Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (1) TMI 6 - BOMBAY HIGH COURT

2016 (1) TMI 6 - BOMBAY HIGH COURT - [2016] 89 VST 349 (Bom) - Constitutional validity of some of the provisions of the Maharashtra Purchase Tax on Sugarcane Act, 1962 - Interpretation - determination of purchase price - valuation - inclusion of expenses - the amendments were carried out from 1st October, 1995 to change the structure of taxation - Held that:- On a reading of the provisions together and harmoniously, we are not in agreement with Mr. Joshi that the tax is on expenses or expenditur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2(f-b) of the Act of 1962. Once it is apparent that the components or elements stated therein go into fixation of purchase price and that is the measure for computation of the tax, then, depending upon facts and circumstances in each case, the occupier can point out that not all components or elements are included in the purchase price in his case. That it is only the actual costs which have been taken into account or that they have not included all the heads simply because not all of them form .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

would be open for the Petitioners to point out that the turnover of purchases in their case involves payment of purchase price without the elements that are set out in the definition of the term "purchase price" referred above. - The computation of the purchase price is indicated so that the tax to be levied and collected is correctly computed. If sum total of the purchases would constitute the turnover and the measure of that would be the amount of purchase price paid and payable by an occu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on No. 3198 of 2015, Writ Petition No. 7543 of 2015, Civil Application No. 2197 of 2015, Writ Petition No. 12068 of 2012, Civil Application No. 1696 of 2015, Writ Petition No. 12070 of 2012, Civil Application No. 2649 of 2013, Civil Application No. 2984 of 2013, Writ Petition No. 12071 to 12079 of 2012, Writ Petition No. 1441 of 2014 For the Appellant : Mr Sudam Kale, Mr P C Joshi with Mr Piyush Shah, Mr P C Joshi with Mr Ms Nandini Joshi, M/s Harish and Co, Mr S P Surte with Mr Niranjan Shimpi, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2) We grant Rule in some of the Petitions which have been listed for admission and along with others which are ready for hearing. Even these Petitions would be disposed of finally by this judgment. In other words, since all parties agreed and are present before the Court, with their consent, the Petitions are disposed of finally by this judgment. 3) The leading argument canvassed is in Writ Petition No. 2060 of 1997. We would refer to the facts in this Writ Petition. 4) The Petitioner is a Co-op .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e cultivators of sugarcane having their own land under cultivation. Apart from challenging the constitutional validity of sections 2, 3 and 6 of the Act of 1962 as amended from 1st October, 1995, the Petitioner also challenges the legality and validity of the letters dated 19th October, 1996, 20th November, 1996 and 6th January, 1997, issued to the Petitioner by Respondent No. 3. The Maharashtra Act IX of 1962 was enacted on 18th April, 1962. It is an Act to provide for levy and collection of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uot;, "occupier", "prescribed" and "unit". These definitions read as under:- "2(b) "Factory" means any premises (including the precincts thereof), wherein twenty or more workers are working and in which, or in any part of which any manufacturing process connected with the production of sugar by means of vacuum pans is being carried on, or ordinarily carried on, with the aid of power. 2(c) "licence" means a licence granted or renewed under th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s a unit engaged or ordinarily engaged in the manufacture or production of Khandsari sugar and which is capable of handling or processing sugarcane juice produced with the aid of a crusher driven by power." 5) Therefore, unless the context otherwise requires, the definitions will have to be read and understood as enacted above. By section 3, it is stated that there shall be levied and collected a tax on the purchase of sugarcane being purchased for use in the manufacture or production of su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

int an officer to be called the Commissioner of Purchase Tax (Sugarcane) and may appoint one or more officers to assist such Commissioner for the purpose of functions under this Act and give them such designations as may be prescribed. By section 5, there is a provision made for issuance of a licence for purchasing sugarcane for use in the manufacture or production of sugar. By section 6, every occupier liable to pay tax under the Act of 1962 shall, within thirty days after the end of every mont .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

D, interest on delayed refund is dealt with. By section 7E, refund of excess payment of tax is contemplated, whereas, by sections 8 and 9, there is a provision for Appeal and Revision to a person aggrieved. By section 10, Court fees on appeal and applications are provided for and by section 11, it is clarified that in computing the period laid down in sections 8 and 9, provisions of section 4 and 12 of the Indian Limitation Act, 1963 shall, so far as may be, apply. By section 12, finality is giv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dealt with. By section 16, the offences and penalties are set out. By section 17, the compounding of offence is permitted. By section 18, there is a power conferred in the State Government to make Rules and generally to carry out the purpose of the Act and such Rules made includes Rules for levy of fees for any of the purposes of the Act. Certain purchases are not liable to tax and which are falling within section 19 of the Act and by section 20, the Maharashtra Purchase Tax on Sugarcane Ordina .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case of the Petitioners that by the amending Act XVI of 1995, the Act of 1962 was radically changed so as to provide for levy of tax on the purchases of sugarcane based on the purchase price instead of the quantity purchased. The Petitioners therefore challenge the validity of the said amendments carried out by this Amendment Act. It is the case of the Petitioners that by the amendments, the definitions of "purchase price, "turnover purchases", which were not in the original .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

