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2016 (8) TMI 1077 - GUJARAT HIGH COURT

2016 (8) TMI 1077 - GUJARAT HIGH COURT - TMI - Classification - Product prawn feed - Whether Product prawn feed would be covered under Entry 14 of the First Schedule pertaining to cattle feed - Held that:- In the present case all that the legislature has done is to provide for a specific exemption for all aquatic products with effect from 31.03.2012. This exemption entry in no manner, amended any provisions of the First Schedule to the VAT Act, which continued to carry Entry 14 pertaining to the .....

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pose of entry 11 to the Schedule-I to the Sales Tax Act. The Assessing Officer, thus, proceeded entirely on the wrong premises and assumed jurisdiction not vested in it. It was bound by the order of determination passed by the Deputy Commissioner unless, by virtue of exemption notification, entire basis of such determination was rendered invalid. The legislature providing for exemption of such product from payment of tax does not necessarily and by itself imply that the product was otherwise exi .....

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have ignored the order of determination. His order therefore was wholly without jurisdiction. - Special Civil Application No. 7171 of 2016 - Dated:- 28-7-2016 - Akil Kureshi And A. J. Shastri, JJ. For the Petitioner : Uchit N Sheth, Advocate For the Respondent : Advance Copy Served To GP/PP Notice Served By DS JUDGMENT ( Per : Honourable Mr. Justice Akil Kureshi ) 1. The petitioner has challenged an order dated 30.03.2016 passed by the Assistant Commissioner of Commercial Tax in the following f .....

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es under section 62 of the Sales Tax Act for determination of such a question. The case putforth by the petitioner was that prawn would be included within the meaning of live stock since the aquatic farmers are engaged in systematic breeding of prawn for human consumption. The Deputy Sales Tax Commissioner passed an order dated 18.01.2001 and upheld the petitioner's contention. He concluded that the prawn feed, a commodity in which, the petitioner was dealing, would be included under Entry 1 .....

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ed by the Gujarat Value Added Tax Act, 2003 ('the VAT Act' for short). This Act also contained an exemption Entry11 in the First Schedule referring to cattle feed. We may record that this exemption entry was worded identically as Entry14 of ScheduleI to the Sales Tax Act. The VAT Act also contained section 80 for determination of disputed questions which was a successor provision of section 62 of the Sales Tax Act. This new provision however, has certain additional features, to which we .....

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le of the tax payable from 31.03.2012. 5. On the basis of this development, the Assessing Officer carried a belief that prior to 31.03.2012 aquatic feed would fall under the residuary clause since after 31.03.2012, it is made specifically exempt from payment of tax by notification of exemption issued by the Government. For the assessment year 201112, therefore, after hearing the petitioner, he passed the impugned order dated 30.03.2016 and held that the product in question i.e. aquatic feed woul .....

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ve even after introduction of the VAT Act. The Assistant Commissioner therefore could not have taken a view different from that expressed by the Deputy Commissioner in such order. The Assistant Commissioner was bound by the order of determination. II. The entries in the Sales Tax Act and the VAT Act concerning the cattle feed were identical. Consideration of the disputed question by the Deputy Commissioner under the Sales Tax Act would therefore continue to govern the dispute even after introduc .....

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tion notification cannot govern the classification of a product for its taxability. If a product otherwise does not fall within any of the taxable entries, merely because an exemption has been granted, would not mean; prior to the exemption it was taxable. 7. In support of his contentions, counsel has placed reliance on certain decisions, to which, we would refer to at a later stage. 8. Learned AGP, on the other hand, opposed the petition contending that against the order of assessment, a statut .....

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the sale or purchase of which is free from all taxes. Entry14 thereof reads as under: 14. Cattlefeed including fodder, concentrates and cotton seed oil cakes [(but excluding cotton seeds, other oil cakes and deoiled cakes)] 10. Section 62 of the Sales Tax Act pertained to determination of disputed questions and read as under: Section 62Determination Of Disputed Questions. (1) If any question arises, otherwise than in proceedings before a court, or proceedings under section 41 or 44, whether for .....

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rate thereof, the Commissioner shall make an order determining such question. (2) The Commissioner may direct that the determination shall not affect the liability of any person under this Act, as respects any sale, specified sale or purchase effected prior to the determination. (3) If any such question arises from any order already passed under this Act or any earlier law, no such question shall be entertained for determination under this section; but such question may be raised in appeal agai .....

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dule to the Sales Tax Act reads as under: 11. Cattle feed including fodder, grass, hay and straw and concentrates. (excluding cottonseeds, oil cakes and deoiled cakes.) Thus, an identically worded entry continued to find place in the First Schedule in the VAT Act even after the Sales Tax Act was substituted. 13. Section 80 of the VAT Act pertains to determination of disputed questions and reads as under: 80. Determination of disputed questions. (1) If any question arises, otherwise than in proce .....

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r sale or purchase or if tax is payable the rate thereof, or (e) any tax credit is admissible under section 11 or section 12, [the Commissioner, Special Commissioner, Additional Commissioner or Joint Commissioner] shall make an order determining such question. (2) [The Commissioner, Special Commissioner, Additional Commissioner or Joint Commissioner] may direct that the determination shall not affect the liability of any person under this Act, with respect to any sale or purchase effected prior .....

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o any sale or purchase effected prior to such order.] (3) any such question arises from any order already passed under this Act or under the earlier law, no such question shall be entertained for determination under this section; but such question may be raised in appeal against, or by way of revision of such order. 14. From the above provisions, it can be seen that under section 62 of the Sales Tax Act, the authority had the power to decide a question regarding the taxability of a particular pr .....

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n additional features. Subsection (1) of section 80 gives similar power to the competent authority to make a determination of disputed questions. Subsection (2) of section 80 allows the authority to avoid retrospective effect of such determination. Subsection (2A) of section 80 which is a new provision, permits the Commissioner on its own motion to call for and examine the record of any order passed by the Special Commissioner, Additional Commissioner, or Joint Commissioner under subsection (1) .....

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ffect of any such order prospectively. Under subsection (3) of section 80, it is provided that any question which arises from any order already passed under this Act or under the earlier law, no such question shall be entertained for determination under this section, but such a question can be raised in appeal or by way of revision. 16. Under subsection (3) of section 80 therefore, the order of determination passed by the Deputy Commissioner under section 62 of the Sales Tax Act would continue t .....

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ile determining the disputed question under subsection (1) of section 62. 17. In case of Nestle India Ltd. v. Deputy Commissioner of Commercial Tax & Others, reported in [2016] 89 VST 56 (Guj), Division Bench of this Court held that decision of higher forum as regards classification of goods having attained finality, the Assessing Officer was bound by such decision and cannot in absence of any change in circumstance, take a different view. 18. In case of Ponds India Limited (Merged with H.L. .....

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ication of the petitioner's commodity viz. prawn feed was concerned. 20. If that be so, the question that arises is whether the Assistant Commissioner could have given a different interpretation and reopened the classification. This question has two elements. First is of the binding nature of the order of determination and second is whether had there been any material change owing to which such question was thrown open for fresh consideration. 21. First aspect can be answered briefly. As poi .....

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termination of disputed questions - 1. If any question arises, otherwise than in proceedings before a court, or proceedings under section 41 or 44, whether for the purposes of this Act, any tax is payable in respect of any particular (sale, specified sale or purchase) or if tax is payable the rate thereof, the Commissioner shall make an order determining such question. Under the Act, the final authority to determine the dispute is conferred upon the Commissioner or any of his authorised represen .....

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State Sales Tax Department which was a party before the Commissioner of Sales Tax. Under the circumstances, we must hold that the Tribunal was justified in holding that toolbits would be taxable under Entry 3(ix) of Schedule IIA of the Act. 22. Likewise, in judgment dated 30.06.2005, passed in Sales Tax Reference No.6 of 1994 in case of State of Gujarat v. Electro Porcelain Industries, the Court held and observed as under: 9. Section 62(1) of the Act clearly provides that if any question arises, .....

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respondent. In spite of it, ignoring clear provision of Section 62(3) of the Act the Assistant Commissioner took the contrary view then the earlier view taken by the Deputy Commissioner of Salestax only on the ground that there was subsequent decision of the Tribunal and, therefore, he was bound by the decision of the Tribunal. 10. Bare reading of Section 62(3) of the Act makes it clear that if any question arises from any order already passed under the Act or any earlier law, no question shall .....

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ment on 9.11.1981. Admittedly no such Appeal was filed u/s.65(1)( c ) of the Act before the Tribunal. Where Appeal lies u/s.65 of the Act and no Appeal has been filed then no proceeding in revision u/s. 67 can be entertained upon an Application. However, proviso to Section 67(2) of the Act provides that proceeding in revision may be entertained upon an application where the applicant satisfies the Commissioner that he had sufficient cause for not preferring the Appeal against the order in respec .....

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t view of the matter. 23. Thus, the Assessing Officer was bound by the order of determination passed by the Deputy Commissioner and could not have taken a different view unless of course, there had been any material change. In this context, the second element of the question arises viz. did introduction of the exemption entry with effect from 31.03.2012 make any material difference. We have noticed that with effect from 31.03.2012, the State Government exempted aquatic feed from all taxes. This .....

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ithin the power to consider such question independently ignoring the order of determination passed by the Deputy Commissioner. In the present case however, all that the legislature has done is to provide for a specific exemption for all aquatic products with effect from 31.03.2012. This exemption entry in no manner, amended any provisions of the First Schedule to the VAT Act, which continued to carry Entry 14 pertaining to the cattle feed, and thus whether before or after 31.03.2012, all cattle .....

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