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VAT and Sales Tax - Supreme Court - Case Laws
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2022 (3) TMI 270
Levy of Excise Duty - weak spirit, which was more than 2% allowable wastage - industrial alcohol not fit for human consumption - loss arising during the process of re-distillation in the State of Orissa - HELD THAT:- It is not in dispute that the license, which was granted to the respondent-Company, is for the purpose of manufacturing, bottling, blending and reduction of IMFL. It is also not in dispute that as required under the license, the respondent-Company has installed one ENA column to rectify the rectified spirit to be used in the manufacturing of IMFL. It is also not in dispute that the sample of wastage generated in the manufacturing process was sent for examination to the State Drugs Testing and Research Laboratory, Orissa - It is thus clear that the wastage generated has been found to be unfit and unsafe for potable purpose.
The Constitution Bench of this Court in the case of SYNTHETICS & CHEMICALS LTD., ETC. VERSUS STATE OF UP. [1989 (10) TMI 214 - SUPREME COURT] was considering the issue, as to whether the States are entitled to levy excise duty in respect of industrial alcohol. Different legislations in the different States dealing with such a power of the State Government came up for consideration before the Constitution Bench of this Court in the said case. The Constitution Bench observed thus Constitution makers distributed the term ‘alcohol liquor’ into two heads, viz., (a) for human consumption; and (b) other than for human consumption. It has been held that the alcoholic liquors, which are for human consumption, are put in Entry 51 List II authorizing the State Legislature to levy tax on them, whereas alcoholic liquors other than for human consumption have been left to the Central Legislature under Entry 84 for levy of duty of excise. It has been held that what has been excluded in Entry 84 has specifically been put within the authority of the State for purposes of taxation. The Constitution Bench clearly held that the State Legislature had no authority to levy duty or tax on alcohol, which is not for human consumption as that could be levied only by the Centre.
A three Judge Bench of this Court in the case of STATE OF UP. & ORS. VERSUS M/S. MODI DISTILLERY ETC. AND M/S. AJUDHIA DISTILLERY [1995 (8) TMI 300 - SUPREME COURT] was considering the power of the State Government to levy excise duty on wastage of liquor after distillation. Following the judgment of the Constitution Bench of this Court in the case of Synthetics and Chemicals Ltd., this Court observed that this Court held that the State was only empowered to levy excise duty on alcoholic liquor for human consumption. This Court held that the State has no power to levy excise duty on wastage of liquor after distillation.
Perusal of Section 27(1) of the said Act would reveal that the State’s power to impose duty on import, export, transport and manufacture is only in respect of any excisable articles imported, exported, transported and manufactured. ‘Excisable article’ has been defined to be any alcoholic liquor for human consumption or any intoxicating drug. It is thus clear that even under the relevant statute, the State has power to levy excise duty only in respect of the alcoholic liquor for human consumption.
There are no reason to interfere with the impugned judgment and order. The appeals, therefore, are found to be without merit and as such, dismissed.
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2022 (3) TMI 226
Maintainability of petition - Input tax credit - juristic person - HELD THAT:- The writ petition preferred by Tata Steel Ltd., which is a juristic person, could not have been dismissed as not maintainable when it had challenged the denial of input tax credit to the unit at Naomundi, in respect of the purchases made and utilised in the said unit.
Interpretation of statue - Clause (ix) to sub-section (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005 - HELD THAT:- The period involved in the present appeal are the financial years 2006-07 and 2007-08. These aspects have to be considered. Learned senior counsel for the appellant has stated that the appellant may consider challenging these amendments and notification, if required and necessary.
The impugned order interpreting Clause (ix) to sub-section (8) of Section 18 of the Jharkhand Value Added Tax Act, 2005, as it existed before the Jharkhand Value Added Tax (Amendment) Ordinance, 2011, with an order of remand to the High Court for a fresh decision, is set aside - appeal allowed.
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2022 (2) TMI 1111
Interpretation of statute - Entry 44 of Part B of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006 - Cotton Hank Yarn - Division Bench was of the view that no external aid for interpretation was called for when the language of the Entry in question was clear in itself - HELD THAT:- When the Entry in question specifically provides for exemption to the goods described as “Hank Yarn” without any ambiguity or qualification, its import cannot be restricted by describing it as being available only for the hank form of one raw material like cotton nor could it be restricted with reference to its user industry.
That being the position, reference to the decision in K.P. Varghese (supraKP VARGHESE VERSUS INCOME-TAX OFFICER, ERNAKULAM, AND ANOTHER [1981 (9) TMI 1 - SUPREME COURT] remains entirely inapposite to the facts of the present case. Therein, this Court was dealing with the interpretation of the language of sub-section (2) of Section 52 of the Income Tax Act, 1961 and it was found that a literal interpretation might not cover several eventualities concerning the value of consideration declared by the assessee in respect of the transfer of a capital asset vis-a-vis its fair market value as on the date of its transfer - the observations in the said decision, based on the rules of interpretation to cull out meaning of a sentence (vide paragraph 5 thereof), do not apply to the question at hand because the Entry in question is clear, direct and unambiguous; and simply reads: “Hank Yarn”.
There are no question of law worth consideration so as to entertain this petition - SLP dismissed.
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2022 (2) TMI 1006
Liability to pay tax under the U.P. Motor Vehicles Taxation Act, 1997 - liability on the financier-in-possession of the transport vehicle or not - financier had extended a loan for the purchase of the transport vehicle and on default in payment of the loan is in possession of the vehicle in question - whether, a financier of a motor vehicle/transport vehicle in respect of which a hire-purchase, lease or hypothecation agreement has been entered, is liable to tax from the date of taking possession of the said vehicle under the said agreements? - HELD THAT:- In respect of a transport vehicle, the tax is to be paid in advance as monthly tax or yearly tax, as the case may be, and only thereafter such vehicle shall be put to use - therefore, before any transport vehicle is put to use or used, the owner is liable to pay the tax in advance and only thereafter the vehicle can be used or operated. The wordings of Section 4(2-A) are very clear that no public service vehicle SHALL BE USED in any public place unless a monthly tax at such rate as may be notified by the State Government is paid in respect thereof. As per Section 9(1)(iv)(a), the tax payable under sub-section (2-A) of Section 4 shall be payable in advance on or before fifteenth day of each month next following. Therefore, the requirement under law is to first pay the tax in advance as provided under Section 9 and thereafter to use the vehicle. In other words, it is ‘pay the tax and use’ and not ‘use and pay the tax’. Therefore, the submission on behalf of the appellant-financier that tax has to be paid at the time of use or thereafter cannot be accepted.
The owner or operator has to first pay the tax in advance and thereafter if the transport vehicle is not used for a continuous period of one month or more since the tax was last paid, he may have to apply for the refund, which may be granted subject to compliance of the necessary requirements as per first proviso to Section 12 and subject to satisfaction of the Taxation Officer that the transport vehicle has not been used for a continuous period of one month or more since the tax was last paid.
