Jharkhand High Court
M/S Tata Steel Limited vs The State Of Jharkhand Through The ... on 11 April, 2022
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P (T) No. 1953 of 2021
With
W.P (T) No. 1893 of 2021
With
W.P (T) N. 1892 of 2021
With
W.P (T) No. 1894 of 2021
With
W.P (T) No. 1895 of 2021
With
W.P (T) No. 1907 of 2021
M/s Tata Steel Limited --- --- Petitioner [All cases]
Versus
1. The State of Jharkhand through the Secretary-cum Commissioner, State
Taxes Department, Ranchi
2. Joint Commissioner of State Taxes (Administration), Jamshedpur Division,
Jamshedpur, East Singhbhum
3. Deputy Commissioner of State Taxes, Urban Circle, Jamshedpur, East
Singhbhum
4. State Tax Officer, Urban Circle, Jamshedpur, East Singhbhum
--- --- Respondents [All cases]
---
CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh Hon'ble Mr. Justice Deepak Roshan
---
For the Petitioner: M/s Kavin Gulati, Sr. Advocate, Sumeet Gadodia, Ajay Agarwal, Avi Tondon, Advocates (WPT 1953/21) Ms. Amrita Sinha, Advocate (WPT 1892/21, 1893/21, 1894/21, 1895/21 &, 1907/21) For the Respondents: M/s Ashok Kr. Yadav, G.A.-I, Deepak Kr. Dubey, A.C to A.A.G-II Manav Poddar, A.C to A.A.G-I
----
04 / 11.04.2022 Let W.P(T) Nos. 1892/2021, 1894/2021, 1895/2021 and 1907/2021 be tagged with the instant matters as they raise common issue relating to initiation of assessment proceedings under Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011.
2. The challenge to the vires of Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 was upheld by this Court vide judgment dated 03.04.2012 passed in W.P (T) No. 5696/2011. After the decision of the Apex Court in the nine judges Constitution Bench judgment in the case of Jindal Stainless Ltd. & Another versus state of Haryana and others [2016 (11) Scale 1], Civil Appeal No. 8275/2012 preferred by the State of Jharkhand and other analogous appeals were decided by the Division Bench of the Apex Court vide judgment dated 22.03.2017 (Annexure-3) holding as under:
2"We may also mention at this stage that when the matters were argued before the Nine Judges' Bench, certain other aspects were also argued. Primarily, three kinds of issues were taken by the assessees which are to the following effect:
(1) Whether the entire State can be treated as 'local area' for the purposes of entry tax?
(2) Whether entry tax can be levied on the goods which are directly imported from other countries and brought in a particular State?.
(3) In some statutes enacted by certain States, there was a provision for giving adjustment of other taxes like VAT, incentives etc. paid by the indigenous manufacturers and it was contended by the assessees that whether the benefits given to certain categories of manufacturers would amount to discrimination under Section 304.
The Nine Judges' Bench while answering the reference deemed it appropriate to leave these questions to be agitated before the regular Bench. That is how these matters are posted before this Bench and it is agreed that the aforesaid issues are the main issues to be decided.
During the hearing of arguments, counsel for both sides submitted that since the main challenge in the writ petitions, which were filed by the writ petitioners before the High Court, was predicated on the law laid down by the Constitution Bench in 'Atiabari Tea Co. Ltd. (supra), the High Court essentially confined its discussion only on "compensatory tax theory", as propounded in the aforesaid judgment so the High Courts looked at the issue by only keeping in mind the principle propounded in the aforesaid judgment and decided as to whether the tax imposed by a particular statute is compensatory in nature or not. Thus, when other issues are to be dealt with, as indicated above, we find that in many cases there is no adequate factual foundation and there is no discussion in the impugned judgments as well. It is also agreed by counsel for both the sides that in the absence thereof, it may not be possible for this Court to decide these issues.
According to us, in the aforesaid scenario, appropriate course of action would be to permit the appellants to file fresh petitions by May 31, 2017, raising the aforesaid issues with necessary factual background or any other constitutional/statutory issue which arises for consideration.
All these appeals are, accordingly, disposed of with the aforesaid liberty granted to the appellants. The interim orders which were passed by this Court and which are continued in these appeals shall continue till May 31, 2017. It will be open to the appellants to seek interim orders. We make it clear that the High Courts shall deal with the interim prayers of stay on their own merits without being influenced by the fact that the stay order was passed in these cases or has been extended by this Court as aforesaid. The High Courts, at that time, shall also consider the import and effect of the reference answered by the Nine Judges' Bench."
33. The Assessees were granted liberty to approach the jurisdictional High Court to file a fresh petition by 31.05.2017 raising the three issues referred to therein with necessary factual backgrounds or any other constitutional / statutory issue which arise for consideration. By an order dated 29.05.2017, interim orders which were passed by the Apex Court were continued in those appeals till 7th July 2017.Thereafter, the present Assessee has preferred a fresh writ petition i.e. W.P (T) No. 3884/2017 which is pending consideration. The present writ petitions relate to quashing of the Assessment Orders and Review Assessment Order for different Assessment Years starting from 2011-12 till 2017-18 under the Act of 2011. The Assessment Order dated 01.12.2020 (Annexure-13) was revised by the impugned Review Assessment Order dated 24.03.2021 in W.P (T) No. 1953/2021. In the rest of the writ petitions, no Review Assessment Order has been passed.
