TMI Blog2023 (12) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department of the Government of Assam at Sl. No.54 in respect to service by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale and purchase of agricultural produce pre-supposes that the cess which was collected by virtue of the Act of 1972 had been subsumed by the CGST Act,2017 as well as AGST Act, 2017. Under such circumstances, the levy of cess by the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017. In the instant case, the Respondent Board and the Market Committee after having lost their powers to levy cess, the financial position of the Respondent Board is in a penurious state. It is surviving as could be seen from the additional affidavit filed on 28.09.2023 on the basis of grant-in-aid received from the State Government. Under such circumstances, it is the opinion of this Court that directing the State to recover the said amount from the Respondent Board would not be in the interest of justice, equity, good co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 4 or any portion thereof to be a market area for the purpose of the Act of 1972 in respect of all agricultural produces specified in the said notification. 4. In the backdrop of the above, let this Court take into account the power to levy cess which is the subject matter of dispute in the instant batch of writ proceedings. Section 21 of the Act of 1972 stipulates the power to levy cess. The said Section 21 being relevant is reproduced hereinunder:- 21. Power to levy cess. (1) Every market committee shall levy and collect a cess on the agricultural produce bought or sold in the market area at a rate not exceeding two rupee for every one hundred rupees of the aggregate amount for which a specified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable considerations. (2) The Assam State Agricultural Marketing Board shall also have the power to levy and collect cess for any or all of the Market Committee(s) in the market areas in addition to the powers of the Market Committee (but not both), whenever felt necessary with approval of the State Government, on the agricultural produce bought or sold in such market area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas in addition to the powers of the Market Committee (but not both), whenever felt necessary with approval of the State Government on the agricultural produce bought or sold in such market areas at a rate not exceeding two rupees for every one hundred rupees of aggregate amount for which a specified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable considerations. Sub-Section (3) of Section 21 stipulates that no cess would be levied on goods manufactured from the agricultural produce on which cess is proposed to be levied and which are ultimately exported out of the Country. In terms with Exlanation-1, a legal presumption is drawn unless the contrary is proved that all specified agricultural produces would be deemed to be bought or sold in notified market area if (i) such produce is taken out or proposed to taken out of the said area; or (ii) the agreement of sale or purchase thereof in respect of such produce is entered into the said area; or (iii) in pursuance of sale or purchase or the agreement of sale or purchase such produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed Bill, which seeks further to amend the Constitution, inter alia, provides for (a) subsuming of various Central indirect taxes and levies such as Central excise duty, additional excise duties, excise duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, service tax, additional customs duty commonly known as countervailing duty, special additional duty of customs, and Central surcharges and cesses so far as they relate to the supply of goods and services; (b) subsuming of State value added tax/sales tax, entertainment tax (other than the tax levied by the local bodies), Central sales tax (levied by the Centre and collected by the States), octroi and entry tax, purchase tax, luxury tax, taxes on lottery, betting and gambling; and State cesses and surcharges insofar as they relate to supply of goods and services; (c) dispensing with the concept of declared goods of special importance under the Constitution; (d) levy of integrated goods and services tax on inter-State transactions of goods and services; (e) levy of an additional tax on supply of goods, not exceeding one per cent in the course of inter-State trade or comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution (101st Amendment) Act, 2016 was enacted on 08.09.02016 to amend the Constitution. By the said Amending Act of 2016, new Articles 246A, 269A and 279A were inserted. Amendments were also made to Articles 248, 249, 250, 268, 269, 270, 271, 286, 366 368. Article 268A was omitted. Further to that, it is also seen that amendments were also carried out to the Schedule 7 to the Constitution, i.e. both to Union List and State List. In List I, Entry 84 was substituted. In List II, i.e. the State List, Entry 52 was omitted, Entry 54 was substituted, Entry 55 was omitted and Entry 62 was substituted. 