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TMI Blog2014 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... se of such items namely, patasa, harada, sakaria and alchidana. His returns were assessed by the Commercial Tax Inspector. He passed orders of assessment on 18.2.2005 accepting the returns of the assessee making no additions. 3.2. The Deputy Commissioner of Commercial Tax was prima facie of the opinion that the respondent was not entitled to exemption. He therefore, after issuing notices passed two separate orders both dated 1.1.2009 levying tax on such transactions under entry no.167 at the rate of 6% on the transactions. In such order he distinguished the decision of Supreme Court in case of the State of Gujarat v. Sakarwala Brothers reported in 19 Sales Tax Cases 24 in order to hold that the case of the respondent does not fall under entry 86 of scheduleI to the Gujarat Sales Tax Act, 1969 ('the GST Act' for short). This was on the premise that, according to him, the important condition of the said entry namely, the levy and collection of additional duties of excise, should not be exempted on account of any exemption or drawback, was not fulfilled. He also did not accept the assessee's contention that even if the cases did not fall under entry 86, the same would fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of entry 86 and since the additional duty of excise was not exempted, the goods were covered under such entry. In light of such conclusion, the tribunal did not examine the alternative contention of the assessee that if the items did not fall under entry 86, they would be covered under entry 8 and by virtue of exemption notifications issued by the Government from time to time, no tax was leviable in any case. It is this judgement of the tribunal which the State has challenged before us. 4.We may record that previously a tax appeal was filed. However, the Court was of the opinion that against the order passed by the tribunal in the revision petition, tax appeal would not be maintainable. The State therefore, preferred these writ petitions. 5. Learned AGP Shri Jaimin Gandhi for the State raised the following contentions : 1) That the goods in question did not fall under entry 86 of schedule-I to the GST Act since the vital condition contained therein was not satisfied. He submitted that such condition must be viewed in the background of legislative intent namely, that in case of only those goods where additional duties of excise has been paid by the dealer, can he claim the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on this behalf, the Commissioner on his own motion within three years or on application made to him within one year from the date of any order passed by officer appointed under section 27, may call for and examine the record of any such order and pass such order as he thinks fit and proper within twelve months from the date of service of notice for revision. Sub-section (1) of section 67 thus empowers the Commissioner under the circumstances mentioned therein to exercise revisional powers. 8. Rule 60 of the Gujarat Sales Tax Rules, 1970 ("the GST Rules" for short) pertains to notice for production of accounts, documents etc., and provides that where the Commissioner requires any dealer to produce any accounts or documents or to furnish any information under section 59, he shall issue a notice therefor in form 45. Rule 67 pertains to notice to person likely to be affected adversely and reads as under : "67. Notice to person likely to be affected adversely (1) Before an appellate or revising authority passes an order in appeal or revision which is likely to affect the appellant or applicant or any other person adversely, it shall serve on him a notice in Form 49 and shall gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice under form-45, the power of the Commissioner can be exercised under section 67(1) only if a notice has been given of reasonable opportunity of being heard to an assessee before the order is revised and such notice is prescribed in form-49. In the present case, admittedly in the notice under form-49 mention was made by the Commissioner only for taxing patasa and no other items. His final order therefore, could not have travelled beyond such notice which would fall foul of requirement of rule 67 and reasonable opportunity of being heard to the assessee. To that extent in our view tribunal was perfectly justified in coming to its conclusion which we have recorded earlier. 12. Coming to the central controversy, we may notice that schedule-I to the GST Act pertains to goods, the sale or purchase of which is free from all taxes. This schedule is framed under section 5, sub-section(1) whereof provides that subject to conditions or exceptions if any set out against each of the goods specified in column 3 of schedule-I, no tax shall be payable on the sales or purchases of any goods specified in that schedule. Entry 86 of schedule-I reads as under : "86 Sugar, covered under sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f term 'sugar' for the said entry was identical to one adopted under entry 42 of schedule-I to the GST Act. A division bench of this Court on a reference made by the Sales Tax Tribunal held that patasa, harda and alchidana were products of sugar and would be covered under the definition adopted for the purpose of said entry 47 of the Bombay Sales Tax Act. The Court agreed with the suggestion of learned Advocate General that items patasa, harda and alchidana bear a distinct and different name from sugar and are not