Rajasthan High Court - Jaipur
M/S Devyani International Ltd vs State (Tax Board )Ors on 12 March, 2012
Author: Alok Sharma
Bench: Alok Sharma
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JUDGMENT S.B. CIVIL WRIT PETITION NO.14776/2011 (M/s Devyani International Ltd. Vs. The State of Rajasthan & Ors.) Date of Order : 12.03.2012 HON'BLE MR. JUSTICE ALOK SHARMA Mr. Manish Sharma, for the petitioner. Mr. R.B. Mathur, for the respondents.
This petition has been filed inter alia challenging the notices issued by the Commercial Taxes Officer, Anti Evasion, Zone-3 all dated 15.09.2011 in respect of assessment years 2009-10, 2010-11 and quarterly return for the assessment year 2011-12 wherein the produce of the petitioner-Company engaged in making and selling of Pizza and other such food items is sought to be covered under Schedule 5 of the Rajasthan VAT Act, 2003 (hereinafter 'the Act of 2003') and levied with VAT of 14% ad valorem.
The case of the petitioner-Company is that it is only liable to pay a VAT of 5% ad valorem tax on its cooked food sold with reference to a notification No.F.12(22)FD/Tax/10-87 S.O.391 dated 09.03.2010 which provides that the dealers selling food cooked in the restaurants and hotels below three star category would be liable to pay VAT only @ 5% ad valorem on their sales.
At the very outset, the counsel for the petitioner-Company has pointed out that the same issue with regard to the classification of the produce of the petitioner-Company and others similarly situated engaged in making and selling of Pizza and such other fast food items is under consideration before the Rajasthan Tax Board, Ajmer by way of an appeal under Section 83 of the Act of 2003 occasioned by an earlier determination by the Additional Commissioner (IT), Commercial Taxes, Jaipur rendered on an application under Section 36 of the Act of 2003. It is submitted that even while the appeal on the issue of classification of the petitioner-Company's produce under the Act of 2003 is pending before the Rajasthan Taxes Board, the tax authorities are seeking to recover VAT purportedly under charged for the years 2009-10, 2010-11, and the first quarter of the assessment year 2011-12 under notices dated 15.09.2011. Counsel submits that neither a return to the show cause notices dated 15.09.2011, nor even an appeal against an imminent order of assessment before the appellate authority under Section 82 of the Act of 2003 (a Deputy Commissioner) would be of avail inasmuch as the Additional Commissioner, a superior officer, has vide order dated 11.05.2011 already determined the classification of the produces of the petitioner-Company as falling within Schedule 5 of the Act of 2003 and of not being covered under Notification No.F.12(22)FD/Tax/10-87 S.O.391 dated 09.03.2010.
Mr. R.B. Mathur appearing for the Tax Department would submit that merely because of the pendency of an appeal under Section 83 of the Act of 2003 at the instance of the petitioner-Company and others against the order dated 11.05.2011, passed by the Additional Commissioner, there can be no freezing of the jurisdiction of the tax authorities and the tax authorities are within their statutory rights to recover amount of tax short paid owing to mis-classification along with interest and penalties for the previous years 2009-10, 2010-11, and the first quarterly return for the assessment year 2011-12. He submits that Rajasthan Tax Board is an independent body and not in the control of the respondent-Department to enable the respondent-Department facilitate or bring about an early disposal of the appeals pending and the determination of the question of classification of the petitioner-Company's produce for the purpose of levy of VAT. It is submitted that the petitioner-Company cannot make out any capital on this count to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. Counsel has also referred to an order of this Court in SBCWP No.11291/2011 decided on 26.09.2011, wherein this Court required the assessee-petitioner therein to pursue its remedy before the Tax Board in its appeal against the order dated 11.05.2011.
I have heard the counsel for the parties and perused the writ petition as also reply thereto.
The question as to whether the produce of the petitioner-Company is a branded bakery product falling under Schedule 5 of the Act of 2003 and therefore excisable to VAT @ 14% ad valorem or whether the produce of the petitioner-Company is cooked food covered under Notification No.F.12(22)FD/Tax/10-87 S.O.391 dated 09.03.2010 entitled to levy of VAT only to an extent of 5% ad velorem is a neat legal question. However, as the same question is pending adjudication also at the instance of the petitioner-Company and other in an appeal before the Rajasthan Tax Board against the order dated 11.05.2011, passed by the Additional Commissioner on an application under Section 36 of the Act of 2003 moved by M/s Jublicant Food Works Ltd., Jaipur, I would restrain the hands of this Court in addressing the same issue on merits.
Consequently, I would remit the petitioner-Company to pursue its appeal against the order 11.05.2011, passed by the Additional Commissioner before the Rajasthan Tax Board. This Court while deciding the writ petition No.11291/2011 under its order dated 26.09.2011 has recorded the fact that since the core issue before the Tax Board will determine the rights of the parties in the appeal, there was some substance in the case of the petitioner in the said writ petition that it would not be in the interest of the parties to create multiplicity of the litigation. In the present case, if the respondent-Department were allowed to pursue its notices dated 15.09.2011 against the petitioner-assessee, the same multiplicity of proceedings which this Court had expressed the undesirability of in SBCWP No.11291/2011 would be occasioned. It is to be noted that the order dated 26.09.2011, passed in SBCWP No.11291/2011 was not put to challenge, modified or recalled and still holds.
Consequently, even while not being inclined for the reasons stated hereinabove to address the issue of classification of the petitioner-Company produce for the purpose of levy of VAT as the matter is pending before the Rajasthan Tax Board, I would direct that as the petitioner-Company already protected by an interim order passed by this Court on 21.10.2011 should continue to be protected till the decision in its appeal against the order dated 11.05.2011 is decided by the Rajasthan Tax Board. It is directed that no coercive steps be taken against the petitioner-Company pursuant to the notices dated 15.09.2011 for a period of three months from today. The Rajasthan Tax Board hearing the appeal against the order dated 11.05.2011, passed by the Additional Commissioner on an application under Section 36 of the Act of 2003 (holding that Pizzas and such other fast food items are not covered by the notification No.F.12(22) FD/Tax/10-87 S.O.391 dated 09.03.2010, but fall under Schedule 5 of the Act of 2003) is directed to decide the appeals within a period of two months from the receipt of a certified copy of this order.
The writ petition stands disposed of Accordingly.
Stay application and any other applications are also disposed of.
(ALOK SHARMA), J MS/-
All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
- Manoj Solanki, Jr. P.A.