54.
-
Whether the CST appeal order can be rectified to levy
Interest u/ss. 36(3)(a) & (b) r.w. CST Act in view of retrospective validation
of levy?
Held ... No.
-
Whether Rectification Order can be passed after expiry of
two years on the application of affected party?
Held ... Yes.
This is a Rectification Application filed by the Sales Tax
Department in the S. A. No. 1416 of 1995 decided on
25-2-2000. The applicant had prayed for restoration of interest u/s 9(2) of
CST Act read with sections 36(3)(a) & (b) of the BST Act by the present
application on the ground of amendment of section 9 of the CST Act and
validation provision contained in the Finance Act, 2000.
The Tribunal by its judgment dated 25-2-2000 in S. A. No.
1416 of 1995 deleted interest levied u/ss. 36(3)(a) & (b) of the BST Act in
the CST assessment order by following the Supreme Court judgment in the case
of India Carbon Ltd. (106 STC 460).
The assessee raised the preliminary objection on the ground
that the order proposed to be passed u/s 62 is not within the statutory time
limit of two years. On merit, the assessee submitted that the Tribunal decided
the issue on the basis of the Supreme Court judgment, as it was the law of
land then. Therefore, the Tribunal had not committed any apparent mistake,
which can be rectified. Secondly, the section 9 was amended with a
retrospective effect after passing of the said Tribunal judgment. Therefore,
the question whether such a provision authorizing levy of interest
retrospectively is constitutionally valid or not, still remains to be decided
and that will take the matter beyond the scope of rectification u/s 62. Lastly
he submitted that interest u/s 36(3)(b) cannot be levied as the differential
tax dues was ascertained much later by virtue of the consequential orders
passed by the assessing authority which was subsequently modified by the
Tribunal in the Second Appeal in the context of such recomputation orders.
Therefore, he prayed for rejection of Rectification Application.
The Tribunal rejected the preliminary objection raised by
the assessee as regard limitation. The Tribunal following the judgment in the
case of M/s Motilal & Company, Appeal No. 471 of 1964 decided on 27-6-1967
observed that the limitation of two years for passing the Rectification Order
shall apply only in case where the authority is rectifying any order suo
motu and not in case where the affected party has filed Rectification
Application within two years for rectification
of any order but the authority failed to act.
As regards merits of the Rectification Application the
Tribunal observed that rectification is bound to be opposed by questioning the
constitutional validity of the retrospective amendment by which interest is
proposed to be levied for the past periods. This will certainly involve the
elaborate arguments from both the sides. Thus it will take the matter outside
the scope of rectification u/s 62. The Tribunal also agreed with the assessee
that the differential tax dues have been ascertained at a later date and
therefore it is always open to the revenue to levy the interest afresh on the
basis of the said retrospective amendment. The Tribunal rejected the
rectification application.
[Rectification Application No. 1 of 2001 decided on
10-11-2005. The judgement was delivered by Shri G. G. Kochrekar, Member, Third
Bench. Mr. M. H. Gami, Advocate appeared for the opponent (assessee)]
55.
-
Whether the appellant have option to discharge his tax
liability under VAT w.e.f. 1-10-1995 as per Rule 42H or 46 B ?
Held ... Yes.
-
Whether the full set-off of tax paid can be allowed when
the seller has paid tax on full sale price without reducing discount u/s 42H ?
Held ... Yes.
The common issue was involved in present two Second Appeals
regarding discharging of tax liability under VAT w.e.f. 1-10-1995 under the
BST Act.
The appellant had, by the deed dated 18-1-1996, agreed to
purchase Crocin, the pharmaceutical product manufactured by Duphar-Interfran
Ltd., Mumbai as in stock on the cut-off date defined in the deed as 15-1-1996.
The price to be paid at the rate stated in the Schedule to the Deed and stock
to be delivered to the location specified by the appellants in the shipment.
On the stock delivered in Maharashtra, Duphar-Interfran charged full tax in
the invoices raised by it for such sales as provided in the BST Act and
deposited the same into the Government Treasury. The Duphar Interfran had
allowed rebate to the appellant at 30.30% of the sale price of Crocin,
considering the fact that the appellants were to sell Crocin at the same price
at which it was purchased and was not entitled to resale due to introduction
of VAT w.e.f. 1-10-1995. The assessing authority determined the VAT liability
by subjecting the difference between purchase price (after reducing discount
granted by the seller; i.e., Duphar Interfran) and sale price u/r 46 B of the
BST Rules. The appellate authority confirmed the same in the First Appeal.
The appellant submitted that the lower authorities erred in
taxing the difference between the sale price and purchase price u/r 46 B for
determining the VAT liability w.e.f. 1-10-1995. He further submitted that the
seller had paid full tax on the sale price before allowing the discount. Thus,
the Government has received tax even on the discount. Therefore, if the VAT
liability is determined as per rule 42H then there will not be any liability
as there was no value addition.
The Department confirmed that the seller has paid taxes on
the sale of Crocin on the gross amount without considering the discount
granted to the appellant. Therefore, it did not have any objection to grant
set-off u/r 42H.
The Tribunal observed that the option are given to the
appellant to discharge the VAT liability under rule 42H or Rule 46 B.
Therefore, the Tribunal accepted the appellant’s contention and allowed the
set-off u/r 42H and redetermined the VAT liability, which was equivalent to
the set-off u/r 42H for both the periods.
(M/s SmithKline Beecham Consumer Healthcare Ltd., S. A.
Nos. 1118 & 2338 of 2001 decided on 19-11-2005. The judgment was delivered by
Mr. R. B. Ahuja, Member, First Bench. Mr. D. D. Vashi, Advocate appeared for
the appellant)
-
Whether set-off u/r 42L be eligible on
closing stock also in the year of purchase?
Held: Yes, subject to goods in stocks are sold before the
assessment
The point of dispute is disallowance of set-off u/r 42L on
closing stock. The appellant was assessed for the period 1-4-2000 to 31-3-2001
by allowing set-off u/r 42L on entire purchases effected during the period.
The Assistant Commissioner (Adm) revised the said assessment order to restrict
the set-off u/r 42L to the extent the goods consumed during the year. In the
First Appeal, the Deputy Commissioner confirmed the withdrawal of set-off on
goods lying in stock.
The appellant submitted that the word used in Rule 42L;
i.e., such goods are used with reference to the goods; i.e., commodity stated
in Schedule
C-I-20 or C-I-22; i.e., sale of liquor. Then, he referred to the dictionary
meaning of word "such".
The Tribunal agreed with the appellant that the words "such
goods" appeared in the provision of "42L" are related to the goods specified
in Schedules C-I-20 & C-I-22; i.e., liquor. "Sale" is the condition for
granting set-off u/r 42L. Only question is whether it is necessary to effect
sales during the period of assessment or whether set-off u/r 42L can be
granted even if the sales are effected prior to the assessment. Thus, the
Tribunal relying on M/s Sudha Instant Soft Drinks & Essences (S. A. No. 318 of
1985 dated 28-1-1988, held that the appellant has option either to claim
set-off in the assessment year or if not granted on the closing stock during
the said period then to get carried forward to the next year.
(M/s Vijay Wine Mart, S. A. No. 1817 of 204 decided on
29-11-2005. The judgment was delivered by Mr. G. D. Parekh, President, Second
Bench at Nasik Camp. Mr. M. R. Shirode Advocate appeared for the appellant)
-
Whether, on the facts, the lower
authorities justified in forfeiture of tax u/s 43(3) of the Act?
Held ... No.
The appellant is a manufacturer of agriculture implements.
The assessment order was revised by the Assistant Commissioner (Adm) raising
demand of Rs. 68,628/-.
The appellant submitted that he has not collected tax
separately in the bills. They have filed the returns by claiming deduction u/r
46A at 4%. At the time of assessment, he claimed that sales are liable to tax
@ 2% as per N/e A-37. He further submitted that the rate of sales tax on the
impugned goods were changed from 2% (during 1995 to 1998) to 4% (during
1998-99) and 0% (during 1999) to 8% (in 1-1-2000 to 31-1-2000). He submitted
that even though there has been fluctuation in rate of tax, there has been no
fluctuation in the sale price of the impugned goods, which remained static, in
support of this he submitted specimen of the bills for the year
1997-98 & 1999-2000. Therefore, he prayed that forfeiture be set aside.
The Tribunal following the larger bench judgment in the
case of
M/s Unique Automobiles, S. A. No. 1961 of 2003 decided on 18-6-2005 accepted
the appellant’s contention as he has rebutted the presumption made against him
for the reimbursement of the tax.
(M/s Indira Trailor Sillod, S. A. No. 1581 of 2004 decided
on 19-11-2005. The judgement was delivered by Mr. R. B. Ahuja, Member, First
Bench at Aurangabad Camp. Mr. Ifterkhan Patel, STP appeared for the appellant)
-
Whether, on the facts of the case, the
revisional authority was justified in levying interest u/s 36(3)(b) and
penalty u/s 36(2)(C) for the first time in revision?
Held ... Yes.
In both the appeals, the appellants has challenged the levy
of interest u/s 36(3)(b) and Ppenalty u/s 36(2)(C) by the Assistant
Commissioner (Adm) while revising the assessment orders. The assessment orders
were revised to levy turnover tax.
The appellants contended that as no interest u/s 36(3)(b)
or penalty u/s 36(2)(C) was imposed by the assessing authority, the revision
authority has no jurisdiction while exercising the powers u/s 57 to levy
interest or penalty for the first time. He referred to section 36(3)(b) and
submitted that the appellate or revisional authority can enhance or reduce the
interest if as a result of any order, the amount of tax which has remained
unpaid is enhanced or reduced as the case may be. For this purpose he relied
on the judgment in the case of State of Tamil Nadu vs. Jakhti Veliyeetakem
40 STC 466. (In the present case, as there was no interest or penalty
levied there is no question of enhancement) In an alternate, he prayed for
remission in the amount of interest and penalty on the ground that there was
lot of confusion as to payment of turnover tax during the said period.
The Department submitted that in the absence of any
limitations imposed by the provisions of the statute or the scheme there is no
reason to put a limitation on the revisional powers of a revising authority to
correct an error which occurred in the order of a subordinate officer. He
further submitted that enhancement u/s 36(3)(b) means to enhance the interest
from nil also. He placed reliance on the judgement in the case of M/s S. T.
Bookwala & Sons (R. A. No. 78 of 1972 decided on 25-4-1972). The Tribunal
perused the relevant provisions and observed that only limitations on exercise
of revisional power is that revisional authority should not trench upon the
powers which are expressly reserved by the Act or Rules to the other
authorities and should not ignore the limitations inherent in the exercise of
those powers.
The Tribunal referred to the Bombay High Court judgment in
the case of M/s Tata Exports Ltd. 98 STC 314 and observed that here it
is not the case that the assessment has been resulted in demand and despite of
the said assessment dues, no interest u/s 36(3)(b) was levied. Nor it is the
case that the assessing office has recorded the findings as regards the
concealment and still has not chosen to impose penalty u/s 36(2)(C). Here the
assessment has either resulted in refund or in nil demand. Therefore, there
was no question of levy of interest or imposition of penalty. Now the
assessment itself has been revised. As a consequence of revision, assessment
resulted in demand of assessment dues. It is also noticed in revision that
there is concealment of liability. Therefore, the revisional authority was
justified in levying interest u/s 36(3)(b) and imposing penalty u/s 36(2)(C).
But the Tribunal considering the facts granted some
remissions in interest and penalty.
(M/s Maruti Federation Ltd., S. A. No. 2009 of 2003 and M/s
K. Ferts Lab, S. A. No. 1258 of 2004 decided on
11-11-2005. The judgment was delivered by Shri G. D. Parekh, President, First
Bench, Aurangabad Camp. Mr. N. V. Tapare, Advocate appeared for both the
appellants)
-
At what rate CQB u/r 31AA is to be
calculated i.e., schedule rate or notified rate in case of notification u/s 41
?
Held ... At notified rate.
The appellant carries on business of manufacture and sale
of plastic film. He hold Entitlement Certificate granted to him by the learned
Deputy Commissioner of Sales Tax, Kolhapur Division. He was assessed by the
Sales Tax Officer by assessment order dated 22-3-2002. The Sales Tax Officer
calculated CQB at the rate of 13% on entire sales on the ground that goods
sold are covered by Entry C-II-93 at
Rs. 2,12,112/-. In the First Appeal against the same, the appellate authority
confirmed the said calculation on the basis of Rule 31AA.
