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TMI Blog2014 (9) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... for Commercial Taxes. Both writ petitions are filed by the same petitioner, a company registered under the Companies Act, 1956. It is also registered as a dealer under the Andhra Pradesh Value Added Tax Act, 2005 and the Central Sales Tax Act, 1956. It is engaged in the manufacture of eco-friendly organic fertilizers for the benefit of various agricultural crops besides feed supplements, organic acids, chelated minerals/mineral mixtures for poultry and veterinary segments and has technical collaboration with Council for Scientific and Industrial Research, Department of Bio-technology, Government of India, etc. The petitioner believed that 17 of its products fall under entry 26 of the First Schedule to the Andhra Pradesh Value Added Tax Act, 2005 (for short, "the VAT Act") and hence exempt from tax. It made an application dated February 6, 2009 under section 67(1) of the VAT Act to the Authority for Clarification and Advance Ruling (for short, "ARA"), i.e., the second respondent and sought an advance ruling with regard to classification of its 17 products under the said Act. By order dated November 16, 2011, the ARA by a majority of2:1 held that all the products fall under entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril 26, 2011, respectively seeking exemption on inter-State sales turnover as per entry No. 26 of the First Schedule to the VAT Act. By orders dated March 30, 2011 and February 23, 2012 respectively, the first respondent overruled the objections of the petitioner and assessed the petitioner to tax of Rs. 2,51,79,495 and Rs. 1,17,52,360, respectively and issued notices dated March 30, 2011 and February 23, 2012 demanding the petitioner to pay the assessed tax. Subsequently, the first respondent passed a rectification order dated June 13, 2011, in respect of the assessment year 2007-08 (CST) on the ground that the turnover of Rs. 20,03,25,237 was subjected to tax at 12.5 per cent instead of at four per cent and demanded Rs. 81,57,411 from the petitioner. The assessment order dated March 30, 2011, passed by the first respondent for the assessment year 2007-08 as rectified by the order dated June 13, 2011, is challenged by the petitioner in M.P. No. 35355 of 2012. The assessment order dated February 23, 2012, passed by the first respondent for the assessment year 2008-09 is challenged by the petitioner in M.P. No. 35359 of 2012. The principal contention of the petitioner is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973 SC 2230, Tek Chand Daulat Rai v. Excise and Taxation Officer [1972] 29 STC 585 (P&H) [FB], Thallam Bala Subrahmanyam v. State of Andhra Pradesh [1973] 31 STC 498 (AP), International Cotton Corporation (P.) Ltd. v. Commercial Tax Officer [1975] 35 STC 1 (SC); AIR 1975 SC 1604, A.V. Rajshekarappa v. Commercial Tax Officer [1975] 35 STC 379 (Karn), Rattan Lal Tiku v. Commissioner of Income-tax [1974] 97 ITR 553 (J&K), R.C. Hiremath (Patil) v. The Judicial Magistrate, First Class, II Court, Hubli [1981] 47 STC 38 (Karn), S.S. Gadgil v. Lal and Co. [1964] 53 ITR 231 (SC); AIR 1965 SC 171, Jameel & Co. v. Commercial Tax Officer [1973] 30 STC 321 (AP), State of Tamil Nadu v. Sitalakshmi Mills [1974] 33 STC 200 (SC); AIR 1974 SC 1505, Gwalior Rayon Silk Mfg. (Wvg) Co. Ltd. v. Assistant Commissioner of Sales Tax [1974] 33 STC 219 (SC); [1974] 94 ITR 204 (SC); AIR 1974 SC 1660, Orissa Cement Ltd. v. State of Orissa AIR 1970 SC 1672, Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra [1975] 35 STC 571 (SC); [1975] 2 SCC 22, India Car bon Ltd. v. State of Assam [1997] 106 STC 460 (SC); AIR 1997 SC 3054, New Central Jute Mills Co. Ltd. v. Assistant Collector of Central Excise, Allah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified: Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of subsection (3) of section 5, is a sale in the course of export of those goods out of the territory of India. (1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of interState trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of tit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification, the tax payable on the sale of such goods under this Act. 9. Levy and collection of tax and penalties.-(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected- (a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods; and (b) where such subsequent sale has been effected by an unregistere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax law. (2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax and assessment and collection of interest for delayed payment of tax, of the general sales tax laws of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law. (3) The proceeds in any financial year of any tax, including any interest or penalty, levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it and the proceeds attributable to Union Territories shall form part of the Consolidated Fund of India." In Nataraja Mudaliar's case [1968] 22 STC 376 (SC); AIR 1969 SC 147, the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-State trade or commerce and making it obligatory upon the Government of India to assign the tax to the States in the manner provided in clause (2); by clause (3) it was enacted that "Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce"; that in the exercise of the authority conferred by the Constitution (Sixth Amendment) Act, 1956, Parliament enacted on December 21, 1956, the Central Sales Tax Act, 1956 with a view to formulate principles (a) for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, (b) providing for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and (c) declaring certain goods to be of special importance in inter-State trade or commerce and specifying the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject; that the Central Sales Tax Act and the constitutional provisions were intended to restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience of assessment as well as for the convenience of the parties so that they will