4. Respondents have issued demand notices dated 03.03.2022 bearing no. 5408 enclosed in I.A. No. 2339/2022 in W.P (T) No. 1953/2021, asking the petitioner to deposit an amount of 52,98,46,636.00 by 22.03.2022. Similar notices have been issued in respect of other Assessment Years which have also been brought on record through the respective interlocutory applications in the analogous writ petition.
5. Learned Senior Counsel for the petitioner has argued in the lead matter W.P (T) No. 1953/2021 as common issues of law and facts are involved in all the writ petitions. He has also brought to the notice of this Court that reminder notice has been issued on 23.03.2022 bearing no. 72225 asking the petitioner to deposit the total amount as indicated therein by 18.04.2022, failing which coercive steps could be taken, if there is no interim order in his favour. The grounds of challenge are primarily three fold:
(i) The first and second ground of challenge both stem out from the provisions of section 11(5) and the proviso thereto of the Act of 2011. Section 11 is quoted hereunder.
"11. Assessment of tax: - (1) If the prescribed authority is satisfied, without requiring the presence of the registered assessee or the production of accounts or other evidence by him; that the returns furnished by such assessee in respect of any period are correct and complete, he shall proceed to assess the amount of the tax due from such assessee, on the basis of such returns furnished. (2) (a) If the prescribed authority is not satisfied without requiring the presence of the registered assessee or the production of accounts or other evidence that the returns furnished by such assessee in respect of any period are correct and complete, he shall serve on such assessee a notice in the prescribed manner requiring him, on a date, time and at a place to be specified therein, either to 4 attend in person or to produce or cause to be produced any evidence on which the assessee may rely in support of such returns.
(b) On the date specified in the notice or as soon afterwards, as may the prescribed authority, after hearing such evidence as the registered assessee may produce and such other evidence as the prescribed authority may require on any required cause, shall assess the amount of tax due from such assessee. (3) If an registered assessee having fumished returns in respect of a period fails to comply with all the terms of the notice under sub-
section (2) or if the accounts and other evidence produced by him are, in the opinion of the prescribed authority, incorrect, incomplete or unreliable, either wholly or partly, the said authority shall proceed to assess to the best of his judgment, the amount of tax due from such assessee.
(4) If the registered assessee fails to file returns in respect of any period, the prescribed authority shall, after giving the assessee reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax payable, from such assessee. (5) If upon information or otherwise, the prescribed authority is satisfied that reasonable grounds exist to believe that any assessee or any person other than a registered assessee has been liable to pay tax in respect of any period, and has nevertheless willfully failed to apply for registration, the prescribed authority shall, after giving the assessee or such person reasonable opportunity of being heard, assess to the best of his judgment the amount of tax, if any, due from such assessee or any other person in respect of such period and all subsequent periods and the prescribed authority shall direct that the assessee or any other person, to pay by way of penalty in addition to tax so assessed, a sum not exceeding fifty rupees for every day of the period during which the assessee or any other person failed to apply for registration or an amount equal to the amount of tax assessed, whichever is higher;
Provided that no proceeding for such assessment shall be initiated except before expiry of two years from expiry of the period to which it relates;
Provided further that a proceeding initiated under this sub- section shall be concluded within a period of two years from the date of initiation."
5. Learned Senior Counsel for the petitioner has urged that no satisfaction has been recorded by the prescribed authority showing reasonable grounds to believe that the Assesee or any other person other than the registered person has wilfully failed to apply for registration, though being liable to pay taxes and thus, is required to be proceeded under Section 11(5) for assessment of tax, penalty and interest as well. The requirement of alleging specific acts of wilful violation on the part of the petitioner is completely lacking in the show-cause notice dated 10.05.2019. For the period up to 22.03.2017 i.e. the date of the judgment of the Apex Court in Civil Appeal No. 8275/2012, the Act of 2011 was not on the statute book as having been held as ultra vires the constitutional provision. The initiation of proceedings therefore suffers from erroneous assumption of jurisdiction which goes to the root of the matter and is amenable to the writ jurisdiction as is also held in the recent judgment of the Apex Court 5 in the case of Magadh Sugar & Energy Ltd. Versus State of Bihar and Others [2021 SCC OnLine SC 801, Para- 25 to 29] ii. The proceedings initiated under show-cause notice dated 10.05.2019 which is common in all the writ petitions covering different Assessment Orders, is barred by limitation in view of proviso to Sub Section (5) of Section 11 of the Act being after expiry of two years from the period to which it relates reckoning the starting period of limitation from the date of the judgment of the Apex Court passed in Civil Appeal No. 8275/2012 i.e. 22.03.2017. Respondents in their counter affidavit have wrongly placed reliance on the date of starting of limitation period as 09.10.2017 relying upon the judgment of the Apex Court in the case of State of Kerala and others versus Fr. William Fernandez Etc. [2017 SCC OnLine SC 1291]. Learned Senior Counsel for the petitioner has referred to paragraph 30 and 33 in the case of Fr. William Fernandez Etc. (Supra) dealing with the Civil Appeals of the State of Bihar and State of Jharkhand and concerning the Bihar Tax on Entry of Goods under the Local Areas Act, 1993. According to the petitioner, the said judgment has no application to an assessment proceeding under the Act of 2011. To make the things more clear, learned senior counsel for the petitioner has also referred to the explanation to the definition clause of 'Importer' under section 2(h)(i) which reads as under.