The submission on behalf of the petitioner is that many a time, the documents referred to in sub-section (2) of Section 12 are not with the financier/owner and they remain with the registered owner and therefore such a financier/owner may not be able to get the refund under subsection (1) of Section 12 or exemption from payment of tax as per subsection (2) of Section 12 is concerned, on the aforesaid ground, the liability of the owner/financier to pay the tax will not cease. It is for the financier to acquire the documents such as original registration certificate, permit, token etc. from the registered owner at the time of seizure of the vehicle. If, for any reason, the financier/owner is not able to secure the documents, then he has to follow the procedure for getting fresh certificate of registration as provided under Section 51 of the Act, 1988 - before seeking refund under sub-section (1) of Section 12 or before he is exempted from payment of tax under sub-section (2) of Section 12, such an operator / owner has to comply with and fulfill all the conditions, which are mentioned therein.
Appeal dismissed.
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2022 (1) TMI 1013
Exemption from payment of amount of purchase tax - Applicability of original Entry No.255(2) vide F.D.’s Notification dated 05.03.1992, which was issued under Section 49(2) of the Gujarat Sales Tax Act, 1969 - subsequent amended Entry No.255(2) issued vide Notifications dated 14.11.2000 and 16.01.2002 in any way alters or amends the basic requirements/conditions stipulated as per the first notification dated 05.03.1992 - subsequent amended Entry vide Government Notifications dated 14.11.2000 and 16.01.2002 in any way takes away the right of the respondent to avail the exemption under the first/parent Entry No.255(2) issued vide Notification dated 05.03.1992 or not - breach of the declaration filed by the respondent as per Form No.26 - demand of the purchase tax on and after 14.11.2000 was hit by the principle of promissory estoppel - non-application of mind or adjudication - HELD THAT:- Only in a case where the raw materials, processing materials or consumable stores are used by the eligible unit and the eligible unit actually uses the goods purchased within the State of Gujarat as raw materials, processing materials or consumable stores in the manufacture of goods, there shall be exemption from payment of purchase tax/sales tax to the extent provided in the said Entry.
In the present case, it is an admitted position that after furnishing a declaration in Form No.26, the goods - raw materials, processing materials or consumable stores so purchased were to be used by ESL, but the respondent - ESL after purchase of raw materials – Naphtha and Natural Gas and after availing the benefit of exemption from the payment of purchase tax did not himself/itself used the same, but, instead, sold the same to another entity – EPL and the said another entity – EPL used the said raw materials for generating the electricity, which thereafter came to be sold to the respondent - ESL pursuant to the power purchase agreement - the submission on behalf of the respondent that as Naphtha and Natural Gas were transferred to EPL for generating the electricity, which in turn came to be used by the respondent – ESL for manufacture of HRC, and it cannot be said that there is a breach of conditions of original Entry No.255(2) dated 05.03.1992, cannot be accepted.
The original Entry No.255(2) dated 05.03.1992 does not provide that the eligible unit after purchase of the raw materials instead of using the same by itself or himself can transfer/sold to another unit and the another unit can use the said raw materials - the original notification does not at all permit such transfer and use of the raw materials after availing the exemption for use of another unit, who, as such is otherwise not entitled to any exemption as per the incentive policy.
The High Court has committed an error in holding that the respondent did not commit any breach of any of the conditions mentioned in the original Entry No.255(2) dated 05.03.1992 and that the respondent fulfilled all the conditions provided in the said Entry and that there was no breach of any of the conditions provided in the original Entry No.255(2) dated 05.03.1992 - While the exemption notification should be liberally construed, beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise.
In the present case, the intention of the State to provide the incentive under the incentive policy was to give benefit of exemption from payment of purchase tax was to the specific class of industries and, more particularly, as per the list of ‘eligible industries’. Exemption was not available to the industries listed in the ‘ineligible’ industries. It was never the intension of the State Government while framing the incentive policy to grant the benefit of exemption to ‘ineligible industries’ like the power producing industries like the EPL, which as such was put in the list of ‘ineligible’ industries - Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand the scope deviating from the language. There is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification.
Whether the subsequent amended Entries vide notifications dated 14.11.2000 and 16.01.2002 can be said to be clarificatory and/or take away any of the rights under the original Entry No.255(2) dated 05.03.1992 and/or the subsequent notifications modifies/amends the basic conditions for availing the exemption under the original Entry No.255(2) dated 05.03.1992? - HELD THAT:- The eligibility criteria/condition that the eligible unit “shall actually use the goods” remain the same even in the said amended Entry No.255(2) dated 16.01.2002. Therefore, the subsequent notifications/amended Entries cannot be said to be in any way in conflict with the first/parent notification/Entry No.255(2) - Even as per Form No. 26 (Entry No.255), as per the declaration filed by the respondent, being ‘eligible’ unit while purchasing goods for use in manufacturing goods, it was declared that the raw materials so purchased will be used by it in the manufacture of goods for sale. Thus, by not using the raw materials so purchased by it, the respondent – eligible unit – ESL has violated the declaration given in Form No.26. Therefore, the respondent was not entitled to the exemption even under the first/parent notification.
Even the reasoning given by the Tribunal and the High Court that the demand of purchase tax is hit by the principle of promissory estoppel also cannot be accepted. In the present case, first of all, the principle of promissory estoppel to the exemption sought ought not to have been applied at all. Each assessment year/period is independent. Even otherwise, in the facts and circumstances of the case, the principle of promissory estoppel shall not be applicable. In the present case, the respondent – eligible unit as such was not entitled to the exemption even under the first notification as it violated the declaration given in Form No.26 as well as did not comply with and/or fulfilled the eligibility criteria/conditions required to be fulfilled while availing benefit of exemption - the respondent did not actually use the raw materials purchased by him/it and availed the exemption and after availing the exemption sold the said raw materials to ‘ineligible’ unit - EPL and the EPL used the same for manufacture of its goods – generating the electricity, which subsequently again sold to the ESL – eligible unit on payment of sale consideration.
The principle of promissory estoppel shall not be applicable. ESL had furnished wrong and false declarations. In the original notification/entry, it was not provided that even if the raw materials so purchased is not used by itself after availing the exemption, the same can be sold to another entity, which is ‘ineligible’ industry. It did not provide that in such a situation also and despite the fact that raw material is not actually used by the eligible unit, which was required to be used even as per the declaration in Form No.26, such eligible unit shall be entitled to the exemption. No such promise was given - when there was no such promise and/or representation, the demand cannot be said to be hit by the principle of promissory estoppel as observed and held by the Tribunal as well as the High Court in the impugned judgment and order.