The appellant contended that the entire sales were effected
to a milk dairy, registered under the BST Act and such sales attracted sales
tax at 4% in view of notification entry F-9. He submitted that if rule 31AA is
interpreted in a manner interpreted by the lower authority then there will be
two rates application to sales of goods manufactured by the appellant and that
even if the tax is payable on his sales will be 4%, the CQB will be calculated
at 13%. He further submitted that in case the appellant were to opt for
deferral in place of exemption, the tax liability would be calculated @ 4%
only at
Rs. 65,265/- and not at Rs. 2,12,112/-. Thus, resulting into discrimination
between a dealer who has opted for exemption and a dealer who has opted for
deferral and a dealer who does not hold an Entitlement Certificate. Therefore,
he prayed that rule 31AA has to be interpreted in rational manner so that tax
liability of all dealers remain the same.
The Tribunal held that no discrimination can be made in the
matter of calculation of CQB in the small scale industrial unit situated in
the backward area of the State. In fact, the object of granting entitlement
certificate to the dealer situated in backward area is to offer him certain
concessions and not to levy tax at the rate higher than the rate at which the
manufacturer of such film will sell the same goods to a milk dairy. Therefore,
the Tribunal held that CQB be calculated at the notified rate; i.e., 4% and
not the rate prescribed in the schedule.
(M/s Apurva Poly-Printers, S. A. No. 1571 of 2004 decided
in November 2005. The judgment was delivered by Shri G. D. Parekh, President,
First Bench, Kolhapur Camp. Mr. P. V. Surte, Advocate appeared for the
appellant.)
-
Whether, on the facts of the case,
interest u/s 36(3)(b) can be remitted in full ?
Held ... Yes.
The appellant is a manufacturer in electrical grade wire,
enamels and insulation, varnishes, thinners and phenolic resins. The appellant
is holding entitlement certificate under the Package Scheme of Incentive,
1983. The appellant was assessed u/s 33(3) of the Act for the period 1994-95
by order dated 31-3-1998. Interest u/s 36(3)(b) was levied at Rs. 86,542/- in
the order of assessment, in respect of which no relief was granted in the
appeal.
The appellant submitted that the ratio of the Tribunal
judgment in case of M/s P. V. Textiles applies in his case also and if the
same is applied there wouldn’t be any question of levy of interest u/s
36(3)(b) of the Act. The appellant did not wish to pursue the points taken in
the grounds of appeal but prayed to grant full remission of interest levied
u/s 36(3)(b).
The Tribunal accepted the appellant’s contention and
granted full remission of interest u/s 36(3)(b).
(M/s Schenectady Chemical India Ltd., S. A. No. 1043 of
2001 decided on 24-11-2005. The judgement was delivered by Shri J. N. Khambait,
Member, First Bench at Kolhapur Camp. Mr. P. V. Surte, Advocate appeared for
the appellant)
-
Whether interest u/s 43A can be granted on
excess BST refund adjusted against CST dues ?
Held ... Yes.
The appellant was assessed for the period 1997-98. The
assessment under the BST resulted into refund of Rs.1,50,496/- and assessment
under CST resulted in tax dues of Rs. 1,44,443/-. The assessing authority
adjusted full refund of Rs. 1,50,496/- against CST dues and granted net refund
of Rs. 6053/- under the CST Act. He did not give any interest u/s 43A on the
said excess of Rs. 6053/-.
The appellant submitted that as per provision of section
43A, any refund under the BST Act can be adjusted towards the dues under the
CST Act but it cannot be adjusted in excess of the dues payable. Therefore,
the excess refund of Rs. 6,053/- ought to have been granted under the BST Act
and interest u/s 43A on the same.
The Tribunal accepted the appellant’s submission and
granted interest u/s 43A on the said amount of Rs. 6,053/-.
(M/s Marine Fabrics, S. A. No. 1540 of 2004 decided on
19-11-2005. The judgment was delivered by Shri G. D. Parekh, President, First
Bench, at Kolhapur Camp. Miss P. P. Pawar, Advocate appeared for the
appellant)
