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2015 (8) TMI 1061 - BOMBAY HIGH COURT

2015 (8) TMI 1061 - BOMBAY HIGH COURT - TMI - Calculation of Cumulative Quantum of Benefits Assessing Officer worked out Cumulative Quantum of Benefits as per Rule 31AA of Bombay Sales Tax Rules,1959 Assessment order resulted in refund Applicant being not satisfied with working of cumulative quantum of benefits preferred appeal which was dismissed Held that:- Appellate Authority found that there is no documentary evidence to support argument that calculation is erroneous and incorrect .....

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x to Government Assessment could not have been made as all invoices would indicate that sale price was not to include component of sales tax Tax element could not have been, therefore, forming part of price and as depicted in invoices Tribunal has correctly come to conclusion that sale effected by dealer is not liable for payment of sales tax Therefore, calculation of CQB as made in applicant's case is not required to be altered or changed, such reason could not have been termed as perve .....

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the context of the express provision in rule 31AA of the Bombay Rules providing for calculation of CQB equal to the amount of sales tax, additional tax, surcharge, turnover tax which would have been payable by a dealer if he was not holding Certificate of Entitlement, whether the Tribunal is justified in not allowing in deduction as provided in Rule 46A of the Bombay Rules while calculating the CQB (Cumulative Quantum of Tax Benefits enjoyed by the applicant) on sales side." 2. The Tribuna .....

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t the applicant before us at whose instance this question is referred is duly registered under the Bombay Sales Tax Act,1959. It is a manufacturer of PVC Pipes. The applicant is holding Certificate of Entitlement granted under the Package Scheme of Incentives and opted for exemption mode of incentives. The applicant was assessed to tax for a period commencing from 1.4.2000 to 31.3.2001 by the Assistant Commissioner of Sales Tax on 18.6.2004. The applicant was granted exemption from payment of ta .....

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It was urged before him that the Assessing Officer did not work out the CQB correctly. It was worked out without allowing deduction of tax element as provided by Rule 46A of the Bombay Rules. This contention was not accepted by the First Appellate Authority and it proceeded to reject the First Appeal on 30.12.2004. The applicant, therefore, filed a second appeal before the Tribunal. The Second Appeal was heard by the bench of the Tribunal and after it referred to the Rules in question, it dismi .....

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s calculation of CQB. In the case which is admittedly covered by subrules (1) and (2), the CQB has to be calculated in terms of subclauses (a) to (e) of subrule (2) and proviso below the same. Mr.Thakar would submit that in the present case the language of subclause (e) falls for consideration and determination. It is that language which enables the Authorities to calculate these benefits on notional or deemed basis. The legislature contemplates that the calculation has to be made by assuming th .....

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going back to Rule 46A. Once this basic fallacy in the conclusion of the Tribunal is noted, then, it is inevitable that the calculations have to be redone. Mr.Thakar invites our attention to the fact that the copies of sales Invoices were produced. The sale price prior to the period of exemption is stated to be more or less equal. However, the Tribunal has wrongly and erroneously taken assistance of the language of Rule 46A. Thereby it has completely ignored the manner of calculation of CQB as s .....

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of Maharashtra, (56 VST 62.). Finally, reliance is placed upon the judgment of the Karnataka High Court in the case of "Deputy Commissioner of Commercial Taxes (Vigilance), Bangalore Vs. Hindustan Lever Ltd., ((2007)10 VST 330)(Karn.)". 8. On the well settled principles that the word "deemed" will have to be interpreted in such a way that the things which do not exist must be taken to be existing and real, Mr.Thakar relies upon the judgment of the Supreme Court in the case & .....

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fore the Assessing Officer the dealer appeared on notice through his Chartered Accountant. The applicant - dealer admitted that he is holding an Entitlement Certificate bearing date namely 8.9.1997. The period is from 1.9.1997 to 30.4.2007 and the ceiling amount is fixed at ₹ 83,40,944/-. There is an expansion unit for which as well the similar certificate is issued on 21.1.2000 and the period covered is 1.2.2000 to 31.7.2007. The ceiling amount is fixed at ₹ 34,62,750/-. Mr.Sonpal w .....

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plates a tax which is payable. In this case no tax was payable. In the definition of the term 'sale price' as appearing in Section 2(29) of the Bombay Sales Tax Act,1959, Mr.Sonpal placed heavy reliance on Explanation II which denotes as to how component of tax has to be ignored for determining the sale price. Then, our attention is invited to Section 3, 8, 9 and 10 as well as Section 37 to urge that there is no question of any tax payable by the applicantdealer and when the exemption is .....