system was to allow the units to make payments of purchase tax by two installments, 50% payable during the season while the balance 50% was allowed to be paid in five equal installments during off season. The amended position in law, in nutshell, made departure from earlier system of levying tax on quantity basis coupled with the deductions that were provided under the unamended section 3(3). After the amendment, the tax is provided to be levied not only on the consideration that a buyer would p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

etitioner is a member of the Federation, namely, Maharashtra State Co-operative Sakhar Karkhana Sangh Limited. Through that Federation, representations were made to the State Government requesting to clarify the impact of the amendment carried out to the Act. Accordingly, the Deputy Commissioner of Sales Tax (Headquarters), by his letter dated 5th September, 1996, clarified that it was necessary to include the expenses incurred for sugarcane transport in the purchase price before paying tax. Sim .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnexure 'A' is copy of this letter. This clarification was in addition to the earlier clarification by the Deputy Commissioner of Sales Tax (Headquarters) dated 27th June, 1996 Annexure 'B'. Since the interpretation placed by Respondent No.2 through its subordinate was erroneous and arbitrary, the Petitioners sought legal advice and they were informed that the Respondents were not justified in holding that the expenditure incurred for transportation of sugarcane, even though paid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

no dispute about such an addition, but according to the interpretation placed by the Respondents, any expenditure incurred by the factory or the Petitioners, distinct separate and independent of the purchase of sugarcane in question, would also have to be included or added to the consideration paid to the cultivator. This interpretation, according to the Petitioners, runs counter to the provisions of the Sale of Goods Act, 1930 as also the principles which determine the transfer of title to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and severed from the land as per the programme formulated much in advance is explained. The emphasis is that sugar industry is a seasonal industry. The sugar season normally commences from October- November and culminates by April-May of the following year. However, the exact duration of the season entirely depends on the growth of sugarcane, which in turn entirely depends on the rainfall during rainy season. Sugarcane is the main raw material for the sugar industry and therefore, each sugar ma .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of water in the area concerned. The Petitioner in question would thereafter supply the sugarcane seed to the cultivator from its own nursery and in case the required seeds are not available in the nursery, the cultivator in question would be permitted to procure the sugarcane seed from the market and its cost would be reimbursed by the Petitioner in question. The cost of seed supply at this initial stage is treated as interest-free loan by the sugar factories to the cultivator which is to be adj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g of sugar crushing, the cultivator concerned is required to submit the information of sugarcane plantation in a prescribed form to the Agricultural Department of the factory in question. After receiving the information about sugarcane plantation, the same is counter-checked by the staff employed by the factory owner as the field Mukadam, who would verify the area of plantation, the quality of the sugarcane in question, the date of plantation etc. After receiving such a scrutiny report from the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ding the cost of fertilizers, pesticides, wages to workers etc. As per the system and the procedure adopted in the State of Maharashtra, the crop loan so granted to the individual cultivator, may be by a bank or the co-operative credit society, is again required to be adjusted against the sale proceeds of the sugarcane purchased from the cultivator in question. 32. Each factory would prepare its own harvesting programme on the basis of the entries in their register referred to hereinabove. In th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

factory in question would arrange to test the maturity of the cane by selecting at random the samples of sugarcane grown in the field. After successful testing is done at the laboratory, and if found fit, the sugar factory would give a notice to the cultivator concerned to stop watering the cane for a period of 15 days so that proper harvesting of the cane could be done. Accordingly, a timetable is prepared as to which field is to be visited for the purpose of harvesting the sugarcane from a pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

i.e., after the completion of the event of its purchase from the cultivator, arrange for the transportation of the sugarcane through its own agency by its own truck or by the trucks arranged for the purpose from outside agencies. However, in all such cases, three copies of the receipt issued by the representative of the sugar factory at the Collecting Centre accompany the truck driver to the factory where the sugarcane so brought are weighed at the weigh bridge. The weighment is recorded on all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or transfers the physical property or the title to the goods by delivering the severed sugarcane to the agent of the buyer-sugar factory. Therefore, the point of time when the transaction of sale by the cultivator and the purchase by the sugar factory, can be said to have been fructified, is the time when the delivery of the sugarcane is given by the cultivator to the representative of the sugar factory in question. That necessarily would mean that the seller cultivator would not be responsible .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he delivers the severed sugarcane at the Collecting Centre and obtains the receipt acknowledging the delivery thereof, from the representative of the sugar factory. The general property over the goods therefore would pass from the cultivator to the sugar factory at the moment of delivery of the sugarcane in question by the cultivator to the Collecting Centre in question. The passing of the property to the sugar factory at the Collecting centre would not be affected by the fact that the crops in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lish the transfer of title to the goods from the seller to the buyer." 10) Then, reliance is placed on certain definitions under the Sale of Goods Act and it is submitted that the concept of delivery is understood as the point of time when there is a change of the possession of the goods in question from the seller to the buyer. Then, relying upon the definition of the term "goods" appearing in section 2(7) of the Sale of Goods Act, it is submitted that the Petitioners having agre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Petitioner. The term "purchase of sugarcane" will have to be interpreted in the same manner as is done in the Sale of Goods Act. Throughout the Petition, reliance is placed on the Sale of Goods Act to urge that the Petitioners effect purchase of sugarcane at the moment when there is a transfer of property from the cultivator to them and that would be only when the sugarcane severed is delivered to the Collecting Centre or to the representative of the factory owner/Petitioners. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(Respondent No. 2), there is a misinterpretation of the provisions of the Act. That is how uncalled for and unwarranted additions are made to the consideration agreed to be paid to the cultivator. The Petitioners have been submitting their returns, but the complaint is that though there is a provision of assessment in the Act, there is no assessment made for the period covered by the amendment with effect from 1st October, 1995. Though there was no such assessment, Respondent No. 3, by his lett .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hase tax payable by the Petitioners. He also directed that information be provided about purchase tax payable during the month of May, 1996, June, 1996 and July, 1996. Annexure 'D' is a copy of this letter. 11) Following the letter at Annexure 'D', there is another letter dated 5th November, 1996, under which, Respondent No. 3 informed the Petitioner that certain amount of purchase tax was due in the month of May and June, 1996 in respect of 1995-96 season and the purchase tax on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

asures on the basis of interpretation of the provisions of the Act of 1962 that the Petitioners are constrained to challenge the vires of the Act and the legality and validity of the aforementioned letters. It is on this footing and by raising several grounds in para 41 that this Writ Petition has been filed. 13) On this Writ Petition, an order of admission was made on 24th June, 1997. The Respondents were given time to file affidavit and an affidavit in reply has been filed by the Joint Commiss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x as compared to the Karkhanas which pay higher prices for sugarcane. In order to remove disparity and ensure social justice, the amendments were carried out from 1st October, 1995 to change the structure of taxation. Though it is stated that the Petitioner has not challenged the legality and validity of the amended provisions, it is apparent that after the affidavit was filed, one opposing admission on 20th June, 1997 and the other on 13th April, 2010, the amendments have been made to the Writ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

garcane. The tax on purchase of the sugarcane is under the Act of 1962. It is therefore within the field of legislation provided by Item No. 54 of the List II of the VIIth Schedule to the Constitution of India. 15) The Commissioner explains that the amounts spent for transport charges will also form a part of the purchase price which is very clear from the language of the definition. It is submitted that the argument and challenge that if transport charges are paid by the factory, the same shall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

However, by the amended definition the word "charge" has been substituted by word "spent" in clause (iii) of section 2(f-b). Even when it is not charged separately by any farmer since amendment is effective from 1st October, 1995 though amount has been paid by the Karkhana, it will form part of the purchase price. The argument that the expenses incurred have been brought in and the tax is not on purchase of sugarcane but expenditure incurred is dealt with in the subsequent pa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd the Appeals were also decided on 5th February, 2008 by the appellate authority. It is in these circumstances that the information was sought by the letters addressed in November, 1996 and January, 1997. Once the tax has been levied legally and validly, then, the amount thereof can be demanded by the officers and if that demand is not satisfied, they are justified in recovering the tax by coercive means. For these reasons and when the levy is constitutional and valid, the impugned communicatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n is raising an identical challenge. The reply, therefore, is in identical terms. The same principles are relied upon to support the levy. Hence, we need not refer to the facts in the other Petitions in detail. Similarly, in other Petitions, which were heard along with Writ Petition No. 2060 of 1997, the challenge being identical, the pleadings are identical. Some of the Petitions have been called from the Benches of this Court at Aurangabad. 18) Mr. P. C. Joshi, learned Counsel led the argument .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re incurred by the cultivator before delivery would be forming part of the purchase price. In other words, criticizing the definitions in section 2(f-a) (f-b)(ii), Mr. Joshi would submit that if these definitions and the sub-clauses therein are read together, it would mean that the aggregate of the amounts of purchase price paid as provided by section 2(g-a) is not the determinative or conclusive test. The attempt is to include other sums or amounts incurred or spent. That is not contemplated by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment. The demand should be crystallized and ascertained. That would be only on adjudication. Once the adjudication is not done, then, no coercive recovery can be effected. Mr. Joshi was at pains to invite our attention to pages 66-A, namely the Ordinance VI of 1998. He would also refer to the compilation Volume - I of which relevant documents form part to submit that each and every amount cannot be taken into consideration. The amount taxed is on expenditure and therefore beyond the compe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plied to it. If this is understood, then, in pith and substance, the subject tax is on expenditure. That is how the word "spent" has been used. 20) Mr. Joshi then submits that the Ordinance has no saving clause. The impugned letters cannot be saved by the amendments. Mr. Joshi has referred to the full text of Maharashtra Act XX of 2002. He would submit that section 1(2) (a) of this Maharashtra Tax Laws (Levy and Amendment) Act, 2002, Maharashtra Act XX of 2002 refers to the amendments .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the said Act dated 29th March, 2003 read with Circular No. 12T of 2003 dated 31st March, 2003 coupled with the amendment by the Maharashtra Act 8 of 2003 dated 29th March, 2003 are questioned. The Petition also challenges the validity and correctness of the latest circular issued by the commissioner of Sales Tax dated 23rd November, 2009 being Trade Circular No. 31T of 2009 on various grounds set out in the Petition as amended. 21(B) Under the provisions of the Central Act No. 10 of 1955 i.e. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sions of the Essential Commodities Act, 1955, the impact of Sale of Goods Act will also have to be considered for determining the legality of the amendments impugned before this Court. 21(C) The procedure adopted by the sugar factories during the relevant period has been succinctly mentioned in paras 28 to 33. In a nutshell, it can be mentioned that the Petitioner had established various crop growing centres in the vicinity of the field of the grower concerned so as to have quick delivery of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ane severed from the farm was intended to be transferred to the Petitioner by the cultivator upon delivering the crop to the Petitioner's agent at the respective crop growing centres. The general property over the sugarcane severed from the farm was thus affected by respective cultivator, did not depend on the later weighment of the crops so purchased at the factory gate, solely for the purpose of effecting the payment to the cultivator concerned. 21(E) As per the then existing law, the Peti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oner was being continuously pressurised with directions by the Respondent to make the payment of purchase tax on sugarcane purchase also on the expenses incurred for transportation of the sugarcane from the crop growing centre to its factory by adding harvesting and transport expenses to the actual consideration paid by the Petitioner to the cultivators as purchase price from time to time. 21(G) After amendment through the Maharashtra Act XVI of 1995, with effect from 1st October, 1995, the Gove .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