not have to deal with two sets of officers and two sets of laws in addition to avoiding discrimination between intra-State and inter-State sales; that the very purpose of the Act and its scheme would be defeated or at least considerably impeded if the rates of tax applicable in any State in respect of intra-State sales were not applicable to inter-State sales where that State is the appropriate State. In K.A. Ramudu Chettiar's case [1973] 31 STC 470 (SC); AIR 1973 SC 2230, the Supreme Court held that the power conferred under the amended section 9(2) of the Central Sales Tax Act embraces all the powers that the assessing authority had under the sales tax law of the State in force during the relevant assessment year; and that by virtue thereof, the Appellate Assistant Commissioner, at the time he decided the appeal of the assessee, had the power to enhance the assessment because of the existence of such a power under the Madras General Sales Tax Act, 1959. In R.C. Hiremath's case [1981] 47 STC 38 (Karn), the High Court of Karnataka held that the provisions for making assessment is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctment. Therefore all subsequent amendments to the general sales tax law, which were made, are applicable to the facts of the case. In Khemka & Co.'s case [1975] 35 STC 571 (SC); [1975] 2 SCC 22, the Supreme Court held that an assessee under the Central Sales Tax Act, 1956 cannot be made liable for penalty under the provisions of the State Sales Tax Act for default in payment of taxes within the prescribed time under the State Act when there is no provision in the Central Act for imposition of penalty for delay or default in payment of tax; that under section 9(2) of the Central Sales Tax Act, the provisions of the State Act shall apply only for the purpose of assessment, reassessment, collection and enforcement; that whatever be the objects of levying a penalty, its imposition gives rise to a substantive liability which can be viewed either as an additional tax or as a fine for the infringement of the law; that the machinery or procedure for its realization comes into operation after its imposition; in any case, it is an imposition of a pecuniary liability which is comparable to a punishment for the commission of an offence; that it is a well-settled canon of construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Commissioner), with regards classification of goods under different entries of the various Schedules to the Act, or the rate of tax applicable to such goods, etc., thereby avoiding conflicting orders being passed by different assessing/appellate/revisional authorities under the Act. It is in furtherance of this object that section 67(2) and (3) of the Act respectively prohibits the ARA, and the officers or authorities in the Commercial Taxes Department, from entertaining an application seeking clarification, or to decide any issue for which an application has been made by an applicant under the section and is pending before the ARA. The words 'question' and 'issue' are used interchangeably in section 67(2) and (3), and mean the same. The effect of these two provisions is that the applicant-dealer is required to seek a clarification from the ARA prior to the assessment proceedings being initiated against him, or before an appeal is filed either before the appellate authority or the STAT. Likewise the ARA is prohibited from giving a clarification when the quasi-judicial/judicial authorities under the Act have already initiated appropriate proceedings for, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not affect the jurisdiction of the Supreme Court under article 136 of the Constitution or of the High Court under articles 226 and 227 of the Constitution to entertain a challenge to the advance ruling pronounced by the authority; that when an advance ruling of the authority is challenged before the High Court under article 226 and/or article 227 of the Constitution, the same should be heard directly by a Division Bench of the High Court and decided as expeditiously as possible. In our view, the provision for "advance ruling" is a mechanism introduced by the Legislature to ensure uniformity in orders of assessment, appellate and revisional orders (other than a revisional order passed by the Commissioner), with regard to the classification of goods under different entries of the various Schedules to the Act or the rate of tax applicable to such goods, etc., thereby avoiding conflicting orders being passed by different assessing/appellate/revisional authorities. Such a mechanism can only be introduced by way of a substantive provision in a statute and cannot be implied. Our view is also supported by the language of section 9 of the Central Sales Tax Act. Sub-section (2) thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est judgment assessment was held to be only a rule of procedure. Likewise Rattan Lal Tiku's case [1974] 97 ITR 553 (J&K) would also be inapplicable as in that case it was held that the provisions of section 143 of the Income-tax Act, 1961 were also held to be procedural. Orissa Cement's case AIR 1970 SC 1672, was also a case dealing with the issue whether in view of section 9(3) of the Central Sales Tax Act, the rebate provided in section13(8) of the Orissa Sles Tax Act is payable to the assessee under the Central Sales Tax Act, if they pay the tax assessed within the prescribed time. It was held that a rebate for payment of tax levied within the time prescribed under the Orissa Act was provided as a stimulus for prompt payment, that such a stimulus would facilitate and expedite collection and therefore is a part of process of collection. It was held that the power to collect tax assessed in the manner as the sale and purchase under the general sales tax law of the State as provided in section 9(3) of the Central Sales Tax Act (as it then stood) included within itself, all concessions given under the Orissa Act for payment within the prescribed time. The said judgment woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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