Madras High Court
M/S.Laxmi Gold House Exports Limited vs The Commercial Tax Officer on 13 July, 2023
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.4585 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 13.07.2023
CORAM :
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.No.4585 of 2020
and
W.M.P.No.5437 of 2020
M/s.Laxmi Gold House Exports Limited,
Now Known as "Shree Laxmi Jewellery Private Limited"
Represented by its Director Ashok Kumar Jain
No.60A, NSC Bose Road,
Chennai - 600 079. ... Petitioner
Vs.
The Commercial Tax Officer,
Moore Market (North) Assessment Circle
Now re-designated as
The Assistant Commissioner (ST),
Moore Market Assessment Circle,
Wall Tax Road, Chennai - 600 003. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India, for
issuance of a Writ of Certiorarified Mandamus, to call for the records on the
file of the respondent in TNGST No.0380498/2002-2003 dated 17.08.2005
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W.P.No.4585 of 2020
and quash the same to the extent levying and collecting luxury tax from the
petitioner on purchase/stock of Gold Jewellery as illegal, against law laid
down by the Supreme Court in the case of Godfrey Phillips India Limited
reported in 139 STC 537 and direct the respondent to refund the luxury tax
collected from the petitioner.
For Petitioner : Mr.T.Pramod Kumar Chopda
For Respondent : Mr.V.Prashanth Kiran
Government Pleader
ORDER
The petitioner has challenged the impugned order in TNGST No.0380498/2002-2003 dated 17.08.2005 passed by the respondent levying luxury tax under the provisions of the Tamil Nadu Tax on Luxuries Act, 1981.
2. By an amendment Act No.24/2002 to the Tamil Nadu Tax on Luxuries Act, 1981, in the year 2002, luxury tax was imposed at 1% on gold, silver, platinum jewellery and other precious stones at every point of purchase.
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3. Similar amendments to luxury tax on the other states were subject matter before the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited and another Vs. State of Uttar Pradesh and others, (2005) 139 STC 537. There was however no challenge to the provisions of the Tamil Nadu Tax on Luxuries Act, 1981 as amended by Act No.24/2002.
4. The Hon'ble Supreme Court rendered its decision on 20.01.2005 in M/s.Godfrey Phillips India Limited case (referred to supra). In Paragraphs 83 and 93, it was held as under:-
"83. Hence on an application of general principles of interpretation, we would hold that the word "luxuries" in entry 62 of List II means the activity of enjoyment of or indulgence in that which is costly or which is generally recognized beyond the necessary requirements of an average member of society and not articles of luxury ............
93. Given the language Entry 62 and the legislative history we hold that Entry 62 of List II does not permit the levy of tax on goods and articles. In our judgment, the word "luxuries" in the entry refers to activities of indulgence, enjoyment or pleasure. In as much as none of the impugned statutes seek to tax any activity and admittedly seek to tax goods described as luxury goods, they must be and are declared to be legislatively incompetent."
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5. