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2016 (6) TMI 140 - UTTARAKHAND HIGH COURT

2016 (6) TMI 140 - UTTARAKHAND HIGH COURT - TMI - Power of state of restrict or deny input tax credit (ITC) claim, circular bearing no. 4411 dated 23.01.2013 and Section 6(3)(d) of the UKVAT Act - Admissibility of ITC claim - packaging material, containers etc. - finished goods are removed by way of branch transfer - Held that:- since an alternate remedy is available to the petitioners before Joint Commissioner (Appeals) in respect of impugned order denying ITC claim, therefore, the petitioners .....

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direction striking down Section 6(3)(d) of the UKVAT Act as being ultra vires or Article 301 and 304 of the Constitution of India, directing the respondent no. 2 to continue to issue Form XVI as provided under Rule 26(3) of Uttarakhand VAT Rules which are required by the petitioner for import of raw material as well as finished products and direction declaring that the respondent no. 2 has no authority in law to stop issuance of Form XVI as provided under Rule 26(3) of Uttarakhand VAT Rules are .....

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ly exercised by it otherwise, the right to raise taxes.

It has already been mentioned that special appeals were filed on behalf of Hindustan Unilever Limited against the judgment and order of learned Single Judge without meeting any success. Furthermore, when the SLPs were preferred before the Hon’ble Supreme Court, the same were also dismissed on 07.12.2015. Since the propositions of law have already been dealt with and discussed by learned Single Judge and Hon’ble Division Bench of .....

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ned four writ petitions, therefore, they are being decided together by this common judgment and order for the sake of brevity and convenience, with the consent of learned counsel for the parties. 2) Writ petition no. 3263 (M/S) of 2015 shall be the leading case. 3) By means of present writ petition, the petitioner seeks following reliefs, among others: i) Issue any writ, order or direction setting aside the impugned order dated November 30, 2015, passed by respondent no. 2 for the assessment per .....

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f sale . iv) Alternate to prayer (iii) above and in the event this Hon ble Count is to hold that Section 6(3)(d) of the UKVAT Act denies ITC on packaging material etc. in case of transactions other than by way of sale; issue any writ, order or direction striking down Section 6(3)(d) of the UKVAT Act as being ultra vires or Article 301 and 304 of the Constitution of India; v) Issue any writ, order or direction in the nature of mandamus directing the respondent no. 2 to continue to issue Form XVI .....

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well as the validity of Section 6(3)(d) of the Uttarakhand Value Added Tax Act (UKVAT Act), insofar as it seeks to deny ITC in respect of packaging material, containers etc., when finished goods are removed by way of branch transfer. This Court has upheld the validity of Section 6(3)(d) of the UKVAT Act, on the ground that by the usage of the words …or in the course of inter-State trade or commerce , the legislature had contemplated sale and both terms have the same meaning. However, it .....

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pretation urged by the petitioner in the present writ petition was not urged in Hindustan Unilever Limited case (HUL case) and was not considered by this Court. Hence, it is submitted that the previous judgment rendered in HUL s case does not come in the way of consideration of the present writ petition. 5) The impugned Assessment Order issued by respondent no. 2 denying ITC in respect of packaging material is enclosed as Annexure no. 1. A copy of the impugned Circular dated 23.01.2013 issued by .....

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e of Kerala, 2000 (6) SC 359]. The petitioner was served with a show cause notice dated 26.10.2015 by the respondent no. 2 and the same is enclosed as Annexure no. 6. The petitioner replied to the show cause notice vide its response dated 19.11.2015 which is enclosed as Annexure no. 7. The petitioner submitted an additional response dated 20.11.2015 in addition to its response dated 19.11.2015 which is enclosed as Annexure no. 8. 6) By the impugned order, the respondent no. 2 while passing the A .....

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locally, utilized in the production of manufactured/finished goods and sent outside the State on branch transfer (covered under Section 6(3)(d) of the UKVAT Act). The details of the ITC rejected by the respondent no. 2 in the impugned order are given in the following table, for ease of reference: Sr. No. Particulars Amount 1 ITC claimed by the Company relating to local sales in Uttarakhand (per Section 6(3)(a)/(d) to the UKVAT Act 3,09,649 2 ITC claimed by the petitioner in relation to exports .....

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mounts towards ITC has stopped certification/issue of Form XVI issued under Rule 26(3) of the Uttarakhand VAT Rules for import of the raw material by the petitioner as well as the finished product, thereby jeopardizing the activities of the petitioner in relation to manufacture and sale of their goods to a grinding halt. It is submitted by learned counsel for the petitioner that the certification/issue of the said Forms is a routine function of the respondent no. 2, however in order to coerce th .....

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in rejecting the same, is contrary to the powers vested on the respondent no. 2 under the UKVAT Act. 8) Insofar as paragraph 4(d) above is concerned, the petitioner had purchased packaging material in Uttarakhand and the same was utilized in manufacture of diverse range of products in its plant at Sitarganj, Uttarakhand and the manufactured/finished goods are subsequently sent out of Uttarakhand, other than by way of sale i.e. on branch transfer. The respondent no. 2 had rejected ITC on packagin .....

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pondent no. 2 based on the impugned Circular (which is binding on him as well as the Appellate Commissioner) as well as in view of the judgments passed by learned Single Judge confirmed by Hon ble Division Bench of this Court in HUL s case, it is submitted that the statutory Appeal under Section 51 of the UKVAT Act is not an efficacious alternate remedy. In addition, it is submitted that the petitioner has challenged the impugned circular issued by respondent no. 1 as well as challenged the vire .....

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se as [raw material and consumables] in manufacturing or processing of goods (other than those specified in Schedule I or Schedule III) and containers or other packing materials used for packing of such manufactured goods, for sale or resale within the State or in the course of inter-state trade or commerce; …….. Provided that with reference to clause (d) above, in case such finished products are dispatched outside the state other than by way of sale, a partial amount of input tax .....

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provisions under Section 2(wa) and proviso to Section 372 of Code of Criminal Procedure, in the light of their legislative history has held that the right to prefer an appeal conferred upon the victim or relatives of the victim by virtue of proviso to Section 372 is an independent statutory right. Therefore, it has held that there is no need for the victim in terms of definition under Section 2 (wa) of Code of Criminal Procedure to seek the leave of the High Court as required under Sub-Section ( .....

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t for preferring an appeal to the High Court against an order of acquittal it is necessary to obtain its leave. We have to refer to the rules of interpretation of statutes to find out what is the effect of the proviso to Section 372 of Code of Criminal Procedure, it is well established that the proviso of a statute must be given an interpretation limited to the subject-matter of the enacting provision. Reliance is placed on the decision of this court rendered by four Judge Bench in Dwarka Prasad .....

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r context (Thompson v. Dibdin 1912 AC 533). If the rule of construction is that prima facie a proviso should be limited in its operation to the subject-matter of the enacting clause, the stand we have taken is sound. To expand the enacting clause, inflated by the proviso, sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso. A proviso ordinarily is but a proviso, although the golden rule is to read .....

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ages 294-295 has collected the following principles in regard to a proviso: (a) When one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject-matter of the proviso. (b) A proviso must be construed with reference to the preceding parts of the clause to which it is appended. (c) Where the proviso is directly repugnant to a section, the proviso shall stand and be held a repeal of the section as the provis .....

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ings it into general harmony with the terms of section should prevail. (i) When a proviso is repugnant to the enacting part, the proviso will not prevail over the absolute terms of a later Act directed to be read as supplemental to the earlier one. (j) A proviso may sometimes contain a substantive provision. XXXX 32. In Ishverlal Thakorelal Almaula v. Motibhai Nagjibhai it was held that the main object of a proviso is merely to qualify the main enactment. In Madras and Southern Mahrata Railway C .....

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e, from the main enactment a portion which, but for the proviso, would fall within the main enactment. In Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha Hidayatullah, J., as he then was, very aptly and succinctly indicated the parameters of a proviso thus: As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule. XXXX 36. While int .....

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reading of the abovesaid legal position laid down by this Court in the cases referred to supra, it is abundantly clear that the proviso to Section 372 of Code of Criminal Procedure must be read along with its main enactment i.e., Section 372 itself and together with Sub section (3) to Section 378 of Code of Criminal Procedure otherwise the substantive provision of Section 372 of Code of Criminal Procedure will be rendered nugatory, as it clearly states that no appeal shall lie from any judgment .....

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tment, or to qualify something enacted therein, which, but for the proviso would be within the purview of such enactment. Thus, its purpose is to exclude something which would otherwise fall squarely within the general language of the main enactment. Usually, a proviso cannot be interpreted as a general rule that has been provided for. Nor it can be interpreted in a manner that would nullify the enactment, or take away in entirety, a right that has been conferred by the statute. In case the lang .....

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, 2004 SCC (L&S) 257; Nagar Palika Nigam v. Krishi Upaj Mandi Samiti, AIR 2009 SC 187 and State of Kerala v. B. Six Holiday Resorts (P) Ltd. (2010) 5 SCC 186] 21. The proviso to a particular provision of a statute, only embraces the field which is covered by the main provision, by carving out an exception to the said main provision. (vide Ram Narain Sons Ltd. v. CST, AIR p. 769, para 10 and A.N. Sehgal v. Raje Ram Sheoran, SCC p. 315, para 14.) 22. In a normal course, a proviso can be exting .....

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o. 2282 of 2014. Special Appeals were preferred by Hindustan Unilever Limited against the judgment passed by learned Single Judge. Learned Division Bench of this Court while dismissing special appeals no. 159 of 2015, 160 of 2015 and 161 of 2015, vide judgment and order dated 23.09.2015, observed as below: 43. We are not impressed at all by the said arguments. We would think that to allege lack of wisdom is beyond the province of the court to probe. The Court is concerned only with constitutiona .....

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sed by it otherwise, the right to raise taxes. The Court must strike a balance between the right of the State to raise taxes, which forms the major source of revenue for it for carrying out various public purposes, no doubt, while it stands ever vigilant against any move to treat goods manufactured from or brought from other States in a discriminatory manner. 44. We see no merit at all in the contention that all the other States have provided for the benefit of ITC in respect of packing material .....

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ed to the benefit of ITC in respect of packing materials used for its finished goods, which were stock transferred. Even the Circular of 2008, in our view, does not as such clearly provide for the grant of such benefit. Lack of clarity and place for doubt in a stray sentence in a Circular cannot be seized upon by the appellant to claim that, contrary to the clear mandate of the Legislature, it should be given the benefit of ITC for the years 2008-2009, 2009-2010 and 2010-2011. 14) Special Leave .....

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