the Assessee during the
period 01.04.2007 to 31.12.2007 and
01.01.2008 to 31.03.2008 when the
production did not increase but only the
consumption was high.

20.

In
M/s
Melton
India,
Gautambudh Nagar (supra), the Apex
Court had held that where the production
does
not
increase
with
the
high
consumption of electricity, inference is
drawn as to the evasion of sales tax by the
Assessee by not disclosing the sale.

21. Considering the facts and
circumstances of the case, I find that no
ground for interference is made out in the
order of Tribunal. Both the revisions lack
merits and are hereby dismissed.

22. The question of law stands
answered in favour of the Revenue and
against the Assessee.
1 All. Museebat @ Rahat Ali Vs. State of U.P. & Ors.
1301
----------
(2023) 1 ILRA 1301
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 10.01.2023

BEFORE

THE HON'BLE SHAMIM AHMED, J.

Application U/S 482 No. 103 of 2023

Museebat @ Rahat Ali ...Applicant
Versus
State of U.P. & Ors. ...Opposite Parties

Counsel for the Applicant:
Gopesh Tripathi

Counsel for the Opposite Parties:
G.A.

Criminal Law - Code of Criminal Procedure,
1973 - Section 111-Prayer for quashing a notice
issued under Section 110(G) Cr.P.C (citing the
possibility of a breach of peace) - Notice required
the applicant to furnish a personal bond of Rs. 2
lac and two sureties of the same amount -
Challenges the legality of the notice as it lacks with
the requirements of Section 111 Cr.P.C - finds the
impugned notice to be deficient in substance and
lacking a judicious application.

Notice is quashed. (E-9)

List of Cases cited:

Baleshwar S/o Ram Saran & ors. Vs St. of U.P.,
2008 (63) ACC 374

(Delivered by Hon'ble Shamim Ahmed, J.)

1. Heard Sri Gopesh Tripathi, learned
counsel for applicant as well as Sri Diwaker
Singh, learned A.G.A. for State and perused
the record.

2. This application under section 482
Cr.P.C. has been filed to quash the Notice
under Section 110 (g) Cr.P.C. dated
20.12.2022,
Police
Station
Shivgarh,
Raibareli,
issued
by
Sub
Divisional
Magistrate, Mahrajganj, Raibareli and
proceedings arising therefrom.

3. Record shows that Police of Police
Station Shivgarh submitted a challan report
dated
30.11.2022
against
applicant
Museebat @ Rahat Ali, whereby he has
been challaned under sections 110 (G)
Cr.P.C. It is alleged in aforesaid report that
there is possibility of breach of peace. In
order to prevent same, aforesaid person has
been callaned under section 110 (G) Cr.P.C.
In the interest of Justice, requisite amount
of personal bond and surety bond be
obtained from above named persons.

4. After
aforesaid
report
was
forwarded by S.H.O. P.S. Shivgarh, Sub
Divisional
Magistrate,
Mahrajganj,
Raibareli issued notice dated 20.12.2022
under sections 110 (G) Cr.P.C asking
applicant to furnish personal bond of Rs. 2
lac and two sureties of the same amount.

5. Feeling aggrieved by aforesaid
notice dated 20.12.2022, applicant namely
Museebat @ Rahat Ali has now approached
this Court by means of present application
under section 482 Cr.P.C.

6. Learned counsel for applicant
contends that notice dated 20.12.2022,
issued by Sub Divisional Magistrate,
Mahrajganj, Raibareli is patently illegal.
Same does not contain full particulars nor
the full substance of Police Report, on the
basis of which aforesaid notice has been
issued. It is thus urged that impugned
notice does not fulfill the requirement of
Section 111 Cr.P.C. In support of above,
reliance is placed upon Baleshwar S/o
Ram Saran and Others Vs. State of U.P.,