# Vinay Rai v. State of U.P. & Ors

- **Citation:** (2023) 1 ILRA 1293
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-01-02
- **Case number:** Writ (Tax) No. 167 of 2021
- **Bench:** Rajesh Bindal, C.J. Hon'Be J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/vinay-rai-v-state-of-u-p-ors-49585
- **Pages:** 4

## Headnote

Tax-Petitioner seeks quashing of an order -
Rejecting the request of the tax deposited - The
petitioner, not a director or shareholder in three
companies subjected to tax demands, deposited
₹ one crore as a precondition for hearing an
appeal - Tribunal allowed the appeal and
sought a refund - The impugned order rejected
the refund claim prompting the present writ
petition - Despite a delay of 1766 days, the
respondent's challenge to the Tribunal's order
was dismissed - Court noticing the delay directs
to refund with interest. (E-9)

## Text

1 All. Vinay Rai Vs. State of U.P. & Ors.
1293
the date and time on which hearing will
take place. Since in the instant case, the
show cause notice does not mention the
date and time appointed for personal
hearing, therefore, in our opinion, the
proceedings held in pursuance thereof are
rendered illegal, void and a nullity in the
eyes of law. Resultantly, the impugned
order is hereby quashed.

9. The petition succeeds and is
allowed to the above extent with liberty to
the Revenue to proceed in accordance with
law.
----------
(2023) 1 ILRA 1293
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.01.2023

BEFORE

THE HON'BLE RAJESH BINDAL, C.J.
THE HON'BE J.J. MUNIR, J.

Writ (Tax) No. 167 of 2021

Vinay Rai ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Nishant Mishra, Sri Tanmay Sadh, Sri
Yashonidhi Shukla

Counsel for the Respondents:
Sri Nimai Dass, A.C.S.C.
Tax-Petitioner seeks quashing of an order -
Rejecting the request of the tax deposited - The
petitioner, not a director or shareholder in three
companies subjected to tax demands, deposited
₹ one crore as a precondition for hearing an
appeal - Tribunal allowed the appeal and
sought a refund - The impugned order rejected
the refund claim prompting the present writ
petition - Despite a delay of 1766 days, the
respondent's challenge to the Tribunal's order
was dismissed - Court noticing the delay directs
to refund with interest. (E-9)
(Delivered by Hon'ble Rajesh Bindal, C.J.
&
Hon'ble J.J. Munir, J.)

1. Present writ petition has been filed
praying for quashing of the order dated
September 17, 2020 passed by respondent
No. 3 vide which the prayer of the
petitioner for issue of refund of the amount
of tax deposited by the petitioner, in terms
of the order dated October 1, 2007 passed
by a Division Bench of this Court in Civil
Misc. Writ Petition No. 1260 of 2007 titled
as, Sri Anil Rai v. State of U.P. & others,
was rejected. Vide aforesaid order, the
petitioner was relegated to avail of his
statutory remedy and as a precondition for
hearing of appeal, an amount of ₹ one crore
was directed to be deposited.

2. As pleaded in the writ petition, in
the year 2003 ex parte orders were passed
under the U.P. Trade Tax Act, 1948 (for
short, ' the Act of 1948') for the assessment
years 1999-2000 and 2000-2001 against
three different companies namely, M/s
Shristi Agencies (Pvt.) Limited, M/s
Rudder Steels (Pvt.) Ltd. and M/s Shivalik
Ispat and Fabricators Private Ltd., raising a
demand
of
₹
20,80,00,000/-,
₹
6,08,40,000/-
and
₹
6,44,00,000/-,
respectively. The petitioner was not a
director or the shareholder in the aforesaid
three companies. The recovery was sought
to be made from M/s Usha India Ltd. and
M/s Malvika Steel Pvt. Ltd. being debtor of
aforesaid
companies.
In
the
later
companies, the petitioner was a director
and shareholder.

3. The recovery notices issued to the
petitioner in individual capacity was
1294 INDIAN LAW REPORTS ALLAHABAD SERIES
challenged by him by filing a writ petition
being Writ Tax No. 782 of 2007. The same
was disposed of in terms of detailed order
passed in Civil Misc. Writ Petition No.
1260 of 2007 titled as 'Sri Anil Rai v. State
of U.P. & others'. The petitioner was
relegated to avail of his remedy of appeal
and as a condition for hearing the appeal on
merits, a sum of ₹ one crore was directed to
be deposited vide order dated October 1,
2007. The petitioner as well as his brother
preferred appeals before the Commercial
Tax Tribunal, Ghaziabad. The same were
allowed vide order dated June 9, 2016. The
impugned demand raised against the
petitioner was quashed and matter was
remitted back to the Assessing Officer to
continue with the proceedings initiated
under Section 8(3) of the Act of 1948 for
recovery of the trade tax dues, outstanding
against M/s Shristi Agencies (Pvt.) Limited,
M/s Rudder Steels (Pvt.) Ltd. and M/s
Shivalik Ispat and Fabricators Private Ltd.
from M/s Usha India Ltd. and M/s Malvika
Steel Pvt. Ltd.

