TMI Blog2014 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... conflict, section 22 of the SEZ Act was enacted giving overriding effect. Without making any matching provision in the VAT Act, the overriding effect given to the provisions made in the SEZ Act by virtue of section 22 of the Act cannot be whittled down. If the VAT Act and in particular, sections 5A and 9(5) also had a similar non-obstante clause, it would become a matter of legal scrutiny as to which one of the two non-obstante clauses would prevail. In the present case, we are not confronted with such a situation. It was in this background that the Supreme Court in the case of Ketan Parekh (supra) had an occasion to consider as to which one of the two clauses, namely, Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993, would prevail since both contained non-obstante clauses. State legislature desired to give overriding effect to all the provisions of SEZ Act over other State laws and in terms of section 21, particularly, in respect of fiscal statutes, prescribing levy of various duties. There was no intention to limit the operation of this non-obstante clause. No such inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws under section 21(1) of the SEZ Act, including : (d) .. .. exemption from payment of salestax and other taxes for purchase of goods and services from unit in Domestic Tariff Area under Section-21(2) of the Gujarat Special Economic Zone Act, 2004. 4. The case of the petitioner is that section 21 of the Act provides for total exemption from payment of various State taxes to the units situated in SEZ area. The provisions of the SEZ Act have been given overriding effect under section 22 of the SEZ Act. Despite such clear position flowing from sections 21 and 22 of the Act, the State authorities started demanding purchase tax from the petitioner after introduction of section 5A to the Gujarat Value Added Tax Act (hereinafter referred to as VAT Act ) with effect from April 01, 2008 and upon making matching provisions in section 9 of the VAT Act. A Circular was issued by the State Government on May 02, 2008, which provided inter alia that if the unit situated in SEZ area purchased any zero rated goods and used the same for the purposes specified in section 9(5) of the VAT Act, they would be liable to pay purchase tax on such goods. When the petitioner resisted such levy, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in (2003) 11 SCC 549. (2) Thyssen Stahlunion v. Steel Authority of India Ltd., reported in AIR 1999 SC 3923. (3) Management of M.C.D. v. Prem Chand Gupta and another, reported in AIR 2000 SC 454. (ii) The intention of the State legislation in enacting sections 21 and 22 of the SEZ Act was clear, namely, to grant exemption from various State taxes to SEZ units. This was the general fiscal benefit offered to industrial undertakings to set up their establishments in SEZ areas. To avoid any conflict, section 22 of the SEZ Act gave overriding effect to the provisions of the SEZ Act. Any later enactment without nonobstante clause cannot have primacy over section 21 of the SEZ Act. (iii) In taxing statute there would be no room for intendment. If the statute does not permit levy of tax, the same cannot be allowed to be collected having resort to any legislative intent. 6. On the other hand, the learned Assistant Government Pleaders Ms.Maithili Mehta and Mr.Jaimin Gandhi opposed the petitions contending that section 22 of the SEZ Act intended to give overriding effect only to the existing State laws. Sections 5A and 9(5) of the VAT Act were introduced with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er IX which contains miscellaneous provisions gives overriding effect to the Act over other laws for the time being in force in the following manner : 22. The provisions of this Act shall have effect notwithstanding anything contained in any other law for the time being in force. 9. In terms of section 21 of the SEZ Act, thus the units located in SEZ area enjoy certain concessions and exemptions. In particular, in terms of clause (c) of sub-section (1) of section 21, all sales and transactions within the areas specified therein would be exempt from all taxes, cess, duties, fees or other levies under any State laws to the extent of tax on sales or purchase of goods other than goods specified in Schedule III of the VAT Act, Luxury Tax, Entertainment Tax and other taxes payable on sales and transactions. The fact that by virtue of the said provision, the petitioners were not required to pay any taxes under the VAT Act, is not in dispute, more so, since section 22 of the SEZ Act gave the provisions of the said Act an overriding effect over other laws for the time being in force. This non-obstante clause is worded in expression notwithstanding anything contained in any other la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law the case might otherwise appear to be. 14. The said passage, as has been stated in the said pronouncement was quoted with approval by the Privy Council in Bank of Chettinad v. Income-tax Commmr.- AIR 1940 PC 183 and the Privy Council had registered its protest against the suggestion that in revenue cases the substance of the matter may be regarded as distinguished from the strict legal position. Proceeding further the learned Judge stated that : It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provision of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. (Emphasis added) 15. In Commissioner of Sales-tax U.P. v. Modi Sugar Mills Ltd.