"(i) "Importer" means a person who makes or causes to be made any entry of scheduled goods, whether on his own account or on account of a principal or any other person, into a local area from any place outside the State for consumption or use therein or who owns such goods at the time of entry into the local area;
Explanation- For the purpose of this Act import shall not include imports from outside the country."
Decision in the case of Fr. William Fernandez Etc. (Supra) relates to the applicability of the Bihar Act, 1993 on import from foreign countries. The present Act of 2011 has now consciously excluded import from outside the country from the purview of the Act. As such, initiation of assessment proceeding is barred by limitation and void in law.
iii. Learned senior counsel for the petitioner has then referred to the reply of the petitioner to the show-cause dated 10.05.2019 at Annexure-6 dated 10.06.2019 where the petitioner had raised preliminary objection to the initiation of the proceedings. It has been categorically stated that the order dated 24.11.2020 rejecting the preliminary objection of the petitioner are antedated since the same do not bear the counter signature of the 6 representative of the petitioner Company and is a significant departure from the consistent practice followed in all such orders passed in the same proceedings on different dates such as orders dated 20.01.2020, 27.01.2020, 07.02.2020, 14.02.2020, 24.02.2020, 05.03.2020, 14.03.2020, 26.08.2020, 06.10.2020, 09.10.2020, and 09.11.2020 i.e. the preceding date of rejection of preliminary objection i.e. 24.11.2020. The order rejecting the preliminary objection was never served upon the petitioner to enable him to avail of the revisional remedy under Section 21 of the Act within the stipulated period of 90 days. In fact, the Assessment Order was passed immediately thereafter on 01.12.2020 which merged the order dated 24.11.2020 into it leaving the petitioner with no opportunity to avail of alternative remedy of revision.
6. Learned senior counsel for the petitioner submits that the order rejecting the preliminary objection came to the knowledge of the petitioner only after issuance of certified copy of the entire order sheet. The proceedings have thus been vitiated for lack of fairness on the part of the Assessing Officer. For all these reasons, writ petition is maintainable under Article 226 of Constitution of India and fit to be allowed by remanding the matter to the Assessing Authority for a fresh decision after taking into account all the points of law and facts with supporting documents adduced by the petitioner.
7. Learned senior counsel for the petitioner has submitted that under section 20 of the Act of 2011, any such appeal is entertainable by the authority only upon deposit of 20% of the tax assessed or such amount of tax as appellant may admit to be due from him whichever is greater. Learned counsel for the petitioner has referred to page 233 of the writ petition containing the breakup of the demand for different Assessment Years starting from 2011-12 till 2017-18. It is also submitted that in the present writ petition W.P (T) No. 1953/2021, the Assessment Order contained an apparent error on record as the entire turnover of HSD Oil is assessed to tax, though only 15% of the value of the transaction of HSD Oil was liable to tax under the Act of 2011. This being pointed out by the Assessee, Review Assessment Order was issued on 24.03.2021. The breakup of the tax indicated at Annnexure-15 at page-233 including that of HSD Oil and other than HSD Oil would come to Rs. 84.74 crores and odd. Learned senior counsel for the petitioner submits that conscious of the rider of statutory deposit while preferring an appeal under section 20 of the Act, writ petitioner is ready and willing to deposit 20% of the tax amount as assessed for the respective period 2011-12 till 2017-18 i.e. about Rs. 16.94 cores before this Court as the condition for interim 7 protection. It may be kept in an interest bearing account. Learned senior counsel for the petitioner has, on the basis of the aforesaid submission, prayed for an interim protection.
8. Counter affidavit and rejoinder affidavit have been filed in all the writ petitions. However, learned counsel for the Respondent State has prayed for time to address the court on any convenient date when the court is functioning in physical mode.
10. As prayed for on behalf of the Respondent State, list these cases on 09.05.2022.
9. In the meantime, subject to deposit of an amount of Rs. 17.00 crore before the learned Registrar General of this Court by 20.04.2022, no coercive steps shall be taken against the petitioner in respect of the impugned demand notices in the respective writ petitions relating to relevant Assessment Years. The amount so deposited shall be kept in an interest bearing account.
(Aparesh Kumar Singh, J) (Deepak Roshan, J) Ranjeet/