10. This Court at this stage finds it relevant to take note of Entry 52 of List II as it stood prior to its omission which read as under: 52. Taxes on the entry of goods into a local area for consumption, use and sale therein. 11. After the Constitutional amendment, the Parliament enacted the Central Goods and Service Tax Act, 2017 (CGST Act, 2017) to make provisions for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. On the same date, another statute was enacte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government, on 29.06.2017, a notification bearing No.FTX.56/2017/25 was issued by the Finance (Taxation) Department of the Government of Assam, whereby in exercise of the powers under the proviso to Sub- Section (1) to Section 11 of the AGST Act, 2017, the Governor of Assam on being satisfied that it was necessary in public interest to do so, on the recommendation of the Council, exempted the intra-State supply of service description as specified in Column No.3 of the Table in the notification from so much of the State Tax leviable therein under Sub-Section (1) of Section 9 of AGST Act, 2017 as is in excess of the said tax calculated at the rate as specified in corresponding entry in Column No.4 of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in Column No.5 of the said Table. At Sl. No.54 of the said notification with the Heading 9986, services relating to cultivation of plants and rearing of all live forms of animals except the rearing of horses, food, fibre, fuel, raw materials or other similar products or agricultural produce by way of services by any Agriculture Produce Marketing Committee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned legislation has transgressed the limits of its power granted under the Constitution. It is contended that although the impugned legislation is described as for the purpose of giving compensation to States by the Centre to States for loss of revenue but in fact it imposes tax (termed as cess), hence in pith and substance the legislation does not belong to the subject falling within the limits of its power but is outside it. 34. Part XI of the Constitution deals with the relation between the Union and the States, Chapter I of which deals with Legislative Relations . Article 245 deals with Distribution of Legislative Powers . Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in Seventh Schedule of the Constitution. Parliament, and subject to Clause (1) of Article 246, the legislature of a State also have power to make laws with respect to any of the matters enumerated in List III of the Seventh Schedule. Article 248 deals with residuary power of legislation in following manner: 248. Residuary powers of legislation . (1) Subject to Article 246-A, Parliament has exclusive power to make any law with respect to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.) indicates. When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which it is an increment. By Schedule A(1) read with Section 3 of the Act, it is collected as an additional levy with a tax, which, as described in Schedule A, is undoubtedly one within the powers of the State Legislature and has been so even prior to the Constitution. 38. In the Constitution Bench judgment of this Court in India Cement Ltd. v. State of T.N., the above definition given by Hidayatullah, J., was quoted with approval in para 19, which is quoted as below : 19. Here, we are concerned with cess on royalty. One can have an idea as to what cess is, from the observations of Hidayatullah, J., as the learned Chief Justice then was, in Shinde Bros. v. Commr., Raichur where at SCR p. 571, the learned Judge observed : 39. The word cess is used in Ireland and is still in use in India although the word rate has replaced it in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) whether the respondent Board had the authority and jurisdiction by virtue of Section 21 of the Act of 1972 to levy cess after the Constitution (101st Amendment) Act 2016 and the CGST Act, 2017 and AGST Act, 2017 had come in force? (ii) If not, whether the petitioners herein would be entitled to the refund of the amounts which the Respondent Board had illegally collected from the petitioners? 18. This Court in the preceding segments of the instant judgment had dealt with Statement of Objects and Reasons in respect to the Constitution (122nd Amendment) Bill, 2014, the Constitution (101st Amendment) Act, 2016 the enactment of the CGST Act, 2017, AGST Act, 2017, IGST Act, 2017 as well as the Notification bearing No.12/17-Central Tax (Rate) dated 28.06.2017 and the Notification bearing No.FTX.56/2017/25 dated 29.06.2017 as well as the effect thereof. 