TMI Blog2023 (12) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... State and transferred it to its branch at Patna from where it was sold inter alia to other oil marketing companies (OMC) who in turn sold it to retailers, end consumers through its own petroleum outlets inside and outside Patna; which sales were effected by the assessee too. The appellant paid entry tax at the rate of 16% and was liable to sales tax @ 24.5%, from which total liability, set-off was claimed and accepted by the department; which later stood reversed giving rise to proceedings before the Advance Ruling Authority. After copious reference to the provisions the Hon ble Supreme Court held as follows: Since the set-off in question depends upon the interpretation of Section 3(2) of the Entry Tax Act, it is necessary to state, at the outset, that the following conditions need to be satisfied for claim of set-off under the said provision: (i) First and foremost, under Section 3(2) itself, the tax leviable by way of entry tax can only be paid by every dealer liable to pay tax under the VAT Act; (ii) The set-off can only be granted if the assessee is an importer of scheduled goods, who is liable to pay tax under the VAT Act; (iii) The assessee must incur t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Taxes Tribunal, Bihar (henceforth for short, the Tribunal ) by order no. 6 dated 27.07.2015 are the following:- (I) Whether on the facts and in the circumstances of the case, the Tribunal was justified in denying adjustment of entry tax paid on the damaged cement against VAT liability? (II) Whether on the facts and in the circumstances of the case, the appellant is liable to pay entry tax on damaged cement under the provisions of the Entry Tax Act and whether the appellant is not entitled for the refund or adjustment of the same? (III) Whether on the facts and in the circumstances of the case, the imposition of interest under Section 39 (4) of the VAT Act is arbitrary, illegal and without jurisdiction? 2. The facts on which the above questions of law arise are as follows:- The appellant manufactures and sells cement across the country through its various sales unit, one of which is located at Patna and the appellant was also a registered dealer under the Bihar Value Added Tax Act, 2005 (for brevity, VAT Act ). The appellant imports cement into the State from outside the State of Bihar by way of stock transfer to its depot at Patna and the cement is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there can be no tax or duty levied without authority of law and that in the present case, the action of the Assessing Officer has resulted in levying of tax on goods which have not been sold or consumed within the State of Bihar, thus making the levy under the Entry Tax Act, one without authority of law. 6. Reliance is also placed on a decision of the Hon ble Supreme Court in Associated Cement Company Limited v. State of Bihar; (2004) 7 SCC 642 . Therein, despite there being no liability to tax for the goods sold within the State of Bihar, which was imported from outside the State, the entry tax paid at the time of import was permitted to be reduced from the total liability of the assessee. The learned counsel also placed a Division Bench decision of this Court in CWJC 19512 of 2010 dated 07.03.2011 M/s Shree Shankar Ice Cold Storage vs. State of Bihar. 7. Learned Government Advocate, Sri Vikash Kumar, on the other hand, supported the order of the Tribunal specifically relying on the words employed in the statute. It is pointed out that there is no evidence produced as to how the damaged goods were disposed of. The damaged goods in normal conditions would be ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, when he incurs liability under the VAT Act, such liability shall stand reduced to the extent of tax paid under the Entry Tax Act. The set off under the VAT liability would arise only when there is a liability incurred under that Act and in the event of there being no consumption, use or sale within the State, the importer would have to prove as to how the goods were disposed of. 11. The above two contingencies are two different and distinct circumstances which cannot be mixed up in any manner. If the goods are imported for any purpose other than consumption, use or sale within the State, then the importer has to prove how the goods imported were disposed of. If the goods had, in the form in which it was imported or in any other form, incurred a liability under the VAT Act, then the tax paid on entry would be reduced from the liability incurred under the VAT Act. The appellant pleads neither but asserts; though the cement was imported for sale it was damaged and could not be sold and offers no explanation as to what happened to the huge quantity of damaged cement. 12. Hindustan Lever Ltd. (supra) was a case in which the assessee had C F agents within the State of Bihar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fiscal terms it assumes varying shapes and hence, considered the term liability in the context of an exemption notification. From the statutory provisions it was held that the charging section provides for payment of sales tax while another provision empowered the State Government to exempt from such payment. Liability to pay tax and the actual payment of tax were held to be conceptually different. The exemption notification does not efface the liability created by the charging section, but merely absolves the assessee from paying the tax, was the finding rendered in favour of the assessee. 16. This does not come to the aid of the appellant in the facts of this case since there is no question raised of an exemption and the unsubstantiated version is that so much of the goods were damaged and were hence not sold and thus there was no liability incurred. In fact, going by the dictum of the cited decision, unless there is a liability incurred; to tax, there can be no adjustment of entry tax and in the instant case, the claim of the appellant for exemption going by the above dictum, has to fail. 17. In Shree Shankar Ice Cold Storage (supra) the assessee challenged the dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heduled goods, who is liable to pay tax under the VAT Act; (iii) The assessee must incur tax liability at the rates specified under Section 14 of the VAT Act; (iv) This must only be by virtue of the sale of imported scheduled goods; and (v) His tax liability under the VAT Act will then stand reduced to the extent of tax paid under the Act. 19. The assessee being a registered dealer under the Finance Act was found to be satisfying the first condition and though the assessee was the importer of the goods, it had no liability to pay VAT on its sales to OMCs thus not satisfying the second third condition. The assessee also did not satisfy the fourth condition since the words employed in the provision; or sale of goods manufactured by consuming such imported scheduled goods which connotes a sale by the importer itself, who alone is entitled to the set-off as per the fifth condition. The dictum squarely applies in the instant case where admittedly the appellant- assessee did not suffer tax on the imported goods within the State of Bihar thus disabling the appellant from claiming set-off to the extent of such imported goods which did not suffer tax within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
