TMI Blog2019 (4) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence which needed to be verified, produced and appreciated, we do not think that the MSTT was unjustified in not entertaining the additional ground regarding surrender of Exim Scrips - the MSTT was legally justified in not adjudicating on the point regarding levy of tax on Exim Scrips. The question answered in the affirmative and against the applicant and in favour of the revenue. Interpretation of statute - Section 41 (2) of the Bombay Sales Tax Act, 1959 and in Notification entry 39 under Section 41 of the Bombay Sales Tax Act, 1959 - whether plastic powder is not a chemical? - contravention by issuing declarations of T/TT Forms against his purchases of plastic powder or not? - issue related to F.Y. 1993-94 - HELD THAT:- What Section 41(1) inter alia provides is that in public interest, the State Government may exempt any specified class of sales or purchases from payment of the whole or any part of any tax payable under the provisions of the BST Act. Then Section 41(2) stipulates that where any dealer or person has purchased any goods under a declaration given by him under any of the notifications issued under Section 41(1) and, (a) any of the conditions subject to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Exim Scrips, merely because the ground in that regard was not mentioned in the Second appeal memo and that the appellant had not made any specific prayer to seek permission for raising additional ground in that regard? (II) Whether on the facts and circumstances of the case, and on a true and correct interpretation of the provisions in Section 41 (2) of the Bombay Sales Tax Act, 1959 and in Notification entry 39 under Section 41 of the Bombay Sales Tax Act, 1959, the Tribunal was legally justified in holding that plastic powder is not a chemical, and that therefore the appellant has committed any contravention by issuing declarations of T/TT Forms against his purchases of plastic powder, so as to attract the purchase tax liability under Section 41 (2)? 2. As far as Question (I) is concerned, the same arises for financial years (for short F.Y. ) 1993-94 and 1995-96. As far as Question (II) is concerned, the same arises only for F.Y. 1993-94. 3. Before we deal with the aforesaid Questions, we would like to set out a few facts. The applicant is engaged in the manufacture of textiles, made-up textile articles, ready-made garments etc., and is duly registered under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als were also subsequently decided by the Appellate Deputy Commissioner by passing orders dated 31st October, 2001, by virtue of which the appeal under the BST Act was partly allowed and the appeal under the CST Act was dismissed. Against both the orders passed by the Appellate Deputy Commissioner, the applicant filed second appeals before the MSTT and which were registered as Second Appeal Nos. 2360 and 2360-A of 2001. 7. When all the aforementioned four second appeals were fixed for hearing, the applicant sought permission to raise an additional ground relating to levy of sales tax on the surrender of Exim Scrips. This additional ground was with reference to the second appeals that were filed pertaining to the F.Y. 1995-96. The additional ground sought to be raised was thus:- That the lower authorities have erred in levying sales tax on surrender of Exim Scrip and therefore such levy be set aside in view of the judgment of the Hon'ble Tribunal in the case of M/s Agra Engineering Works (Second Appeal No. 185 of 1997, dated 30/4/2002) . 8. It was submitted on behalf of the applicant that since this is a pure question of law, it could be raised at any time in the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be purchased against declarations in Form T/TT. In the facts of the present case, the applicant had issued T/TT Forms in respect of purchases of P.P. powder. The P.P. powder was neither machinery nor was it Dyes and chemicals and therefore the applicant was not entitled to issue T/TT Forms against the purchase of P.P. powder and therefore contravention of the said Form attracted levy of purchase tax under Section 41(2) of the BST Act, was the finding. In coming to this conclusion, the MSTT referred to and relied upon two decisions passed by the earlier Bench of the MSTT in the case of M/s Rajpal Plastics and M/s Century Plastics, which unequivocally held that plastic powder is not a chemical . If it is not a chemical, then the applicant was not entitled to issue declarations in Form T/TT in respect of purchases thereof. The issue whether P.P. powder is a chemical or not is the subject-matter of Question (II), and reproduced by us above. 12. After the order dated 8th December, 2006 was passed by the MSTT, the applicant preferred four Rectification Applications (being Rectification Application Nos. 16, 17, 18 and 19 of 2007) and two Reference Applications (being Reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show and establish that the Exim Scrips were not sold but were in fact surrendered to the DGFT and would therefore not be exigible to any sales tax. 14. As far as Question (II) is concerned, Mr. Rao submitted that P.P. powder is nothing but a chemical . It is obtained from petroleum products when crude oil refining process takes place. It is obtained by a chemical process known as polymerization. The P.P. powder is thus a synthetic chemical and a synthetic raisin. It would therefore be a chemical as contemplated in Notification Entry 39 issued under Section 41 of the BST Act and would therefore be exigible to a concessional tax rate as contemplated therein. This being the case, Mr. Rao submitted that Question (II) also be answered in the negative and in favour of the applicant and against the revenue. 