The doctrine of promissory estoppel is an equitable remedy and has to be moulded depending on the facts of each case and not straitjacketed into pigeonholes. In other words, there cannot be any hard and fast rule for applying the doctrine of promissory estoppel but the doctrine has to evolve and expand itself so as to do justice between the parties and ensure equity between the parties. In the present case, the principle of promissory estoppel shall not be applicable - the principle of promissory estoppel shall not be applicable contrary to the Statute. Merely because erroneously and/or on misinterpretation, some benefits in the earlier assessment years were wrongly given, cannot be a ground to continue the wrong and to grant the benefit of exemption though not eligible under the exemption notification.
It is held that the respondent -Essar Steel Ltd. – the eligible unit was not entitled to the exemption from payment of purchase tax under the original Entry No.255(2) dated 05.03.1992, firstly, on the ground that it did not fulfill the eligibility criteria/conditions mentioned in the original Entry No.255(2) dated 05.03.1992 and secondly that there was a breach of declaration in Form No.26 furnished by the respondent – eligible unit –Essar Steel Ltd. The orders setting aside the penalty imposed by the Assessing Officer are also hereby quashed and set aside. The order passed by the Assessing Officer levying the demand of purchase tax and imposing the penalty is hereby restored.
Appeal allowed - decided in favor of Revenue.
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2022 (1) TMI 312
Levy of excise duty on the liquor destroyed in fire - Demand raised against the writ petitioner company (respondent herein) towards loss of excise revenue because of destruction of liquor in fire - fire incident that took place in a godown of the distillery of the respondent company - whether demand of excise duty on the liquor lost in fire is authorised by law and has rightly been raised as per the applicable provisions of the Act of 1910, the Excise Manual and the Rules of 1969? - HELD THAT:- A comprehensive look at the relevant provisions of law makes it clear that so far as IMFL is concerned, no provision is made in the Excise Manual for any wastage allowance in relation to the bottled sprit, but, in terms of Rule 7(11) of the Rules of 1969, an allowance up to 1% on the total quantity of spirit stored during a month may be allowed for actual loss in bottling and storage. Any allowance for any wastage or loss beyond the same remains, obviously, impermissible - Rule 7(11) of the Rules of 1969 is required to be taken into account for the legal consequences that so far as the bottled spirit is concerned, the licencee remains responsible for payment of duty on any kind of wastage in excess of 1%. Coupled with this provision, Rule 709 of the Excise Manual makes it clear that the distillery remains responsible for safe custody of the stock of spirit and remains liable to make good any loss of revenue caused to the Government by their negligence.
The demand in question cannot be said to be unauthorised but, its validity would depend on answer to the question as to whether negligence could be imputed on the respondent company in terms of Rule 709 of the Excise Manual.
Whether the fire incident in question had been an event beyond human control and no negligence could be imputed on the respondent company? - HELD THAT:- The fire incident in question had not taken place due to operation of any forces of nature. It has also not been the case that the fire was a result of any mischief by any person. Noticeably, the fire that started around 12:55 p.m. on 10.04.2003 could be brought under control by the firefighters only by 5:00 a.m. on 11.04.2003. When all the relevant factors are cumulatively taken into account, we find it difficult to accept that the fire and the resultant loss had been beyond the control of human agency so as to be termed as inevitable accident. Obviously, the fire had not generated on its own and, with appropriately laid fire proof electrical installations as also firefighting measures, the incident was an avoidable one or at least the loss could have been minimised.
The fault of “negligence” need not always be of active negligence or of gross negligence, but it may also be of an inadvertent negligence or of a passive negligence. It does not require much of discussion to say that the goods in question, being highly inflammable, required extra and excessive care for their safe custody; and any laxity or slackness in that regard was impermissible. To put it differently, what was required for ensuring safe custody of the goods in question was that of heightened safeguard measures with foresight - Even if the present case is taken to be that of inadvertence or of unintentional omission on the part of the respondent company, it would fall within the definition of “negligence” for the purpose of Rule 709 of the Excise Manual.
In the given set of facts and circumstances, we are unable to endorse the approach and views of the High Court, where it had basically proceeded on the premise as if the incident in question was referable to an ‘act of God’. - The criticism of Excise Commissioner’s order dated 11.07.2006 by the High Court, while taking the observations and findings therein being of surmises and conjectures, is also required to be disapproved. What the Excise Commissioner had observed in the order dated 11.07.2006 had been of his inferences, which were deduced out of the facts and circumstances of the case and in true application of the principles of res ipsa loquitur - there are no hesitation in disapproving the order of the High Court and in endorsing the views of the Excise Commissioner in the order dated 11.07.2006.
What would be the effect of the fact that the respondent company had taken insurance coverage only of the value of liquor (and not that of excise duty thereupon) and then, had received the insurance claim towards the value of liquor? - HELD THAT:- Admittedly, the respondent company had taken insurance coverage of the value of liquor and indeed received such value of liquor from the insurer. However, respondent company did not take insurance coverage of the excise duty payable over such value of liquor. The appellants contend that when the distiller has received value of liquor, on the principles of equity and fair play, the corresponding excise duty ought to be made available to them - the liability of the respondent company in this matter is rather fortified from the facts that it had taken insurance coverage of the value of liquor and indeed received such claim from the insurer. Further, failure to insure the risk of excise duty liability cannot extricate the respondent from that liability.
In the scheme of law applicable, when duty of excise is upon the goods and the taxable event is the production or manufacture of the liquor, the liability to pay excise duty had arisen as soon as the liquor was manufactured. Thereafter, when the liquor got destroyed in fire but its value was recovered from the insurer, in our view, these events shall answer to the broad expression “issue of an excisable article for sale from a warehouse” for the purpose of proviso to Section 29(e) of the Act of 1910 - receiving of insurance claim over the value of goods by the respondent related back to the date of fire and the respondent became liable to pay excise duty at the rate which was in force on the date of fire, which would be deemed to be the date of “issue” from the warehouse.
In the facts of the present case, where excise duty became payable on manufacture of liquor, it was obviously expected of the respondent company, as a reasonable and prudent distiller, to take all necessary steps to safeguard not only the liquor and value thereof but also the corresponding interest of the Government, i.e., the excise revenue. The Excise Commissioner had been rather justified in drawing inference that the respondent company, after having secured the value of goods for its purpose, might not have been conscious and alert in taking all the necessary care to guard against any loss to the Government due to any mishap like fire.
The submission, that insurer would not have made payment of insurance claim if there was any negligence on the part of the respondent company, has its own shortcomings. The terms of fire insurance policy have not been placed on record and it cannot be deduced as to what were the terms and conditions of that policy under which insurer had acted in accepting the claim of the respondent company. Secondly, what was not treated as negligence by the insurer for the purpose of insurance claim would not ipso facto become a proposition binding on the appellants as regards loss of revenue because of loss of liquor in fire. Such a contention of the respondent could only be rejected.