esent Petition by disturbing the provisions brought in the enactment from 1st October, 1995 by the Maharashtra Tax Laws (Levy and Amendment) Act, 1995. (Act XV1 of 1995). The said Ordinance VI of 1998 did not contain any validating and saving clause, therefore the impugned three letters being Exhibits 'D', 'E' and 'E1' be declared as without jurisdiction. 21(H) In addition thereto, the State Government having realised the position of law regarding its competency to charge .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1995 was resorted to by the said Levy and Amendment Act, 2002. That amendment also have been inserted and referred to in the petition by the additional clause No. (h-a). 21(I) It is shocking to note that overlooking the Civil Application No. 530 of 2010 submitted on 4th February, 2010, by the Petitioner seeking permission to amend the Petition, the Respondent, by its additional affidavit in reply dated 13th April, 2010, referred only to the amendment by Ordinance No. VI of 1998 dated 1st May, 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a (Levy and Amendment) Act, 2002 were relevant for the purpose of the present Petition. The amendments related to the deletion of the definition clauses (f-a), (f-b) and (g-a), substitution of section 3 and amendment of section 6 by the said Amendment Act deleting, substituting and amending certain provisions. The amendment was brought into force with effect from 1st May, 2002 by virtue of the provisions of section 2(a) of the said Maharashtra Act 20 of 2002. In the memorandum of delegated legis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f sugarcane effected by the occupier of a factory from whole of tax if the sugar factory had exported the sugar manufactured by it during nine months from 1st January, 2002 to 30th September, 2002. While in case of other sugarcane purchases made during the period from 1st May, 2002 to 30the September, 2002, tax on cost of cutting and transport charges purported to be forming part of the purchase price of sugarcane; was exempted without any condition; in case of purchases from 1st October, 2002 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct 8 of 2003. The amendment to section 2 of the Amendment Act 20 of 2002 was construed to mean that such an amendment automatically amended the duly amended provisions of sections of the main Act by sections 10, 11 and 12 of the Amendment Act, which already became part of the main enactment with effect from 1st May, 2002. 21(N) Such an erroneous version by the Respondent was again repeated by another Trade Circular 31T of 2009 dated 23rd November, 2009. Under the said Circular, the Respondents h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubmits that the provisions deleted, amended and substituted with effect from 1st May, 2002 by the Maharashtra Act 20 of 2002 continued on the statute book unaffected by Act 8 of 2003 and therefore no tax can be levied on the expenses from the amounts spent by the Petitioner. Accordingly, Rule be made absolute with due relief in terms of prayers (a), (b), (b1), (b2), (c) and (d) of the Petition. 21(O) Mr. Joshi has relied upon the following judgments:- (i) Govind Saran Ganga Saran vs. Commissione .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Chettiar and Co. Ltd. and Anr. vs. Express Newspapers Ltd., AIR 1968 SC 741. (vii) The State of Orissa vs. Utkal Distributors (P) Ltd., (1966) 17 STC 320 (SC). (viii) Thiru Arooran Sugars Ltd. vs. Deputy Commercial Tax Officer, (1988) 71 STC 444 (Mad.). (ix) State of Tamil Nadu and Ors. vs. Kothari Sugars and Chemicals Ltd., (1996) 101 STC 197 SC. (x) Chief Commissioner vs. T. N. T. India Pvt. Ltd. (2010) 31 VST 92 (Kar.) . 22(A) On the other hand, Mr. V. A. Sonpal, learned Special Counsel appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t grower). The hitherto amendment in 1995 was leviable on weight basis and from 1995, basis of levy of tax is changed to ad-volarem. Though there is no challenge to ad-volarem levy of purchase tax, real grievance is of adding the amount spent on transportation and money spent for any thing done before delivery of the sugarcane to the dealer. The challenge is only on the basis of measure for the purpose of calculating the percentage of purchase price. In other words, the challenge is the method o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, Entry 54 of 7th Schedule to the Constitution of India the State or Center has full, unbriddled power to fix the measure of tax that is to what will be basis of calculating tax. 22(C) In several cases as per compilation given separately, in case of sugarcane, the State has power to include harvesting and transportation charges to the agreed or disbursed price is upheld. Sugarcane is a controlled commodity and as per Sugarcane Order each year published by the Central Government fair and reasonab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ransportation expenses are agreed to be deducted from fair price. Hence, going by the principles that disbursement or adjustment does not affect the purchase price at which tax is to be levied. It is therefore submitted that there is no extraneous or alien or irrelevant or unreasonable consideration for inclusion of expenses prior to delivery and transportation expenses to be included in the purchase price. 22(D) So far as vires of the amendments are concerned, suffice it to say that none of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he power to fix the rate and prescribe the machinery for the recovery of the tax. This power also gives jurisdiction to the legislature to make such provisions as, in its opinion, would be necessary to prevent the evasion of the tax. In imposing taxes, the legislature can also appoint authorities for collecting taxes and may prescribe the procedure for determining the amount of taxes payable by any individual, all the provisions are subsidiary to the main power to levy a tax and, therefore, once .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Act but its real nature, its pith and substance. Tax on sale or purchase must be on the occurrence of a taxing event of a sale transaction. Beyond that is left to the free play of the legislature, subject, of course, to the contra-indications about capricious, arbitrary or irrational features. It is a situation, cultivated by familiarity to consider that all sales tax must necessarily have nexus with the price of the commodity. Of course, price as basis is not only usual but also safe to avoi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ethod for quantifying the tax is by reference and determinable to the expenses of the transportation and other expenses before delivery, it is not a tax on expenses. 22(H) The bottom line of the said doctrine is to look at the legislation as a whole and if it has a substantial connection with the entry, the matter may be taken to be legislation on the topic. 22(I) The nomenclature of a levy is not conclusive for deciding its true character and nature. For deciding the true character and nature o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e by Parliament or a State legislature is not declared bad. 22(K) Ordinary laws have to answer two tests for their validity: (1) the law must be within the legislative competence of the legislature as defined and specified in Chapter I, part XI of the Constitution, and (2) it must not offend against the provisions of Articles 19, 13(1) and (2) of the Constitution. 22(L) When a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be asce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tute not as an organic whole, but as a mere collection of sections, then, disintegrate it into parts, examine under what heads of legislation those parts would severally fall, and by that process determine what portions thereof are intra vires and what are not. 22(M) Mr. Sonpal has relied upon the following judgments:- (i) Baramati Grape Industries Ltd. and Ors. vs. The State of Maharashtra and Ors., 1997(3) Bom. C. R.190. (ii) Black Diamond Beverages and Anr. vs. Commercial Tax Officer, Central .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