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ordingly. 10. With the assistance of Mr.Thakar and Mr.Sonpal, we have perused the reference application and the annexures thereto. We have proceeded on the footing that this reference can be disposed of without the assistance of the record and proceedings from the Tribunal. It is agreed by both sides that the question being referred from admitted facts and noted in both the orders of the Tribunal, then, there is no need to call for record and proceedings from the Tribunal's Registry. Though .....

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er enjoyed tax exemption is undisputed. In the case of the present applicant, therefore, the question was how to calculate the Cumulative Quantum of Benefits (for short 'CQB'). The Assessing Officer found that the applicantdealer holds such certificate. He found that there is a refund which accrues to the applicant. The applicant has claimed several benefits in the form of set off etc. Therefore, the assessment order was made accordingly. 12. It is the refund quantum with which the appli .....

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of the cumulative quantum of benefits :- (1) The cumulative quantum of benefits received by a dealer (hereinafter referred to as "the said dealer") to whom a Certificate of Entitlement has been granted by the Commissioner under entry 136 *[or entry 3 or entry 11 or entry 12 in Group E of the Government Notification, Finance Department ,No. STA. 1095/387/Taxation-2, dated 22nd September 1995, as a case may be,] of the Schedule to the notification issued under section 41 shall be calcula .....

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ve been payable on the purchase of raw materials to the Government by the said dealer under any of the provisions of the Act and the amount of additional tax in relation to such purchase tax which would have been payable to the Government if the exemption granted under the said entry was not available; (b) a sum equal to the amount of [sales tax and turnover tax] which would have been payable by a selling dealer not holding a Certificate of Entitlement on the sale of raw materials to the said de .....

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inished products manufactured by the said dealer in the eligible unit and specified in the Eligibility Certificate granted to him by the implementing agency and if the interState sales of such products are generally liable for Central Sales Tax at a rate less than 4 per cent then a sum calculated at such lower rate on the said turnover; (e) a sum equal to the amount of tax (including sales tax, additional tax, [surcharge] and turnover tax) which would have been payable to Government on any sales .....

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urther that, in respect of periods starting on or after the 1st April 1997, if the said dealer would have been entitled to claim setoff drawback or as the case may be, refund under rule 41D [or, as the case may be 41G]. If he was not, holding the said Certificate of Entitlement, then in respect of such turnover of purchases, the sum mentioned in clauses (a), (b) and (c) shall be reduced by an amount equal to such setoff which have been allowed to such dealer.] Provided further that if the said d .....

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ovided also that where by virtue of Rule 3 of the Bombay Sales Tax Rules, 1959, the process employed by the said dealer does not amount to a manufacture, then no sum shall be calculated under clause (e), if the corresponding purchases of raw materials are made from registered dealers. (3)(a) for the purpose of calculation of the cumulative quantum of benefits under the 1988 Package Scheme of Incentives, the provisions contained in subrule (2) [and under the 1993 Package Scheme of Incentives [or .....

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ernment by the said dealer on his interState sales of finished products manufactured by the said dealer in the eligible unit of finished product specified in the eligibility Certificate granted to him, if the said dealer was not holding the said Certificate of Entitlement under Package Scheme of Incentives under 1993 Scheme, [or Power Generation Promotion Policy]] Provided that, for the purpose of calculation of the cumulative quantum of benefits received by the Mega Project, a sum equal to 1 pe .....

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f Group-E of the Schedule to the said notification has agreed to calculate the cumulative quantum of benefit on the maximum retail price specified in condition at serial number 3 in column (4), then for the purpose of clause (e) of subrule (2), the amount of tax which would have been payable to the Government on any sale of product will be taken to be equal to the amount of such tax payable on the aggregate of maximum retail price of the goods so sold.] [(5) In this rule the expression "raw .....

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ion of sale price for levy of tax.- [ A Registered dealer may - (a) in respect of any sale effected [before the notified day] on which the sales tax or general sales tax is payable by him either- (i) exclude the amount, if any, collected by him separately by way of sales tax or, as the case may be, general sales tax from the sale price on which tax is leviable, or (ii) deduct from the sale price of the goods a sum calculated in accordance with the formula given in the Table hereunder:- TABLE The .....