15. On the other hand, Mr. Sonpal, the learned counsel appearing on behalf of the revenue, submitted that there was no merit in any of the contentions canvassed by Mr. Rao. Mr. Sonpal submitted that as far as Question (I) is concerned, firstly the MSTT was fully justified in not entertaining the additional ground for the simple reason that the adjudication of that ground w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to establish that the Exim Scrips were surrendered to the DGFT and therefore not exigible to sales tax. Mr. Sonpal submitted that this exercise cannot be allowed at this stage, especially considering that the evidence that was on record before the authorities below, was examined by the MSTT in its order dated 13th October, 2008 and after carrying out this exercise, it came to the conclusion that there was not enough evidence to adjudicate this issue. He therefore submitted that the MSTT was fully justified in not allowing the applicant to raise the additional ground in second appeal without there being any material evidence to give a proper adjudication on the said ground. Consequently, Mr. Sonpal submitted that Question (I) be answered in the affirmative and in favour of the revenue and against the applicant. 16. As far as Question (II) is concerned, Mr. Sonpal submitted that to determine whether P.P. powder is a chemical or otherwise, one has to apply the common parlance test. If this test is applied, then, it certainly cannot be contended by the applicant that the purchases of P.P. powder is a chemical and would therefore be exigible to the concessional tax rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions of Exim Scrips as also to uphold the levy of purchase tax u/s. 41 (2) as also the disallowance of set-off u/s 43D. The question is whether, with there being such conscious decisions, the impugned judgment can be said to contain any apparent mistake rectifiable under section 62 of the Bombay Act. It is a settled position of law that an additional ground, the adjudication whereon requires perusal, verification and appreciation of relevant evidence, cannot be entertained in an appeal. In this regard, we also made efforts to go through the relevant assessment records to see whether the relevant evidence in support of the appellant's claim relating to Exim Scrips is available in the assessment records. In this regard, the revenue has placed before us, the assessment record for the period 1993-94. No record for the Financial year 1995-96 has been produced before us on the ground of its not being readily traceable. 20. The assessment record relating to the Financial year 1993-94 produced before us contains in all seven files, out of which, one file is the assessment file maintained by the Department and the other six files are Division-wise files prepared and subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 66,739/-. It therefore appears that in respect of these transactions, the appellant had collected tax @ 4% though same is now being claimed as exempt from tax. The next document submitted by Mr. Gami is a Statement of sales of Exim Scrips effected in the year 1993-94, according to which, the sales of Exim Scrips were effected at ₹ 6,47,542/-, ₹ 2,03,904/- and ₹ 99,454/-in the months of October, 1993, January 1994 and March 1994 respectively. This is the same statement, which has been referred above as the one appearing in the assessment record for the period 1993-94. This statement categorically indicates the Exim Scrips as 'sold'. The next document submitted by Mr. Gami is a statement of Exim Scrips. It is mentioned therein that out of the total sales of Exim Scrips of ₹ 9,50,900/- effected in the year 1993-94, the amount of ₹ 6,47,542/- is by way of surrender to the Joint Director General of Foreign Trade, while balance amount of ₹ 3,03,358/- is in respect of the sales of Exim Scrips to one M/s Agarwal Traders of Bombay. It is therefore obvious that in fact some of the transactions of Exim Scrips are not by way of surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasis supplied) 19. As can be seen from the aforesaid Paragraphs, the MSTT (Third Bench) on a consideration of all the relevant facts had taken a conscious decision not to entertain the additional ground relating to levy of tax on the transactions of Exim Scrips. Thereafter, the fourth bench of the MSTT itself examined the files for the relevant financial years. It perused the files submitted by the applicant in the assessment proceedings which contain statements of sales/purchase, declarations and other relevant documents like transport receipts, sales bills, etc. On going through all these files, the fourth bench of the MSTT opined that they did not contain any documents to conclusively show that the Exim Scrips were surrendered to the Government of India or the Designated bank. On the contrary, in the statements of sales, the said transactions of Exim Scrips have been specifically shown to be Exim Scrips sold . Even in the assessment order, the transactions were categorically mentioned to be sale of Exim Scrips. After examining all this material, the MSTT opined (in the referral order) that it was beyond any doubt that the assessment records did not contain any document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciated, we do not think that the MSTT was unjustified in not entertaining the additional ground regarding surrender of Exim Scrips. If the applicant did not bring any material before the MSTT to substantiate its claim that it had surrendered the Exim Scrips to the Government and therefore was not exigible to tax, the MSTT necessarily could not have entertained the aforesaid ground as there was no material brought on record to render a finding thereon. In these circumstances and peculiar to the facts of this case, we find that the MSTT was legally justified in not adjudicating on the point regarding levy of tax on Exim Scrips. In these circumstances, we have no hesitation in answering Question (I) in the affirmative and against the applicant and in favour of the revenue. 