STATE OF UTTAR PRADESH & ORS. versus M/S. VAM ORGANIC CHEMICALS LIMITED

Citation: [2010] 4 S.C.R. 1 · Decided: 26-02-2010 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Disposed off

Judgment (excerpt)

(2010] 4 S.C.R. 1 
STATE OF UTTAR PRADESH & ORS. 
v. 
MIS. VAM ORGANIC CHEMICALS LIMITED 
(Civil Appeal No. 1929 of 2004) 
FEBRUARY 26, 2010 
[S.H. KAPADIA AND AFTAB ALAM, JJ.] 
U.P. Trade Tax Act, 1948: 
A 
B 
ss. 4-8(2) and (4)(ii) proviso -
Amendment of c 
Recognition Certificate - Effective date - Writ petitions 
challenging show-cause notices issued to assessees for 
deletion of high speed diesel oil (HSD) from Recognition 
Certificates, allowed by High Court - HELD: High Court, 
without examining the nature of the power of Assessing D 
Authority u/s 4-B(4)(ii), intervened at the show cause notice 
stage -Assessing Authority is vested with discretionary power 
to amend Recognition Certificate for which it has to give the 
assessee a reasonable opportunity of being heard - It is for 
this reason that the show cause notice was issued - However, 
the stand of Revenue that it seeks to delete HSD on the E 
ground of mistake, is not tenable - 'Rectification' is different 
from 'amendment' - The word 'rectification' does not find place 
in the proviso - When a Recognition Certificate is issued to 
a dealer, he is given the benefit of concessional rate which 
cannot be withdrawn retrospectively - Matters remitted to F 
Assessing Authority to treat the show cause notices as issued 
for purpose of amending the Recognition Certificate and 
decide the same in accordance with the procedure laid down 
in s.4-B(4)(ii) - Assessing Authority would also decide de 
novo the cases in which it has passed adjudication orders, and G 
if an order amending Recognition Certificate is issued, the 
same will operate only from the date of issuance of show 
cause notice - Central Sales Tax Act, 1956 - s. 7. 
1 
H 
2 
SUPREME COURT REPORTS 
[2010] 4 S.C.R. 
A 
The respondents, manufacturers of notified 
chemicals, were given central registration u/s 7 of the 
Central Sales Tax Act, 1956 and also Recognition 
Certificates u/s 4-B of the Uttar Pradesh Trade Tax Act, 
1948 for purchase of high speed diesel oil (HSD) at 
B concessional rates. However, pursuant to the circular 
dated 20.6.2000 issued by the Additional Commissioner, 
Trade Tax, Meerut, U.P., notices were issued to the 
respondents for deletion of HSD from their Recognition 
Certificates. The writ petitions of the respondents 
c challenging the show cause notices were allowed by the 
High Court. 
In the instant appeals filed by the Revenue, the 
question for determination by the Court was: Whether the 
Department was right in issuing notices calling upon the 
·o 
. 
Companies to show-cause as to why HSD should not be 
deleted as an item from their respective Recognition 
Certificates issued u/s 4-8(2) of the Uttar Pradesh Trade 
Tax Act, 1948? 
E 
Disposing of the appeals, the Court 
HELD: 1.1. The High Court, in the ~nstant case, has 
not examined the nature of the power exercised by the 
Assessing Authority u/s 4-B(4)(ii) of the Uttar Pradesh 
Trade Tax Act, 1948, and intervened at the show-cause 
F notice stage. Power to grant exemption from payment of 
duty or to pay concessional duty is expressly conferred 
on the Assessing Authority. It is a case of conditional 
exemption. Under s.4-B(4)(ii) of 1948 Act, the Assessing 
Authority is vested with discretionary power to amend a 
G Recognition Certificate granted under sub-section (2) of 
s. 4-B of 1948 Act either on its own motion or on the 
application of the dealer, for any sufficient reason. This 
pre-condition of "sufficiency of reasons" requires a 
show- cause notice to be given to the dealer in whose 
H favour a Recognition Certificate exists, calling upon him 
STATE OF UTTAR PRADESH & ORS. v. VAM 
3 
ORGANIC CHEMICALS LIMITED 
to show-cause as to why an item should not be deleted 
A 
in a given case. Further, under the proviso to s.4-8(4)(ii) 
of 1948 Act, the words used are "no recognition 
certificate shall be cancelled or amended by Assessing 
Authority of its own motion except after reasonable 
opportunity of being heard". Therefore, each case needs 
B 
to be examined by the Assessing Authority if it seeks to 
exercise its authority to delete an item from a Recognition 
Certificate. Same is the position if the Assessing Authority 
seeks to cancel a Recognition Certificate for the reasons 
indicated in the said sub-section. Not only that, while c 
amending or cancelling a Recognition Certificate, the 
Assessing Authority is also required to give reasons for 
amending or cancelling the existing Recognition 
Certificate or

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