4. After passing of the aforesaid order
by the Tribunal, the petitioner filed an
application for refund of the amount on
August 25, 2017, which was followed by a
reminder dated July 23, 2020. It was on the
aforesaid application that the impugned
order dated September 17, 2020 was passed
by respondent no. 3, stating that the
Tribunal in its order having not directed for
refund of the amount deposited by the
petitioner after acceptance of the appeal
filed by him, the petitioner should approach
the Tribunal for clarification of the order.
The application for refund was rejected.

5. After filing of the present writ
petition, the respondents challenged the
order passed by the Tribunal by filing
Sales/Trade Tax Revision Defective No. 28
of 2021 after a delay of 1766 days. The
same was dismissed by this Court vide
order dated September 2, 2021, as there
was no satisfactory explanation available
for condonation of inordinate delay of 1766
days in filing the revision. Despite this
development, the petitioner has not been
refunded the amount deposited in terms of
the direction issued by this Court for
hearing of the appeal by the Tribunal.

6. The prayer is for a direction to the
respondents to refund the amount deposited
by the petitioner. The prayer is also for
grant of interest in terms of Section 29(2)
of the Act of 1948.

7. Learned counsel for the State fairly
submitted that after setting aside of the
order raising demand against the petitioner
by the Tribunal vide order dated June 9,
2016, the petitioner would be entitled to
refund of the amount deposited by him in
terms of the direction issued by this Court
for hearing of the appeal on merits.

8. Though after hearing learned
counsel for the respondents, we could have
disposed of the writ petition simply with a
direction to the respondents to refund the
amount deposited by the petitioner as a
precondition for hearing of the appeal in
terms of the direction issued by this Court
but, certain facts need to be noticed, which
clearly establish high-handedness on the
part of the officers of the Trade Tax
Department
in
dealing
with
the
assessees/persons, who are treated to be in
default for payment of any amount due to
the department.

9. The facts as have been noticed
briefly above, certain amount of tax due
from three companies namely, M/s Shristi
Agencies (Pvt.) Limited, M/s Rudder Steels
1 All. Vinay Rai Vs. State of U.P. & Ors.
1295
(Pvt.) Ltd. and M/s Shivalik Ispat and
Fabricators Private Ltd., was sought to be
recovered from M/s Usha India Ltd. and
M/s Malvika Steel Pvt. Ltd. in which the
petitioner along with his brothers Anil Rai
were the shareholders and directo₹ M/s
Usha India Ltd. and M/s Malvika Steel Pvt.
Ltd. are said to be debtors of the
companies, from whom amount of tax is
due. The amount was sought to be
recovered from them in their individual
capacity. The order was challenged by them
by filing writ petitions before this Court.
They were relegated to avail of their
remedy of appeal before the Tribunal,
which was to be heard on merits, subject to
deposit of ₹ one crore by both the brothe₹
Undisputedly, the petitioner deposited ₹
one crore. Both the appeals preferred by the
petitioner and his brother were allowed by
the Tribunal vide order dated June 9, 2016
and demand against them was quashed with
liberty to the Department to deal with the
recovery
from
the
companies.
An
application for refund was filed by the
petitioner on August 25, 2017, which
remained pending. A reminder was sent on
July 23, 2020 on which the order dated
September 17, 2020 was passed, rejecting
the claim for refund on the flimsy ground
that the Tribunal while accepting the appeal
had not directed for refund of the amount.

10. We are not required to deal with
that order on merits for the reason that
learned counsel for the State has fairly
submitted that after the order of demand
was set aside by the Tribunal, the petitioner
will be entitled to refund of the amount
deposited as pre-condition for hearing of
appeal on merits. Still further, what is
required to be noticed is that the order of
the Tribunal dated September 17, 2020 was
not
challenged
by
the
Department
immediately when the same was passed.
But, when the petitioner filed the present
writ petition in this Court, impugning the
order rejecting his prayer for refund,
Sales/Trade Tax Revision Defective No. 28
of 2021 was filed, after a delay of 1766
days.
The
same
was
dismissed
on
September 2, 2021 as the delay could not
be satisfactorily explained .

11. More than a year has elapsed
thereafter, but the refund has still not been
given to the petitioner. Still further, a
counter affidavit has been filed by
respondent Nos. 3 and 4 in this Court on
September 19, 2021, which is silent on the
fact regarding challenge to the order passed
by the Tribunal.

12. There is a specific averment made
in paragraph No. 19 of the writ petition by
the petitioner that the order passed by the
Tribunal on June 9, 2016 was not
challenged by the respondents and the same
attained finality. To this, in the counter
affidavit filed, there is no response, except
a bald statement that the contents are not
admitted. It is not mentioned that the
aforesaid order was challenged before this
Court by filing Sales/Trade Tax Revision
Defective No. 28 of 2021, which already
stood
dismissed
vide
order
dated
September 2, 2021 before filing of the
counter affidavit dated September 19, 2021.
To that extent, there is concealment of facts
in the counter affidavit filed by the
respondents. From the facts of the present
case, what is established is that retention of
the amount deposited by the petitioner as a
precondition for hearing of appeal on
merits would be a direct violation of Article
265 of the Constitution of India, as the
State has no authority to retain the amount
after the demand raised was set aside by the
Tribunal and the revision against the same
was dismissed by this Court.
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