-AIR 1961 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all. 11. Section 2(37) of the VAT Act inserted with effect from April 01, 2008, by Amendment Act (9) of 2008, defines the term zero rated sale as under : 2(37) zero rated sale means a sale of goods by a registered dealer to another registered dealer on which the rate of tax leviable shall be zero but tax credit on the purchase related to that sale is admissible. 12. Section 5A of the VAT Act also introduced with effect from April 01, 2008 by the same Amendment Act (9) of 2008, reads as under : 5A. Zero rated sale : The following sale shall be zero rated sale for the purpose of this Act and tax credit on the purchase related to such sale shall be allowed subject to such conditions as may be prescribed : (1) Sale of goods to the Developer or Codeveloper of Special Economic Zone as defined in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT Act pertains to tax credit. Sub-section(1) of section 11 allows the registered dealer who has purchased taxable goods to claim tax credit equal to the amount of tax paid by him during the tax period under sub-sections (i) to (v) or (vi) of section 9, was also introduced with effect from April 01, 2008. 15. It can, thus, be seen that after April 01, 2008, the VAT Act has made provisions for collection of purchase tax even from units located in SEZ areas in relation to zero rated sale . The legislative scheme appears to be that the sales which fall under the zero rated sales would invite no sales tax to be borne by the seller, but the purchaser would have to pay the purchase tax and, in turn, would be entitled to take tax credit as provided under section 2(37) and section 11(1) of the VAT Act. Whatever be the intention, in our opinion, without there being any clear provision giving such statutory provisions primacy over section 21 of the SEZ Act, no such tax can be levied. As noted above, in a fiscal statute, there is no room for intendment. If the statute validly permits the State to levy tax, the same must be allowed to be collected, no matter how harsh the consequences m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mas, 31 LJ Ch 867; 32 LJ Ch 32; Coles v. Pack, LR 5 CP 65]. xxx xxx xxx 16. The intention of the appellant also does not appear to be to confine the meaning of the phrase for the time being to a single time which would be demonstrated by the fact that in the notification issued for recruitment, one of the conditions was that the candidate should have experience of two years at the Bar. This condition was introduced by amendment to Section 87-A on 24-12-1991 that is to say the amendment in the rule regarding two years experience was included in the requirement of eligibility. xxx xxx xxx The consequence of giving effect to the notification dated 13-1-1992 w.e.f. 1-4-1991 would be that Punjab Rules as existing on 141991 would be applicable. If the argument of the appellant is accepted that the phrase for the time being was applicable for only one time and not for future amendments, Punjab Rules, as existed on 1-4-1991 alone would apply without taking note of the subsequent amendment in the rules i.e. as made on 24-12-91 regarding requirement of two years practice. But the appellant did not adhere to that position which is being canvassed now but in the notification f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal officers at the relevant time as expressly mentioned in Regulation 4(1). Therefore, whenever the question of regulation of conditions of service of the municipal officers comes up for consideration, the relevant Rules in force at that time have to be looked into. This is the clear thrust of Regulation 4(1). Its scope and ambit cannot be circumscribed and frozen only to the point of time in the year 1959, when the Service Regulations were promulgated. If such was the intention of the framers of the Regulation, Regulation 4(1) would have employed a different phraseology, namely, rules at present in force instead of the phraseology rules for the time being in force . The phraseology rules for the time being in force would necessarily mean rules in force from time to time and not rules in force only at a fixed point of time in 1959 as tried to be suggested by learned counsel for the respondent-workman. 18. The consistent view of the Supreme Court being that an expression for the time being in force would include even the legislations made at a later point of time and such expression would be akin to the law for the time being in force. The non-obstante clause contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified areas within the SEZ. These were necessarily State taxes. But for section 21 of the SEZ Act such taxes would be levied even on the transactions entered into within the said specified areas. In absence of section 22 of the SEZ Act, there would be a conflict between various taxing statutes and section 21 of the SEZ Act. In order to avoid such conflict, section 22 of the SEZ Act was enacted giving overriding effect. Having done so, in our opinion, without making any matching provision in the VAT Act, the overriding effect given to the provisions made in the SEZ Act by virtue of section 22 of the Act cannot be whittled down. If the VAT Act and in particular, sections 5A and 9(5) also had a similar non-obstante clause, it would become a matter of legal scrutiny as to which one of the two non-obstante clauses would prevail. In the present case, we are not confronted with such a situation. It was in this background that the Supreme Court in the case of Ketan Parekh (supra) had an occasion to consider as to which one of the two clauses, namely, Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and Recovery of Debts Due to Banks and Financial Instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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