The demand raised by the appellants against the respondent company, of excise duty on the liquor lost in fire, is authorised by law and has rightly been raised as per the applicable provisions of the Act of 1910, the Excise Manual and the Rules of 1969. The fire incident in question cannot be said to be that of an event beyond human control and the High Court has been in error in holding that no negligence could be imputed on the respondent company. The fact that the respondent company had taken insurance coverage only of the value of liquor (and not that of excise duty thereupon) and then, had received the insurance claim towards the value of liquor also operates against the respondent company and fortifies the conclusion about negligence of the respondent company.
This appeal deserves to succeed and the writ petition filed by the respondent company deserves to be dismissed.
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2022 (1) TMI 128
Validity of fresh assessment orders - HC quashed the assessment order - Instead of preferring an appeal/appeals before the First Appellate Authority against the fresh assessment orders, the dealers straight way filed writ petitions before the High Court and by impugned judgment and orders, the High Court has allowed the said writ petitions and quashed the fresh assessment orders, solely on the ground that pending suo moto revisional proceedings, the Assessing Officer ought not to have proceeded further with the fresh assessment. - HELD THAT:- Nothing has been observed by the High Court on the merits of the fresh assessment orders. If the fresh assessment orders would have gone against the State, in that case the State would have been the aggrieved party and the State could have raised the objection that pending suo moto revisional proceedings against the order of remand, the Assessing Officer ought not to have proceeded further with the fresh assessments. However, in the present case the fresh assessments have gone against the respective dealers. Therefore, as such the respective dealers were required to prefer the appeals before the First Appellate Authority against the fresh assessment orders.
The judgment and orders passed by the High Court quashing and setting aside the fresh assessment orders in the writ petitions under Article 226 of the Constitution of India are unsustainable - Appeal allowed - decided in favor of appellant.
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2021 (12) TMI 670
Suit for recovery - mortgage transactions - defence of the respondent was that there was no relationship of mortgagor and mortgagee between the parties but that the relationship was as landlord and tenant - whether the alleged bills forming the claim in the suits have been raised on the basis of the fictitious and fraudulent transactions? - HELD THAT:- The respondents have admitted that no sales tax is payable by a dealer to a dealer. By necessary implication, the respondents are admitting the appellant to be a dealer as also the respondents to be dealer under the Delhi Sales Tax Act, 1975. It is only on account of sales made by a dealer to a dealer that the sales tax is not be payable as the incidence of payment of tax would be when the goods are sold to a consumer. The respondents as wholesaler, were getting the benefit of trade discount, which is an agreed term of sale.
The witness examined by respondent no.1 in his cross examination admitted his signature or that of the representative of company on invoices, debit notes and on ST-1 Form. The respondent had led no evidence in respect of fraud or duress apart from self-serving statement. The consignment of goods was sent from the month of November 1985 to January 1986. The respondent had signed large number of documents during this period. However, no complaint was made to any person or authority or even to the plaintiff. It is a denial of receipt of goods without any basis raised only in the written statement filed. Such stand is wholly bereft of any truth and is thus rejected.
The debit notes stamped and signed by the respondents were in respect of trade discount on the wholesale price mentioned in the invoice. Having accepted the trade discount, which is evident from the stamp and signatures not only on the debit notes but also on the invoice as well as on ST-1 Form, shows that the goods were actually lifted by the respondents for which payment has not been made. The respondents have taken up wholly untenable ground that the documents were signed under duress - The High Court in the appeal has gravely erred in setting aside the reasoned order of the learned Single Bench on the grounds which were not even raised by the respondents.
The suit is decreed for recovery of ₹ 96,41,765.31 and future interest on the principal sum of ₹ 71,82,266/- @9% p.a. from the date of filing of the suit till realisation - Appeal allowed.
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2021 (12) TMI 477
Maintainability of appeal - whether the amount deposited under protest prior to an order of assessment can be adjusted against the mandatory pre-deposit required for filing an appeal? - Section 26(6A) of the Maharashtra Value Added Tax Act 2002 - HELD THAT:- Under the provisions of Section 26(6A), the aggregate of the amounts stipulated in the sub-clauses of the provision has to be deposited and proof of payment is required to be produced together with the filing of the appeal. Both clauses (b) and (c) employ the expression “an amount equal to ten per cent of the amount of tax disputed by the appellant”. The entirety of the undisputed amount has to be deposited and 10 per cent of the disputed amount of tax is required to be deposited by the appellant. In the present case, the appellant disputes the entirety of the tax demand. Consequently, on the plain language of the statute, 10 per cent of the entire disputed tax liability would have to be deposited in pursuance of Section 26(6A). The amount which has been deposited by the appellant anterior to the order of assessment cannot be excluded from consideration, in the absence of statutory language to that effect. A taxing statute must be construed strictly and literally. There is no room for intendment. If the legislature intended that the protest payment should not be set off as the deposit amount, then a provision would have to be made to the effect that 10 per cent of the amount of tax in arrears is required to be deposited which is not the case.
The High Court, while rejecting the petition, placed reliance on the fact that there has to be a proof of payment of the aggregate of the amounts, as set out in clauses (a) to (d) of Section 26(6A). The second reason which weighed with the High Court, is that any payment, which has been made albeit under protest, will be adjusted against the total liability and demand to follow. Neither of these considerations can affect the interpretation of the plain language of the words which have been used by the legislature in Section 26(6A) - There is no reason why the amount which was paid under protest, should not be taken into consideration. It is common ground that if that amount is taken into account, the provisions of the statute were duly complied with.
The rejection of the appeal was not in order and the appeal would have to be restored to the file of the appellate authority, subject to due verification that 10 per cent of the amount of tax disputed, as interpreted by the terms of this judgment, has been duly deposited by the appellant.
The appeal shall stand restored to the file of the appellate authority.
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2021 (5) TMI 933
Classification of goods - textile made ups - whether the commodity which is described as an “embroidered ladies suit”, which the respondent claims to be unstitched, would fall within the description of a ‘textile’ under Entry 21 of Schedule I (as the respondent asserts) or under Entry 16 of Schedule II which is “other textile made ups” and the residuary entry in Schedule V? - UP VAT Act, 2008 - HELD THAT:- Firstly, the expression in Entry 16 of Schedule II is “other textile made ups”. A textile made up is an article which is manufactured or stitched from any type of cloth. In the present case, going by the case of the respondent, the product is unstitched because the ultimate work of stitching the salwar kameez is yet to be performed and is not carried out by the respondent. In the circumstances, the product can certainly not be called as a textile made up. Secondly, the entry “other textile made ups” is not a residuary entry for Schedule II, but is used in conjunction with the expression “bedsheets and pillow covers”. The expression “other textile made ups” must be read ejusdem generis with the articles which precede it and should hence comprehend goods of the same class and description. The general entry “other textile made ups” must receive a meaning and connotation bearing in mind the preceding items of Entry 16. Hence, it is not possible to accept the view of the first appellate authority that the product falls within the purview of Entry 16 of Schedule II.