puty Commercial Tax Officer (2005) 142 STC 543 . (viii) Union of India and Ors. vs. Bombay Tyre International Ltd. and Ors., AIR 1984 SC 420 . (ix) Maharashtra Chamber of Housing Industry and Ors. vs. State of Maharashtra and Ors., (2012) 51 VST 168 (Bom.) . (x) Commissioner of Wealth-Tax, Kanpur vs. J. K. Cotton Manufacturers Ltd., (1984) 146 ITR 552 . (xi) Goodricke Group Ltd. and Ors. vs. State of West Bengal and Ors., Writ Petition (Civil) No. 951 of 1989 (Supreme Court) decided on 25th Nove .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ii) Vijay Kumar Sharma and Ors. vs. State of Karnataka, AIR 1990 SC 2072. (xviii) State of A. P. and Ors. vs. Mc. Dowel, AIR 1996 SC 1627. (xix) State of Bihar and Ors. vs. Shree Baidyanath Ayurvedic, AIR 2005 SC 932. (xx) State of West Bengal and Anr. vs. Kesoram Industries, AIR 2005 SC 1646. (xxi) All India Federation of Tax Practitioners vs. Union of India, AIR 2007 SC 2990 . (xxii) State of Karnataka and Ors. vs. Chamudeshwari Sugar Ltd., AIR 2009 SC (Supp) 494. (xxiii) State of Madhya Prade .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5 SCC 23 . (xxix) Godfrey Phillips India Ltd. and Anr. vs. State of U. P. and Ors. (2005) 2 SCC 515 . (xxx) M/s. Hiralal Rattanlal Etc. Etc. vs. State of U. P. and Anr., (1973) 1 SCC 216. (xxxi) Union of India and Anr. vs. Raghubir Singh (Dead) by Lrs. Etc. and Ors., (1989) 2 SCC 754 . (xxxii) State of Karnataka etc. vs. M/s. Pro Lab and Ors. etc., 2015 SCC Online SC 81 . 23) For properly appreciating the rival contentions, it must be noticed that the Petitioners are challenging the vires of ame .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f a tax on purchase of sugarcane for use in the "manufacture of sugar" and which words were then substituted with the words "manufacture or production of sugar including Khandsari Sugar". The Statement of Objects and Reasons leading to the enactment are relevant and some of the clauses thereof are reproduced herein below:- "STATEMENT OF OBJECTS AND REASONS. The Supreme Court in the case of Diamond Sugar Mills Ltd. versus State of Uttar Pradesh (1961) I. S. C. J. 652, hel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ection of the cess on entry of sugarcane into the premises of a factory for use therein, under the Bombay Sugarcane Cess Act, 1948 (Bom. LXXXII of 1948), was proposed to be brought into force in this State with effect from 31st December 1961. As thereafter it was not possible to collect the tax on sugarcane, it was necessary to take immediate action to levy, with effect from 1st January 1962, a purchase tax on sugarcane purchased by factories for the manufacture of sugar to make up the loss of r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Act of 1962 were amended by the Maharashtra Act 21 of 1998 with effect from 1st May, 1998 and are reproduced. Since heavy reliance has been placed on the definitions of the terms "factory", "licence", "occupier", "purchase", "purchase price" and "turnover of purchases", we reproduce these definitions hereinbelow:- "2(b) "factory" means any premises (including the precincts thereof), wherein twenty or more workers are w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deemed to be the occupier of the factory or of the unit, as the case may be; and the term includes also any person appointed by the occupier to act as a purchasing agent. 2(f-a) "purchase" means a purchase of sugarcane made within the State for cash or deferred payment or other valuable consideration and includes any supply by a shareholder to a co-operative society or limited company for cash, deferred payment or other valuable consideration. 2(f-b) "purchase price" means ag .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

during a given period. 26) These definitions indicate as to how the reference is to a factory where manufacturing process connected with the production of sugar and by the means set out in the definitions is undertaken. A licence is required for purchasing sugarcane for use in the manufacture or production of sugar and that is granted under the Act. The term "occupier" is defined so that an officer is identified for the purposes of discharging several obligations in terms of the Act. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m "purchase price" means aggregate of the sums referred to in the sub clauses of the definition of the term "purchase price". The word "aggregate" means total amount or sum total. It is understood as composed of several, combined whole. It also means to collect into a whole (see "Advanced Law Lexicon by P. Ramanatha Aiyar 3rd Edition Reprint 2007"). 27) The term purchase price, therefore, means the total of the amount of valuable consideration paid or paya .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has been defined once again by using the word "aggregate". It means the sum total of the amounts of purchase price paid and payable by an occupier during the given period. Thus, by the charging section 3, it is stated that there shall be levied and collected a tax on the turnover of purchase of sugarcane. It is such sugarcane purchased for the use thereof in the manufacture or production of sugar in the factory or unit on which the tax is levied and collected. The rates thereof are to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