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him either (i) exclude the amount, if any, collected by him separately by way of sales tax from the sale price on which tax is leviable, or (ii) if he has not separately collected any such amount by way of sales tax but has reimbursed himself in respect of any tax liability in the sale price itself, deduct from such sale price a sum collected in accordance with the formula given in the Table hereunder: TABLE The formula shall be as follows:" R+S+T 100+ R+S+T R= Rate of sales tax applicable .....

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the amount, if any, collected by him separately by way of resale tax from the same price on which resale tax is leviable, or (ii) if he has not collected separately any such amount by way of resale tax but has reimbursed himself in respect of resale tax liability in the sale price itself, deduct from such sale price a sum calculated in accordance with the formula given in the Table hereunder: TABLE The formula shall be as follows:" TABLE The formula shall be as follows:- R 100 + R 'R&# .....

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ted by him separately by way of sales tax from the sale price on which tax is leviable, or (ii) if he has not separately collected any such amount by way of sales tax but has reimbursed himself in respect of any tax liability in the sale price itself, deduct from such sale price a sum collected in accordance with the formula given in the Table hereunder: TABLE The formula shall be as follows:" R+S+T 100+ R+S+T R= Rate of sales tax applicable to the sale of the goods. [S= Rate of surcharge ( .....

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by way of resale tax from the same price on which resale tax is leviable, or (ii) if he has not collected separately any such amount by way of resale tax but has reimbursed himself in respect of resale tax liability in the sale price itself, deduct from such sale price a sum calculated in accordance with the formula given in the Table hereunder: TABLE The formula shall be as follows:" Sale Price X RT 100+ RT RT= Rate of resale tax applicable to the sale of the goods]" 14. A bare perusa .....

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uch calculation. By subrule (2), the Legislature makes a specific reference to the Certificate under the 1979 Package Scheme of Incentives including the amended 1979 Package Scheme of Incentives and the 1983 Package Scheme of Incentives. Before us the applicantdealer satisfied this criteria. The calculation of cumulative quantum of benefits in the applicant's case shall be aggregate of the sums set out in Rule 31AA(2)(a) to (e) and we are concerned with clause (e) of subrule (2). That refers .....

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f there is an exemption enjoyed by the applicant, then, the sale price would not include the tax element. Thus, the conclusion reached is that for the purposes of clause (e) of subrule (2), the requirement would be a sum equal to the amount of tax which would have been payable to Government on any sale of products manufactured by the said dealer in the eligible unit and specified in the Eligibility Certificate granted to him by the implementing agency if the said dealer was not holding the certi .....

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ment of sales tax. Therefore, the calculation of the CQB as made in the applicant's case is not required to be altered or changed. The sums that are referred to in clause (e) cannot be taken into consideration as far as the present applicant is concerned. Such a conclusion in the case of the present applicantdealer and concurrently reached, could not have been termed as perverse or vitiated by any error of law apparent on the face of the record. If on the plain, clear and unambiguous languag .....

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& Anr. Vs. Commissioner of Sales Tax, Mumbai and others" (supra) and "Shakti Arora Exports Pvt. Ltd. Vs. State of Maharashtra" (supra) concluded, as urged by Mr.Thakar, that there is a Government Resolution and which was to be interpreted. In interpreting that and going by its plain language the conclusions relied upon by Mr.Thakar are reached by the Division Bench. We must immediately note the factual position when the reference was made to Rule 31AA in "Prasad Power Con .....

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1988 Package Scheme of Incentives, whether a different mechanism for calculating the notional sales tax liability can be introduced with retrospective effect from 1st January,1980 by inserting section 41B in the Bombay Sales Tax Act and Rule 31AA to the Bombay Sales Tax Rules. That is urged to be defeating the rights vested in the Units established under the 1988 Scheme prior to insertion of Rule 31AA. It is in dealing with such a challenge and finding inconsistency in the language of paragraph .....

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s Pvt. Ltd. Vs. State of Maharashtra" (supra) only follows 'Prasad Power Control Pvt.Ltd." (supra) and nothing beyond that is to be found therein. For the reasons that we have assigned above even this judgment is distinguishable. 17. Before the Karnataka High Court, the controversy was entirely different. The respondent - Hindustan Lever Limited established a new industrial unit engaged in the production of blended packed teas at Dharwad and availed the benefit of sales tax exempti .....

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