The product would fall for classification under Serial 1 of Schedule V which is a residuary entry which covers all goods except those which are mentioned and described in Schedules I, II, III and IV - the judgment of the Tribunal as well as of the first appellate authority would have to be set aside.
Appeal allowed.
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2021 (3) TMI 1184
Refusal to issue Form-C - natural gas purchased by petiitoner in the course of inter- state trade or commerce and used by it for the generation of electricity - whether after the amendment of the CST Act, the petitioner is entitled to be issued ‘C' Forms in respect of the natural gas purchased by it in the course of inter-state sales and used by it for the generation of electricity? - HELD THAT:- Considering the consistent view of nine High Courts, including dismissal of special leave petitions by different Bench of this Court, and being satisfied about the exposition on the matters in issue by the High Court of Madras vide impugned judgment and order being a possible view, we decline to interfere in these special leave petitions.
Notably, after the decision of Punjab and Haryana High Court even the Union of India has chosen to act upon the said decision by issuing Office Memorandum dated 1st November, 2018 and directing all the States/Union Territories to follow the view taken by the Punjab and Haryana High Court.
SLP dismissed.
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2021 (3) TMI 93
Exemption from Building Tax - residential accommodations for nuns - hostel accommodations which are attached to various educational institutions - Section 3(1)(b) of the Kerala Building Tax Act, 1975 - HELD THAT:- The object for exempting buildings which are used principally for religious, charitable or educational purposes would be for core religious, charitable or educational activity as well as purposes directly connected with religious activity. One example will suffice to show the difference between a purpose that is directly connected with religious or educational activity and a purpose which is only indirectly connected with such activity.
Take a case where the neighbouring building to the convent is let out on rent to any member of the public, and the rent is then utilised only for core religious activity. Can it be said that the letting out at market rent would be connected with religious activity because the rental that is received is ploughed back only into religious activity? Letting out a building for a commercial purpose would lose any rational connection with religious activity. The indirect connection with religious activity being the profits which are ploughed back into religious activity would obviously not suffice to exempt such a building. But if on the other hand, nuns are living in a neighbouring building to a convent only so that they may receive religious instruction there, or if students are living in a hostel close to the school or college in which they are imparted instruction, it is obvious that the purpose of such residence is not to earn profit but residence that is integrally connected with religious or educational activity.
A reading of the other provisions of the Act strengthens the aforesaid conclusion. “Residential building” is defined separately from “building” in Section 2(l). A “residential building” means a building or any other structure or part thereof built exclusively for residential purpose. It is important to note that “residential building” is not the subject matter of exemption under Section 3 of the Act. Quite the contrary is to be found in Section 5A of the Act, which starts with a non-obstante clause, and which states that a luxury tax is to be charged on all residential buildings having a plinth area of 278.7 square meters and which have been completed on or after 1.4.1999. If we were to accept the contention of the State, buildings in which nuns are housed and students are accommodated in hostels which have been completed after 1.4.1999 and which have a plinth area of 278.7 square meters would be liable to pay luxury tax as these buildings would now no longer be buildings used principally for religious or educational purposes, but would be residential buildings used exclusively for residential purposes - However, there is another line of authority which states that even in tax statutes, an exemption provision should be liberally construed in accordance with the object sought to be achieved if such provision is to grant incentive for promoting economic growth or otherwise has some beneficial reason behind it.
It is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted.
Appeal dismissed.
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2021 (2) TMI 48
Levy of Entry Tax - Respondent was a Casual Trader - time limitation for passing an Assessment Order - HELD THAT:- Under Section 2(ccc) of the Rajasthan Sales Tax Act, 1994 “Casual Trader” means a person who has, whether as principal, agent or in any capacity, occasional transaction of business nature involving the buying, selling, supply or distribution of such goods as may be specified by the State Government by notification in the official gazette whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration - Sections 10A and 10B of the Rajasthan Sales Tax Act pertain to assessment and the time limit for assessment in the case of a Casual Trader. Section 10A(1) read with Section 10A(2) of the Rajasthan Sales Tax Act, 1954 provides that every “Casual Trader”, on completion of a transaction of sale or purchase, for which he is liable to pay tax, shall make a report to the Assessing Officer or to the Officer-in-charge of a Check Post, of the sale or purchase price, tax payable thereon, etc. and deposit the tax with such officer. Subsection (3) of Section 10 enables the Assessing Officer to assess the tax payable by a “Casual Trader” on his failure to make a report.
In the case of a “Casual Trader”, the time limit for assessment is one year from the date of making the report, and if no report is made, within two years from the date of the transaction. The date of transaction in this case is 26.12.2009. The question is whether assessment was barred upon expiry of two years from the date of transaction, and/or in other words after 25/26.12.2011 - The Appellate Authority, the Rajasthan Tax Board and the High Court have concurred in arriving at the finding that the assessment of the Respondent was barred by limitation as the Respondent was a “Casual Trader”. A perusal of the definition of “Casual Trader” makes it amply clear that a person with occasional transactions of buying/selling are to be treated as casual traders, for whom a shorter time limit for assessment has been imposed under Section 10B(iii) read with Section 10A of the Rajasthan Sales Tax Act 1954. The Legislature could not, possibly, have intended that a person making 2 or 3 transactions should be treated as a “Casual Trader”, but a person making only one transaction should be treated at par with regular traders.
It is well settled that in construing a statutory provision, words in the singular are to include the plural and vice versa, unless repugnant to the context in which the expression has been used, as provided in Section 13(2) of the General Clauses Act, 1897 and provisions identical thereto in State enactments pertaining to General Clauses.
SLP dismissed.
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2021 (1) TMI 501
Levy of CST - Benefit of Concessional rate of tax - sales in the course of import or inter-State sales - grant of time to the appellant to produce the prescribed C-Forms to the assessing authority - whether the sales in question took place in the course of the import of the goods into the territory of India and qualify for exemption under Section 5(2) of the CST Act?
HELD THAT:- The basic principles for determining as to when a sale or purchase of goods takes place in the course of import or export are contained in Section 5 of the CST Act. As per sub-section (1) of Section 5, a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. Under sub-section (2), a sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
Having expounded on the legal position, the Court examined the facts of the case and held that the case fell under the fourth principle aforesaid when the petitioner, pursuant to the earlier contract with the Government, delivered the shipping documents including the bill of lading to the Government against payment when the goods were on high seas. Hence, it was held that the sales in question took place in the course of imports of goods into India. The Court also scrutinized the terms of contract to ascertain whether they disclosed any intention of the parties that notwithstanding the delivery of bills of lading against payment, the property in the goods should not pass to the Government and held, after scrutiny of all the terms of contract that they did not indicate any such intention. Though the scrutiny and analysis of the terms of contract relates to the facts of that case only but worthwhile it would be to reproduce the same to indicate that ultimately, on the facts, the Court found that the sale took place in the course of import.