production of sugar in a factory or a unit. By the sub-sections of this section 5 as also by sub section (1) of section 6, it is apparent that the licence is for purchasing sugarcane for the purpose of use thereof in the manufacturing or production of sugar in a factory or a unit. By sub section (1) of section 6, every occupier liable to pay tax under this Act is obliged to file a return in the prescribed form and showing a turnover of purchases of sugarcane purchased by him for above use. Thus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amount has already not been paid, then, the Commissioner shall issue a notice and serve it by requiring the payment of the amount assessed. The consequences of not filing the return are set out in sub section (2) of section 7. By section 7A, penalty is provided for failure without reasonable cause to submit a return as required and by sub section (1) of section 7B, interest payable by occupier in certain cases is set out. The provision of Appeal under section 8 and Revision under section 9 would .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rchase of sugarcane and the price paid therefor are taken into consideration by the legislature. It is apparent that the term "purchase price" is defined in such a way as to include amounts mentioned in sub-clauses (i) to (iii) of section 2(f-b) of the Act of 1962. Once it is apparent that the components or elements stated therein go into fixation of purchase price and that is the measure for computation of the tax, then, depending upon facts and circumstances in each case, the occupie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

chases meaning the aggregate of the amounts of purchase price paid and payable by an occupier, on which tax is levied and collected. The turnover is computed on the basis of the purchase transactions and the price paid for the same. Thus, it would be open for the Petitioners to point out that the turnover of purchases in their case involves payment of purchase price without the elements that are set out in the definition of the term "purchase price" referred above. In the event the Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax. The levy is on purchase of sugarcane used for manufacture or production of sugar in a factory or unit. If that is the transaction or dealing on which the tax is levied and for such transaction or deal to be struck, a licence is required, then, all the more we cannot agree with Mr. Joshi. 30) Mr. Joshi's arguments as noted above are based on paras 28 to 33 of the Petition argued by him. We are not going by individual facts and circumstances of each Petitioner/factory. It could be open for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by the cultivator or farmer or supplier and that is how it would be in a position to convince the Assessing Officer about the computation of the tax and the liability in pursuance thereof. It must at once be noticed that the definition of the term "purchase price" takes within its fold the amount of valuable consideration paid or payable by the occupier for the purchase of sugarcane made by the factory or by the unit. It could also include or be an aggregate of the sums such as amoun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

consideration, but does not include a supply by a shareholder of the factory or limited company. Therefore, it could be said that the supplier of sugarcane is not a shareholder. It could also be said that the sugarcane is obtained from the farmer or cultivator directly and it is his responsibility to reach the sugarcane, for which the purchase price is tendered, directly to the factory or unit where the production or manufacturing of sugar is undertaken. The transporter may or may not be involv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amount of purchase price paid and payable by an occupier during the given period, then, it is only to enable the assessment and collection of tax in accordance with law that these provisions have been inserted. Thus, we are in complete agreement with Mr. Sonpal on the legality and validity of the tax. It is not unconstitutional and ultra vires as alleged. 31) Mr. Joshi relied upon Entry 54 in the State List (List - II), which enables the State to impose taxes on the sale or production of goods o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mendment particularly by (Forty sixth Amendment Act, 1982). In Article 366 (29A), the term "tax on the sale or purchase of goods" is defined in a conclusive manner as under:- "366(29A) "tax on the sale or purchase of goods" includes - (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