19. This Court at this stage finds it relevant to take note of the submission of Mr. N. J. Gogoi, the learned Standing Counsel of the Respondent Board who submitted that pursuant to the coming into effect of the GST regime, the Respondent Board have been realizing the cess on the basis of the communication dated 31.07.2017 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d stage is assessment. The assessment particularizes the exact amount which a person liable has to pay. The third stage is the method of recovery if the person taxed does not voluntarily pay. The core of a taxing statute is a charging section and the provision for levying such a tax defines persons who are liable to pay tax. If that core disappears, the remaining provisions lose its efficacy. It is well settled by the judgment of the Supreme Court in the case of Associated Cement Companies Ltd. vs. State of Bihar and Others , reported in (2004) 7 SCC 642 that exigibility of tax is not the same as liability to pay tax. The former depends on charge created by the statute and the later on computation in accordance with the provisions of the Statute. The Supreme Court further held in the said judgment that the liability to pay tax and the actual payment of tax are also conceptually two different aspects. It was observed that exemption pre-supposes a liability or in other words, unless there is a liability, the question of exemption does not arise. The above propositions have also been explained in detail by the Supreme Court in the case of Peekay Re-Rolling Mills (P) Ltd. vs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent however argued that such adjustment could not be made since the same was exempted, which meant that there was no liability to tax. The Court rejected the argument of the respondent, holding as follows: 17. Crucial question, therefore, is whether the appellant had any liability under the Act. The question of exemption arises only when there is a liability. Exigibility to tax is not the same as liability to pay tax. The former depends on charge created by the statute and the latter on computation in accordance with the provisions of the statute and rules framed thereunder, if any. It is to be noted that liability to pay tax chargeable under Section 3 of the Act is different from quantification of tax payable on assessment. Liability to pay tax and actual payment of tax are conceptually different. But for the exemption the dealer would be required to pay tax in terms of Section 3. In other words, exemption presupposes a liability. Unless there is liability, question of exemption does not arise. Liability arises in terms of Section 3 and tax becomes payable at the rate as provided in Section 12. Section 11 deals with the point of levy and rate and concessional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instructions from the respondent Board as to whether any proper account were maintained in respect to the petitioners in the instant batch of writ petitions and how much amount of cess was collected from the petitioners in the meantime pursuant to the filing of the writ petitions. Subsequent thereto, three affidavits were filed on 21.09.2023 whereby detail collection of cess from the writ petitioners for the period from 01.07.2017 to 12.06.2020 were placed. At the cost of repetition, it is reiterated that from 12.06.2020, the respondent Board had stopped the collection of cess vide notification No.ASAMD/DEV/913/2020/16 dated 12.06.2020. The three additional affidavits gave district-wise details of the collection of cess from 01.07.2017 to 12.06.2020. The petitioners had also filed additional affidavits bringing on record the amount of cess collected from them by the respondent Board during the period from 01.07.2017 to 12.06.2020. 25. This Court further finds it pertinent to take note of another additional affidavit filed on 28.09.2023 by the Chief Executive Officer of the Respondent Board. In the said affidavit, it was mentioned that the only source of income of the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s could be released. For the year 2023-24, a sum of Rs. 7,62,50,000/- was received in the month of September, 2023 which was used for payment of salaries of the employees. It has also been stated that inspite of that, 10 months salary, i.e. from November, 2022 to August, 2023 is still due to employees of the Market Committees and for 7 months for the employees working in the Headquarter of the Respondent Board due to non-availability of fund and non-receipt of the financial grant-in-aid from the Government of Assam. Further to that, it was also mentioned that the Respondent Board as on 22.09.2023 has a bank balance of Rs. 4,79,923/- against salary and other expenses. The Respondent No.2 is unable to pay the retirement benefits to its retired employees who retired upto August, 2022. 27. In the backdrop of the above, let this Court take note the settled principles of law as regards refund and restitution. The Supreme Court in the case of State of Maharashtra and Others vs. Swanstone Multiplex Cinema Private Limited , reported in (2009) 8 SCC 235 dealt with the doctrine of unjust enrichment as well as also the aspect as to whether any tax unjustly collected be permitted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. 35. In Sahakari Khand Udyog Mandal Ltd. v. CCE Customs this Court has held: 45. From the above discussion, it is clear that the doctrine of unjust enrichment is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11-B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11-B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in the absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the appellant-petitioner to show that he has paid the amount for w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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