commercially purchased or sold as sugar. However, the legislature in entry 47 has not used word sugar simplicter and covered the term as defined in item no.8 of the First Schedule to the Central Excises and Salt Act, 1944. The Court held that this definition did not intend merely to cover sugar as known in common parlance but was intended to cover all forms of sugar in any form which contains more than 90% sucrose. It was observed that a definition which refers to the chemical contents of an article cannot be said to be a definition which is intended to cover the article as understood in common parlance. On such premises, the reference was answered in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under entry 3E in schedule-II part A of the GST Act was exempted from payment of whole of the tax. It may be noted that entry 3E of schedule-II part A referred to Sugar as defined in item no. 1 of the first schedule of Central Excises and Salt Act, 1944. 20. Thus the definition of sugar for the purpose of entry 42 to Schedule I and entry 3E to schedule-II part A remained the same. By virtue of these entries, sugar falling under entry 42 would be exempt from payment of tax, if the condition contained in second column of entry was satisfied. If such condition was not satisfied, it would fall under entry 3E and would ordinarily be taxed at the rates specified therein. However, by way of exemption notification issued by the Government, such tax was also waived. We are informed that this was done in view of the representations made by the trade as is apparent from the circular dated 17.9.81 issued by the Government. The circular refers to legislative changes made in entry 42, corresponding insertion of entry 3E in schedule-IIA and issuance of exemption notification on account of difficulties faced by the trade which was brought to the notice of the Government through representation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Salt Act, 1944" were deleted and now simpliciter description of goods read as "Sugar to which entry 42 in Schedule I does not apply." For all purposes, therefore, this was also consequential change in entry 3E which only dropped description of sugar as defined in item no.1 of the First Schedule to the Central Excises and Salt Act, 1944 since the schedule itself did not survive. It is true that so far in entry 42, no corresponding clarification was made to cover sugar as referred to in sub-heading Nos. 1701.10, 1701.20, 1701.31 and 1701.39 of the schedule to the Central Excise Tariff Act,1985. We may record that exemption notification under section 49(2) of the GST Act and entry 133 by which sugar covered under entry 3E was exempted from payment of whole of the tax continued to hold the field. 25. With effect from 1.4.1992 to 31.3.2006, the entries were renumbered. Entry no.42 to Schedule-I which was renumbered no.86, continued exactly in the same language. Like-wise entry 3E of schedule-IIA was renumbered as entry 8 also in the same language which read as under: Sr. No. Description of goods Conditions and exceptions subject to which exemption is granted. 86 Sugar co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open for the petitioner to deny the benefit of exemption to the respondent in terms of entry 86 of schedule-I to the GST Act. In the present case, it is not even the case of the petitioner that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, is exempted. The respondent had pointed out before the tribunal that his vendors pay full additional duty at the point of clearance of goods. State Government however, raised a curious contention namely, that such duty must be paid by the respondent. We do not see any such warrant in condition contained in entry 86. Condition in plain terms is that levy and collection of additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957, should not be exempted on account of any exemption or drawback. When admittedly, the additional levy of duty is not exempted nor is the case of the petitioner that any drawback is granted, entry 86 would certainly apply. Such condition no where provides that such additional duty must be borne by the dealer. Additional duty of excise would be payable on manufacture of goods and would therefore, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and Salt Act, 1944, that such terms were included. 30. Term 'sugar' for the relevant entry of Bombay Sales Tax Act, it was verbatim the same as entry 86. However, we have noticed the changes which were made by the State legislature from time to time in predecessor entry 42 and entry 3E. We have noticed that when the condition was imposed in entry 42 for enjoying exemption and correspondingly, entry 3E to schedule-IIA was introduced for taxing these goods which were not falling under entry 42, the definition of term 'sugar' in both the entries was identical. In clear terms, therefore, the intention was to tax sugar not covered under exemption entry 42 (now entry 86) under entry 3E (now entry 8) in which identical definitions were adopted for both the entries. Having done so, on the representations by the trade, the State Government issued exemption notification waiving entire sales tax even on sugar falling under entry 3E. It was only by virtue of deletion of the First Schedule to the Central Excises and Salt Act, 1944 and its replacement by the newly enacted Central Excise Tariff Act,1985, that changes had to be made in entries 42 and 3E. Entry 42 post 1.4.1989 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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