It is but apparent that that while bringing anything into India from a place outside India is generally regarded as “import” and the imported goods are those goods which are brought into India from a place outside but, when the goods are cleared for home consumption, they are no longer imported goods for the purpose of the Customs Act. Significantly, in the process of importation, the importer, in relation to any goods, includes any owner or any other person holding himself to be the importer but, only between the time of their importation and their clearance for home consumption - the High Court has rightly said that this definition of importer cannot be used to usurp the identity of an importer from the person who filed the bill of entry. In other words, the person in whose name the bill of entry is filed does not cease to be an importer and, if that person claims to be not the owner or importer, the ouns would be heavy on him to establish that someone else is the owner or importer of goods.
The fact of the matter remains that even though the appellant has suggested that the bills of lading were endorsed in favour of Radha (and other end-buyers) when goods were on high seas but this bald assertion is not corroborated by any of the official documents which form the part of the process of importation, warehousing and clearance of goods. On the contrary, the High Court has pointed out as illustration the details of one of the bills of entry, which distinctively gave out all the particulars of IGM, the invoice, the value of cargo, etc. and the High Court has found that in the bill of entry, the name of appellant alone was shown as the importer who cleared the goods from customs with the assistance of the Customs House Agent. In the given set of facts, if the goods were at all sold to Radha (and other end-buyers) on high seas, the name of such end-buyer would have appeared as importer and not that of the appellant - The same considerations operate against the assertion that the appellant was only acting as an agent of the end-buyers. The High Court has rightly pointed out that the Customs House Agent is an entirely different person who acts only to present papers for clearance of the imported goods under a bill of entry. Of course, under Section 147 of the Customs Act, a person could act on behalf of importer or owner but such a person cannot be treated as owner of the goods nor could be made liable for customs duty. If the appellant was merely acting as an agent, then bill of entry would have reflected the name of end-buyer as the importer and the appellant as an agent of the importer; and further to that, the said end-buyer would have been assessed for customs duty. It were not so.
Though the definition of importer includes owner or any person holding out himself as the importer; and this definition of importer is not really relevant to the question of title but, that does not mean that a person who holds out himself to be the importer; and who files the bill of entry for home consumption; and who is assessed for customs duty; and whose suggestion about transfer of title to a third person is not established by any reference to any official record, the transfer on high seas may be presumed on mere suggestion about the alleged endorsement of bill of lading.
The High Court was right in observing that once the appellant got released the goods after filing the bill of entry for home consumption, the import stream dried up and the goods got mixed in the local goods. Any movement of the goods thereafter was bound to be a sale under Section 3(a) of the CST Act; and such movement being from the State of Andhra Pradesh to other State, it had been a matter of inter-State sale. The principle that actual sale may not necessarily precede the movement of goods, in its true effect, operates rather against the appellant in relation to the sale to end-buyers after the goods were cleared for home consumption.
The claimed exemption under Section 5(2) of the CST Act has rightly been denied to the appellant and the High Court has been justified in dismissing the writ petitions filed by the appellant. The High Court has yet been considerate and gave time to the appellant to submit C-Forms for availing the benefit of concessional rate of tax. No case for interference is made out - we may observe that in terms of the orders passed in these appeals, the appellant has deposited an amount of ₹ 7,07,325/- with the respondent. As these appeals are being dismissed, the respondent shall be entitled to adjust the same against the dues of the appellant.
Appeal dismissed.
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2020 (9) TMI 1179
Maintainability of petition under Article 32 of the Constitution - HELD THAT:- The writ petition is accordingly dismissed. However, it shall be open for the petitioners to take appropriate remedy against the order impugned.
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2020 (7) TMI 513
Doctrine of Contemporanea Expositio - Availment of Capital Investment Subsidy - issuance of new Entitlement Certificate for subsidy - Capital Investment Subsidy to the Appellant to the extent of 75% of deposited VAT. - whether the company was entitled to the subsidy to the extent of 75% of tax payable and deposited or was entitled only to 50%?
Entitlement of the Appellant to Capital Investment Subsidy - HELD THAT:- It appears that though at one stage (i.e., on 02.12.2005), the State Government thought it proper to announce an entirely different treatment to cement units by extending 75% subsidy to them with a different methodology and hence, inserted Sub-clauses (vi) and (vii) to Clause 7 of RIPS-2003 but, it did not continue with that policy and deleted the said sub-clauses on 28.04.2006. It remains trite that extending of any incentive in the form of exemption, rebate, concession or subsidy is a matter of the policy of the Government and for that matter, fiscal policy. Ordinarily, such framing of the policy remains within the domain of the Government; and the Government is entitled to frame a particular policy and to alter the same, as deemed fit and proper. As to whether the cement industry was to be granted 75% subsidy under RIPS-2003 or not was definitely a matter of the policy of the Government; and when such a policy was not in existence at the time of consideration of the application of the Appellant, no benefit could have been claimed under a non-existent policy.
The Additional Chief Secretary has rightly held that SLSC's decision dated 17.03.2011 and its repeat decision dated 24.11.2011 had been erroneous on the very fundamentals where it was assumed as if BIDI had already sanctioned 75% subsidy to the company. The High Court has also independently examined the entire matter in requisite details and we are unable to find any infirmity when the High Court has held that the Appellant company was only entitled to subsidy to the extent of 50% of the tax payable and deposited and not to the extent of 75%.
SLSC's decision of granting 75% subsidy to the Appellant - HELD THAT:- The possibility of so called other view (the wrong one) could arise only if SLSC is held entitled to simply turn itself away from the applicable provisions of the Scheme while ignoring the fact that Sub-clauses (vi) and (vii) of Clause 7 had already been deleted; and is simultaneously conferred with dubious discretion to interpret the decision of BIDI in whatever manner it would chose to. Obviously, such arbitrary authority or unfettered discretion is not available to any decision taking body; and could least be countenanced for a responsible body of the Government, like SLSC, who deals with public exchequer. Having examined the record in its totality, we have not an iota of doubt that the initial decision of SLSC had not only been erroneous but had been highly perverse, reaching the level of absurdity. The view of SLSC cannot be regarded as a possible view of the matter from any standpoint or any angle - the contention on the part of the Appellant about existence of any ambiguity in the matter and extending the benefit of ambiguity to itself could only be, and is, rejected.
Doctrine of Contemporanea Expositio - HELD THAT:- The doctrine of Contemporanea Expositio cannot be invoked in the case of present nature would also be clear by visualising the result, if at all this doctrine is applied. It is not far to seek that if at all this doctrine is applied, the consequence would be that howsoever erroneous a decision by the executive or administrative authority may be, once it emanates from the understanding of some of the officers or authorities, the same would acquire immunity from scrutiny for all time to come. Such has never been the intent of the doctrine of Contemporanea Expositio nor could such a result be countenanced.