upply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, deliv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), whether such supply is for cash, deferred payment or other valuable consideration. The definition also clarifies that such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. In the circumstance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt has no substance, simply because an Act of the competent legislature can be amended from time to time. It is presumed also in matters of imposition of tax that the legislature understands and appreciates the economic realities. It performs a balancing act and while plugging loopholes and removing defects and lacunas, it has full freedom to make changes in the tax structure or in the process of assessment and collection of tax. Therefore and in the absence of any constitutional prohibition, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt Act 21 of 1998 would be effective from 1st October, 1995. Mr. Joshi would submit that Maharashtra Tax Laws (Levy and Amendment) Act in Chapter VI refers to the Amendment to the Maharashtra Purchase Tax on Sugarcane Act, 1962. It states that the definition as appearing in section 2(f-b) of the term "purchase price" in its sub clause would have the word "spent" instead of "charge" and it shall be deemed to have been substituted with effect from 1st October, 1995. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Maharashtra Purchase Tax on Sugarcane Act, 1962. Chapter V reads as under:- "CHAPTER V Amendments to the Maharashtra Purchase Tax on Sugarcane Act, 1962 10. Amendment of section 2 of Mah. IX of 1962. - In section 2 of the Maharashtra Purchase Tax on Sugarcane Act, 1962 (hereinafter, in this Act, referred to as "the Purchase Tax on Sugarcane Act"), clause (f-a), (f-b) and (ga) shall be deleted. 11. Substitution of section 3 of Mah. IX of 1962. - For section 3 of the Purchase Tax on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pecified for the sugarcane purchased for the manufacture or production of sugar in a factory and of Khandsari sugar in a unit: Provided that, different rates may also be specified for sugarcane purchased for the manufacture or production of Khandsari sugar in units situated in areas, which are declared by the State Government, from time to time, by notification in the Official Gazette, as developed areas or undeveloped areas, so however that the rate or rates so specified shall not exceed four p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n has been made. (4) The tax levied under the foregoing subsections shall be paid by the occupier of the factory or of the unit, as the case may be, at such intervals and in such manner, as is hereinafter provided. 12. Amendment of section 6 of Mah. IX of 1962. - In section 6 of the Purchase Tax on Sugarcane Act, in subsection (1), for the words "the turnover of purchase of" the words "in kilograms the total quantity of" shall be substituted." 35) Thus, the argument is t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndment) Act, 2002 in sub-section (2) - (a) in clause (a), the figures and word "10 to 12" shall be deleted and shall be deemed to have been deleted with effect from the 1st May 2002 and (b) in clause (c), for the word and figures "section 13" the words and figures "sections 10 to 13" shall be substituted and shall be deemed to have been substituted with effect from the 1st May, 2002." 36) The argument is that though this Act amends the Maharashtra Tax Laws (Lev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tions of the main Act. 37) Mr. Sonpal has clarified that this is an improper reading of the amended provisions. He would submit that the Act of 1962 was amended by the Maharashtra Act XVI of 1995 with effect from 1st October, 1995 and the Maharashtra Act XIX of 1996 with effect from 9th June, 1996. It was amended by Maharashtra Act XXI of 1998 with effect from 1st May, 1998. Our attention is invited to these amendments carried out particularly by the Maharashtra Act XVI of 1995. It is urged by M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctober, 1995. Mr. Sonpal then invited our attention to the Maharashtra Tax Laws (Levy and Amendment) Act, 2002 and the amendments contained in Chapter V thereof proposing changes in the Act of 1962. That deleted clauses (f-a), (f-b) and (g-a) in section 2 of the Act of 1962. It also substituted section 3 and made certain changes in section 6 of the Act of 1962. However, the further Act to amend certain Tax Laws in operation in the State of Maharashtra, namely Maharashtra Act VIII of 2003 substit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2002 Amendment Act, the legislature, vide section 10 thereof, sought to delete section 2(f-a), (f-b) and (g-a) from the Act of 1962. Though that deletion came into effect from 1st May, 2002, that provision was not brought into force at all. That is how the Maharashtra Act VIII of 2003 reads. This Act of 2003 was first published after its having received assent of the Governor, in the Maharashtra Government Gazette on 29th March, 2003. The impact of the same has been rightly understood that a le .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted. That Chapter V of the Amendment Act, 2002 being deleted on account of subsequent Maharashtra Act VIII of 2003, we do not see any change in the position. 39) We are not impressed by the argument of Mr. Joshi that such amendments cannot be construed to mean that provisions already brought into force and effected being deleted will not restore those sections which have already been removed from the Statute Book. In other words, amendment to an amendment already brought into effect would not re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s repealed and the repealing enactment is then repealed by another, which manifests no intention that the original Act shall continue repealed, the common law rule was that the repeal of the second Act revived the first ab-initio. However, according to the Maxwell, the common law on the point was altered in 1850, by a provision now to be found in section 11(1) of the Interpretation Act, 1889 to the effect that where an Act passed after 1850 repeals a repealing enactment, it shall not be construe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evival has been abrogated by section 6(a) and 7 of the General Clauses Act, 1897. However, we are not concerned with such a wider controversy. In the present case, the amendment made by the Amendment Act of 1st May, 2002 did not come into effect at all. That has been clarified now by the Maharashtra Act VIII of 2003. Once these amendments made with effect from 1st May, 2002 stood deleted from a prior date, then, the consequences are clear. No assistance can be derived from the principle which Mr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng words:- "..... (24) The result will be the same even if we proceed on the footing that the various 'Firmans' issued by the Nizam were in the nature of legislative enactments determining private rights somewhat on the analogy of private Acts of parliament. We may assume that the 'Firman' of 26-6-1947 was repealed by the 'Firman' of 24-2-1949 and the latter 'Firman' in its turn was repealed by that of 7-9-1949. Under the English Common Law when a repealing e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Interpretation Act of 1889 and as we are not bound by the provisions of any English statute, we can still apply the english Common Law rule if it appears to us to be reasonable and proper. But even according to the Common Law doctrine, the repeal of the repealing enactment would not revive the original Act if the second repealing enactment manifests an intention to the contrary. In the present case the 'Firman' of 7-9-1949, does not repeal the earlier 'Firman' of 24-2-1949 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssary to discuss the third point raised by the Attorney General, namely, whether the City Civil Court has jurisdiction to execute the decree. ….." 42) Once all the legal submissions are taken care of and duly considered, then, on facts, we are not required to go into the rival contentions. If the assessment is not in accordance with law or the assessment is pending and not finalised in a given year, it would be open for the Petitioners to point out that no notices of demand can be is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version