21. As far as the judgment of the Supreme Court in the case of Commercial Tax Officer and Ors (supra) is concerned, and on which heavy reliance was placed by Mr. Rao, we fail to understand how this judgment can be of any assistance to the applicant. It is true that this judgment, inter alia, lays down the proposition that when Exim Scrips are surrendered, the same are not exigible to tax. However, if they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such dealer or person was not liable to pay tax under section 3, and accordingly the dealer or the person who has become liable to pay purchase tax under this sub-section shall file a return in the prescribed form to the prescribed authority within a prescribed time and shall include the purchase price of such turnover in his return, and pay the tax in the prescribed manner. The tax due from any such dealer or person shall be assessed or reassessed under section 33 or 35, as the case may be : PROVIDED that, the amount of tax (if any) paid by the dealer or such person to a Registered dealer on such purchases, on which he has become liable to pay purchase tax under this sub-section, shall be set-off against the purchase tax so leviable. 1 [PROVIDED FURTHER that, if the dealer or the person liable to pay purchase tax as aforesaid has been assessed to purchase tax and if he has paid such tax, then the dealer from whom such goods are purchased shall be exempted from payment of tax on sales of such goods to the extent such purchase tax has been paid.] (3) If the Commissioner has reason to believe that any person is liable to pay tax under sub-section (2), the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic powder as a chemical liable to tax at the concessional rate of 4% under the Notification entry 233 u/s 41 of the Bombay Act. In the light of this legal position, as laid down by the said determination orders, the appellant was legally entitled to issue T/TT Forms in respect of the purchases of P.P. Powder. In view thereof, according to him, there is no contravention of T/TT Forms, so as to attract the levy of purchase tax u/s 41 (2). He also pointed out that the T/TT Forms issued by the appellant have been disallowed in the hands of the concerned vendors and accordingly, sales tax has been levied in their assessments. He submitted that there is no warrant for such double taxation, and hence the purchase tax liability imposed in the appellant's case may be deleted. 11. Mr. Gami's submissions in this regard were however, opposed by the departmental representative. He invited our attention to the assessment order in which the assessing authority while levying the said purchase tax liability has relied on this Tribunal's judgment dated 31.3.1994 passed in the case of M/s Rajpal Plastics and M/s Century Plastics. In the said judgment, the Tribunal has unequivocally h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in levying the same. 14. Mr. Gami has also pointed out that the selling dealers have also been assessed to tax on their sales of the very goods, and therefore there is a double taxation. In this regard, it has to be noted that if the particular goods are not eligible for the particular tax concession and if a declaration has come to be issued against purchase thereof, then the seller is liable to sales tax on his sales and the purchaser is also liable to purchase tax on his purchases. Both these liabilities are without prejudice to each other. In other words, legally the taxes have to be assessed in the cases of both the seller as well as the purchaser. In order to avoid double taxation, it is provided in the proviso to Section 41 (2) with effect from 1.4.1994 that if the purchaser has paid the purchase tax, then the selling dealer shall be exempted from payment of tax on his sales. However, so far as the assessment of tax is concerned, it has to be made both in the cases of seller as well as the purchaser. This is the legal position as explained by this Tribunal through various judgments. 15. In view of the foregoings, the appellant's ground relating to levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts meaning for the purposes of the BST Act. The common parlance test is now too well settled for us to once again burden this judgment by reiterating several decisions of different High Courts as also that of the Supreme Court. Unless the provisions of the BST Act provide otherwise, a particular Entry in the BST Act should normally be interpreted by applying the common parlance test. Once we hold this, we have no hesitation in agreeing with the findings given by MSTT that P.P. powder cannot be termed as a chemical and therefore would not fall within Notification Entry 39 issued under Section 41 of the BST Act. This being the position, even Question (II) will have to be answered in the affirmative and against the applicant and in favour of the revenue. 26. The Questions of Law referred to us for our opinion are answered thus:- QUESTION OF LAW ANSWER (I) Whether on the facts and circumstances of the case, and having regard to the appellate powers in Section 55 of the Bombay Sales Tax Act, 1959, the Tribunal was legally justified in not adjudicating on the point relating to levy of tax on Exim Scrips, merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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