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Madhya Pradesh High Court

Pepsico India Holdings Pvt. Ltd. vs The State Of Madhya Pradesh on 20 July, 2012

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                  W.P.No.10928 of 2012

Pepsico India Holding Pvt. Ltd.            State of M.P. & ors



20.7.2012


       Shri C.S. Lodha, learned Counsel with Shri Sankalp Kochar,
Counsel for the petitioner.
       Petitioner has challenged order dated 7.6.2012 passed by
respondent No.2 the Assessing Officer, which is filed as Annexure

P-1 by which the product of the petitioner namely 'kurkure' was not treated as Namkeen and has been directed to be assessed tax under the residuary entry at higher rate of tax. It was submitted by the learned counsel for the petitioner that as per the circular Annexure P-9 dated 8.11.2006 the product 'kurkure' which was treated under the entry of Namkeen, under the old Act namely M.P. Commercial Tax Act was liable to be assessed under the caption of Namkeen but the Assessing Officer has wrongly assessed under the residuary entry. It was submitted that the Assessing Officer has placed reliance to an order of the M.P. Commercial Tax Appellate Board, Bhopal dated 15.6.2011 in the matter of the petitioner and assessed the product of the petitioner under the residuary entry. That the order dated 15.6.2011 of the Commercial Tax Appellate Board,Bhopal is subject matter of the Vat Appeal [M.A.3024/11] and the High Court has framed two substantial questions of law covering the controversy involved in the present petition. Stating aforesaid, it was submitted by the learned counsel that this writ petition may be entertained against the order of assessment Annexure P-1.

M.P. Vat Act,2002 provides an appeal and second appeal against such an assessment order under Section 46 of the Act and the petitioner is having efficacious alternative statutory

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Pepsico India Holding Pvt. Ltd. State of M.P. & ors 20.7.2012 remedy of filing appeal against such an order. So far as the circular dated 8.11.2006 is concerned, suffice it to say, that the petitioner may draw attention of the appellate authority in respect of the aforesaid circular which has not been followed. The Apex Court in State of Kerala and others vs. Kurian Abraham (P) Ltd. and another [(2008) 3 SCC 582] held in para 27 thus :-

27. Lastly, the binding effect of the said Circular No. 16/98 needs to be kept in mind. As stated above, the said circular was issued by the Board by exercising statutory powers vested in it under Section 3(1-A). As stated above, Section 3(1-A) provides for an enabling power of the Board which was recognised as an authority under the 1963 Act. The said power was to be exercised in special cases. As stated above, granting of administrative reliefs by the Board came within its authority. As stated above, the said circular was issued for just and fair administration of the 1963 Act. As stated above, Section 3(1-A) is similar to Section 119(1) of the 1961 Act. The circulars of this nature are issued by the Board consisting of highest senior officers in the Revenue Department. These circulars are to be respected by the officers working under the supervision of the Board. These circulars are binding on all the authorities administering the Tax Department.

The power of the Board to issue such circular is traceable to Section 3(1-A)(c) of the Act. The said circular is statutory in nature.

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Pepsico India Holding Pvt. Ltd. State of M.P. & ors 20.7.2012 Therefore, it is binding on the Department though not on the courts and the assessees. In the present case, as stated above, completed assessments were sought to be reopened by the AO on the ground that the said Circular No. 16/98 was not binding. Such an approach is unsustainable in the eye of the law. If the State Government was of the view that such circulars are illegal or that they are ultra vires Section 3(1-A), which it is not, it was open to the State to nullify/withdraw the said circular under Section 60 of the 1963 Act. Till today, the circular continues to remain in force. Till today, it has not been withdrawn.

In the circumstances, it is not open to the officers administering the law working under the Board of Revenue to say that the said circular is not binding on them. If such a contention was to be accepted, it would lead to chaos and indiscipline in the administration of tax laws.

The aforesaid judgment can be relief on by the petitioner before the Appellate Authority in support of its contention that the aforesaid circular was binding on the Assessing Officer inspite of the order of the Commercial Tax Appellate Board, Bhopal dated 15.6.2011. On the basis of the aforesaid judgment, petitioner may convince its case before the appellate authority who would consider the case of the appellant in accordance with law. But at present as the petitioner herein is having efficacious alternative remedy of filing statutory appeal

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Pepsico India Holding Pvt. Ltd. State of M.P. & ors 20.7.2012 against the assessment order, we are not inclined to entertain this petition and this petition is dismissed at the admission stage.

At this stage, it would be appropriate to mention that as we have already entertained the Vat Appeal [M.A.3024/11] in which similar controversy is to be decided by this Court, petitioner may move an application before the appellate authority for deferring hearing of the appeal awaiting the verdict of this Court. The petitioner may also move an appropriate application before the appellate authority seeking interim order of staying the recovery, which will be considered by the appellate authority in accordance with law.

      (Krishn Kumar Lahoti)                   (Smt. Vimla Jain)
             Judge                                Judge

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