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Sales Tax Review |
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June 2007 |
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Roving Eye |
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HON’BLE MR. SANJAY BHATIA, IAS, OUR NEW COMMISSIONER OF
SALES TAX.
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By now, all professional brothers know that Mr. Sanjay
Bhatia has taken over as the Commissioner of Sales Tax, Maharashtra State.
With a view to accord him a hearty welcome and also have a preliminary
discussion with him, we had invited him to STT Bar Library on 11th June,
2007 at 2 P.M.
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On the said appointed day and time, Mr. Bhatia came to
our Library and was welcomed by the President of STT Bar Association and
STPAM, together with members of both the Bar Associations. After formal
introduction of the Commissioner to both the Bars and introducing to him
both the Bar Associations, he was requested to give his feel of the
Department. Also, to share with us his priorities in administering the
Department as well as some policy points that he may be having in mind to
press for resolution.
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Accordingly, Mr. Bhatia in a friendly manner very frankly
spoke on the following 4 points:—
(a) Corrupt image of the Dept.:
He said that the corrupt image of the Dept. is
disturbing him most and, therefore, he would do his best to bury this image
of the Dept. Of course for doing so, he would need sincere help from all the
concerned quarters.
(b) Use of Information Technology in the Dept.:
He felt that the use of information technology is very
slow. Hence, he would accord top priority in using IT Technology for the
benefit of dealers as well as the Department.
(c) Benefits of meditation:
While talking on the benefits of meditation, he
became quite sensitive and mentioned that following regular meditation, he
is a totally changed person now. In this connection, he gratefully
acknowledged that ‘Vipashana’ course conducted at Igatpuri, by renowned
authority Shri. Goenka Guruji, has transformed him into a new personality.
He, therefore, very strongly recommended that the Departmental officers as
well as the members of the Bar, should undergo this course to derive the
benefits of meditation and lead a most satisfying life in all sphere.
(d) ‘Agenda’ for meetings of the Empowered Committee on
VAT:
The Hon’ble Commissioner seriously felt that
Maharashtra State, being a progressive State and having largest sales tax
revenue amongst the States, should take a leadership in drafting ‘Agenda’
for the meetings of the Empowered Committee of States Finance Ministers, to
resolve number of burning issues connected with VAT. For this purpose, he
intends to form an expert and research team in which sales tax practitioners
will also be included. This team, according to him, will do the necessary
groundwork for the Agenda that he may be having in mind.
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At the end of the meeting, the Commissioner was profusely
thanked for his friendly and businesslike approach, and everybody present
assured him co-operation in his mission and wished him great success in his
new responsibility.
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RECENT IMPORTANT JUDGMENT FROM THE HON’BLE TRIBUNAL
(BENCH-II).
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Members and readers are well aware of the Trade Circulars
issued by the Hon’ble Commissioner bearing Nos. 40-T of 2002 dated
13-12-2002 in respect of large number of complaints received by him about
non-granting of interest receivable by dealers u/s 43A in original order as
per law and the direction of the Commissioner to lower authorities to grant
such interest in the Assessment Order itself and Circular No. 3-T of 2004
dated 9-1-2004 whereunder, he clarified that earlier the Dept. was granting
interest u/s 43A on the refunds due under the CST Act, WCT Act and Lease
Act, since grant of such interest was not in dispute at that time. However,
in the light of India Carbon Ltd., Apex Court decision dated 16-07-1997, the
Commissioner decided that since there is no substantive provision in the WCT
Act for grant of interest on refund, the same cannot be granted and lower
authorities were directed not to grant interest on such refunds. Obviously,
this Circular being not in conformity with law were challenged in first
appeals as well as second appeals.
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The Hon’ble Tribunal (Bench-II) in the case of M/s
Arvind G. Daftary vs. The State of Maharashtra & Ors. in a batch of five
second appeals filed by (1) M/s Arvind G. Daftary (SA No. 1817 of 2002), (2)
M/s Harbhajan Sarbjeet & Associates (SA No. 168 of 2005), (3) M/s Batliboi
Environmental Engg. Ltd. (SA No. 972 of 2005), (4) M/s PBA Infrastructure
Ltd. (SA No. 1248 of 2005) and (5) M/s Turnkey Electrical Engineers Pvt.
Ltd. (SA No. 1504 of 2005), tagged together, heard and decided on 12th June,
2007, has allowed all the five second appeals in an elaborate judgment and
order, and has held that the appellants are entitled to interest u/s 9(1) of
the WCT Act, r/w Section 43A of the BST Act. In brief, the submissions and
reasoning found acceptable to the Hon’ble Tribunal were as under:—
(a) The Commissioner of Sales Tax while issuing Trade
Circular No.
3-T of 2004 dated 9-1-2004 has not properly understood the ratio of the Apex
Court judgment in the case of India Carbon Ltd. vs. State of Assam (1997)
106 STC 460 (SC), in the matter of substantive law i.e. charging or levy
section and Machinery provision for enforcement of charge, recovery of tax
and refund provisions, which is a part of procedural law - built in some
substantive provisions. Hence, the Tribunal ruled that the said Circular in
which interest withdrawing instructions were given, cannot be justified as
per the interpretation placed by the Tribunal on Section 9(1) of the WCT
Act, r/w Section 43A of the BST Act.
(b) The Tribunal has gone in depth to the legislative
amendments effected from time to time to Section 9 of the CST Act, 1956,
which provision was in pari materia with Section 9 of the WCT Act till
1-7-2004.
(c) The Tribunal at length based on the large case
law marshalled before it, analysed the distinction between charging
provision and machinery provision, to say that even in a procedural law
also, there will be substantive provisions. In this connection, in
particular, the Tribunal has noted its observations made in the case of M/s
Blitz Publication Pvt. Ltd. (SA No. 1214 of 1970 decided on 4-7-1972). This
old judgment was brought to the notice of the Tribunal by Mr. A.B. Ghanekar,
Sales Tax Practitioner, who appeared before the Tribunal as amicues
curiae, amongst others.
(d) In Paragraph 33 of the judgment, the Hon’ble
Tribunal reached to the following conclusion:—
"33. To sum up it is held that the provision for grant
of interest on refund as per section 43A of the BST Act is a substantive
provision but it is a part of a procedural law and it is not a substantive
law. All the provisions of the BST Act relating to refund including the
provision for grant of interest mentioned in later part of section 9(1) of
the WCT Act are applicable for the purpose of assessment, re-assessment,
collection and enforcement of payment of tax under the WCT Act, as if it
is a tax payable under the BST Act. We accordingly hold that the
appellants are entitled to interest on refund u/s 9(1) of the WCT Act read
with section 43A of the BST Act."
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Members may, therefore, take advantage of the above good
judgment and order.
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