Whether principles of Promissory Estoppel apply? - HELD THAT:- When the decisions of SLSC dated 17.03.2011 and 24.04.2011 turn out to be unauthorised and not in accord with the applicable provisions of the Scheme, the principles of promissory estoppel cannot be invoked for their enforcement - Even otherwise, when the decision of SLSC, or any decision of any authority for that matter, was subject to revision by the Government in terms of Clause 13 of the Scheme, it cannot be suggested that the said power of revision cannot be invoked. In other words, the principles of promissory estoppel cannot operate against such revisional power of the Government. Hence, this part of the contentions also deserves to be, and is, rejected.
Exercise of powers of revision by the State Government under Clause 13 - HELD THAT:- The initial decision of SLSC was entirely erroneous and cannot be said to be a possible view of the matter. Coupled with that, the said decision was directly prejudicial to the interest of revenue where the State exchequer was to part with extra 25% of the tax amount received or receivable from the Appellant. As noticed, the learned ACS, while passing the order dated 12.03.2008 in exercise of such power of revision under Clause 13 of the Scheme, has meticulously examined the entire material and has recorded each and every finding with due regard to the dealings of the parties and the provisions of Scheme as applicable. The exercise of power of revision as per Clause 13 of the Scheme remains unexceptionable in the present case.
Effect of availing 75% subsidy for 7 years - HELD THAT:- The suggestion that already availed benefit cannot be withdrawn turn out to be hollow and baseless because whatever was obtained by the Appellant, beyond its entitlement, had only been based on an erroneous and unauthorised decision of SLSC. In any case, RIPS-2003 being a matter of concession in the form of subsidy, securing an advantage by the Appellant at the cost of public exchequer could not have been allowed and, for the Scheme itself having reserved the powers in the State Government to revise the erroneous and prejudicial order within a period of five years from the date of fully availing of the benefits, such powers have rightly been invoked and exercised by the State Government.
Thus, BIDI, in its decision dated 01.04.2006 never directed for grant of 75% subsidy to the Appellant company in terms of proviso to Clauses 7(i)(a) and 7(i)(b) of RIPS-2003 nor allowed any customised package to the company. The position of record is crystal clear that BIDI's decision dated 01.04.2006 had only been for allowing 'recently announced cement package' to the company and that was also coupled with the requirement of applicability of RIPS-2003. The initial part of this decision of BIDI dated 01.04.2006 and the company's prayer dated 26.04.2006 for registration in terms of Sub-clause (vii) of Clause 7 of RIPS-2003 became redundant on 28.04.2006 with the amendment of Clause 7 of RIPS-2003 and deletion of Sub-clauses (vi) and (vii) thereof because no decision had been taken by SLSC to grant subsidy to the company in terms of the said Sub-clauses (vi) and (vii) of Clause 7 by that date i.e., 28.04.2006 - It is also clear that the doctrine of Contemporanea Expositio neither applies to this case nor inures to the benefit of Appellant. The principles of promissory estoppel are equally inapplicable and the State Government has rightly exercised the powers of revision under Clause 13 of RIPS-2003 to interfere with the erroneous decisions of SLSC whereby the Appellant was allowed 25% extra subsidy and which was, obviously, prejudicial to the interest of revenue; and mere availing of the benefits by the Appellant under the erroneous decisions of SLSC is of no effect, particularly when the State Government has exercised the powers of revision within the time stipulated in Clause 13 of RIPS-2003.
Levy of Interest - HELD THAT:- When availing of subsidy to the tune of 75% (and thereby availing 25% in excess) is not referable to any misrepresentation by the Appellants and there is no allegation of breach of any of the conditions of RIPS-2003 by the Appellants while availing such benefit, the Respondent cannot be held entitled to demand interest at the rate stipulated in Clause 10 of RIPS-2003. However, and at the same time, when the Appellant company had obtained undue advantage in monetary terms by availing 25% extra subsidy; and had given undertaking to refund any excessive benefit with interest at the rate of 12% per annum, in our view, the Appellant company remains liable to refund the excess amount together with interest at the rate agreed upon, i.e., 12% per annum.
The impugned order of the High Court dated 11.01.2019, upholding the order dated 12.03.2018 passed by the Additional Chief Secretary, Finance Department, Government of Rajasthan, Jaipur is affirmed but with the modification that the Respondents shall be entitled to recover interest at the rate of 12% per annum from the date of availing of excessive subsidy (25%) by the Appellants until payment/recovery - appeal allowed in part.
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2020 (6) TMI 777
Validity of Garnishee Order - CIRP proceedings are ongoing - failure to deposit taxes by Banks for the period from 2011-12 & 2012-13 - direction to Banks to pay into Government's treasury, on account of tax / penalty due under the JVAT Act - resolution plan approved.
HELD THAT:- Applications seeking exemption from filing Official Translation and Certified Copy of the impugned order are allowed.
Issue notice.
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2020 (6) TMI 685
Interpretation of Statute - Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 - Levy of Purchase Tax - purchase turnover, with respect to the purchase of empty bottles from unregistered dealers under bought note - Clarifications dated 09.11.1989 and 27.12.2000 - HELD THAT:- For applicability of Section 7-A (1) of the Act, all the six ingredients need to be cumulatively satisfied. The ingredient (6) has three alternatives viz., the dealer has either (a) consumed or used the goods in question in the manufacture of other goods for sale or otherwise, or (b) has disposed of such goods in any manner other than by way of sale in the State, or (c) has despatched or carried them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. It is not in dispute that clauses (b) or (c) of this ingredient are not attracted in this case, for the entire manufactured Beer/IMFL, after bottling, having been sold by the assessee only to the Tamil Nadu State Marketing Corporation Limited (TASMAC) within the State of Tamil Nadu.
There are no hesitation in concluding that the bottles in question have neither been consumed in manufacture of Beer/IMFL nor they could be said to have been used in such manufacture of Beer/IMFL. Hence, elements (i) and (iii) pertaining to clause (a) of sub-section (1) of Section 7-A of the Act do not exist in this case.
The purchase tax under Section 7-A of the Act is leviable on the purchase turnover of empty bottles purchased by the assessee in the course of its business of manufacture and sale of Beer and IMFL - the purchase turnover of the empty bottles purchased by the assessee from the unregistered dealers under bought note is exigible to purchase tax under Section 7-A of the Tamil Nadu Act; and the assessee cannot escape such liability on the strength of the Clarifications/Circulars dated 09.11.1989 and 27.12.2000 which do not stand in conformity with the statutory provision as also declaration of law by the Courts.
The appeal is partly allowed by holding that the purchase turnover of the empty bottles purchased by the assessee from the unregistered dealers under bought note is exigible to purchase tax under Section 7-A of the Tamil Nadu Act; and the assessee cannot escape such liability on the strength of the Clarifications/Circulars dated 09.11.1989 and 27.12.2000.
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2020 (6) TMI 181
Reimbursement of the sales tax paid - Scope of terms of works contract - contract inclusive of taxes - as per the contract the stipulation that any Central or State sales tax and other taxes on completed items of works (excluding penalty), as may be levied and paid by the contractor shall be reimbursed by the employer on proof of payment (and) on production of assessment certificate. - Circulars dated 07.11.2001 and 19.06.2002 - main plank of the case of the appellant about the nature, extent and implication of the levy of sales tax in relation to a works contract, it could be usefully recapitulated that in view of the forty–sixth amendment to the Constitution of India, Clause (29-A) came to be inserted to Article 366; and, by virtue of sub-clause (b) thereof, it became permissible for the States to levy sales tax on the price of goods and materials used in works contracts as if there was a sale of such goods and materials
HELD THAT:- Heavy reliance on behalf of the appellant on the expression “completed item of work”, as occurring in the first part of Clause 45.2, is entirely misplaced. The only implication of this expression is that a claim for reimbursement of sales tax cannot be made in relation to a particular work or item whose execution is pending or is in progress and has not been completed. So far the levy of sales tax in relation to a works contract is concerned, the same is on “taxable turnover” and not on the entire turnover. It follows necessarily that the claim for reimbursement could only be made of the amount of sales tax that had been levied; and had been paid by the contractor. Hence, the suggestion as if the expression “completed item of work” refers to the end-product of a works contract is without any substance. The contentions urged in that regard are required to be, and are, rejected.
It remains trite that the terms of contract bind the parties thereto and unless there be any case of ambiguity or violation of law, ordinarily, the terms of contract, revealing the intent of parties, are required to be given effect to - It is, therefore, crystal clear that even when the contract provided that the rates quoted by the contractor shall be deemed to be inclusive of sales and other taxes and royalties on the materials, it was agreed to between the parties that sales tax and other taxes under completed items of work, as paid by the contractor were to be reimbursed.
On a plain reading of the aforesaid relevant terms of the contract, it is clear that while the contractor cannot claim any payment towards the taxes/duties/royalties etc. on the goods/materials purchased by it for performance of the contract but that does not disentitle the contractor from claiming reimbursement of the sales tax levied upon it by the employer, of course after proof of payment/assessment. It is also pertinent to mention that the respondent No.1 only claimed reimbursement of the sales tax paid by it on the turnover of the works contract and not of any tax or duty or royalty paid by it on the material procured for the purpose of execution of the works contract.
On a comprehensive reading of the Circular dated 04.11.1986, it is evident that the State Government was fully conscious of its obligation towards reimbursement under the existing terms of contracts and hence, issued directions for due discharge of such obligation with necessary safeguards and, at the same time, provided that henceforth, neither such a clause be inserted in the contract documents nor any tender containing such a clause or condition be accepted.
Evidently, the doubts at the later stage, as indicated in the Circular dated 27.01.2000, and converse decision against the obligation of reimbursement, as stated in the Circular dated 07.11.2001, had only been of unwarranted attempts to wriggle out of the contractual obligations with rather perverse construction of the plain terms of the existing contracts - appeal dismissed.
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2020 (5) TMI 149
Power of High Court to entertain writ petition - The option to file statutory appeal was foreclosed by time limitation including extended period of limitation - whether the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India ought to entertain a challenge to the assessment order on the sole ground that the statutory remedy of appeal against that order stood foreclosed by the law of limitation?
HELD THAT:- The assessment order dated 21.6.2017 was challenged by the respondent by way of statutory appeal before the Appellate Deputy Commissioner only on 24.9.2018. Section 31 of the 2005 Act provides for the statutory remedy against an assessment order. The same, as applicable at the relevant time - Section 31 states that the statutory appeal is required to be filed within 30 days from the date on which the order or proceeding was served on the assessee. If the appeal is filed after expiry of prescribed period, the appellate authority is empowered to condone the delay in filing the appeal, only if it is filed within a further period of not exceeding 30 days and sufficient cause for not preferring the appeal within prescribed time is made out. The appellate authority is not empowered to condone delay beyond the aggregate period of 60 days from the date of order or service of proceeding on the assessee, as the case may be.
In the present case, admittedly, the appeal was filed way beyond the total 60 days’ period specified in terms of Section 31 of the 2005 Act. In that, the respondent had filed the appeal accompanied by an application for condonation of delay setting out reasons - The High Court finally allowed the writ petition vide the impugned judgment and order on the ground that the statutory remedy had become ineffective for the respondent (writ petitioner) due to expiry of 60 days from the date of service of the assessment order. Inasmuch as, the appellate authority had no jurisdiction to condone the delay after expiry of 60 days, despite the reason mentioned by the respondent of an extraordinary situation due to the act of commission and omission of its employee who was in charge of the tax matters, forcing the management to suspend him and initiate disciplinary proceedings against him. Soon after becoming aware about the assessment order, the respondent had filed the appeal, but that was after expiry of 60 days’ period.
Whether the High Court ought to have entertained the writ petition filed by the respondent? - HELD THAT:- As regards the power of the High Court to issue directions, orders or writs in exercise of its jurisdiction under Article 226 of the Constitution of India, the same is no more res integra. Even though the High Court can entertain a writ petition against any order or direction passed/action taken by the State under Article 226 of the Constitution, it ought not to do so as a matter of course when the aggrieved person could have availed of an effective alternative remedy in the manner prescribed by law.
The principle underlying the dictum in this decision would apply proprio vigore to Section 31 of the 2005 Act including to the powers of the High Court under Article 226 of the Constitution. Notably, in this decision, a submission was canvassed by the assessee that in the peculiar facts of that case (as urged in the present case), the Court may exercise its jurisdiction under Article 142 of the Constitution, so that complete justice can be done - Thus, what this Court cannot do in exercise of its plenary powers under Article 142 of the Constitution, it is unfathomable as to how the High Court can take a different approach in the matter in reference to Article 226 of the Constitution. The principle underlying the rejection of such argument by this Court would apply on all fours to the exercise of power by the High Court under Article 226 of the Constitution.
The remedy of appeal is creature of statute. If the appeal is presented by the assessee beyond the extended statutory limitation period of 60 days in terms of Section 31 of the 2005 Act and is, therefore, not entertained, it is incomprehensible as to how it would become a case of violation of fundamental right, much less statutory or legal right as such - Pertinently, no finding has been recorded by the High Court that it was a case of violation of principles of natural justice or noncompliance of statutory requirements in any manner. Be that as it may, since the statutory period specified for filing of appeal had expired long back in August, 2017 itself and the appeal came to be filed by the respondent only on 24.9.2018, without substantiating the plea about inability to file appeal within the prescribed time, no indulgence could be shown to the respondent at all.
The High Court ought not to have entertained the subject writ petition filed by the respondent herein. The same deserved to be rejected at the threshold - Appeal allowed.
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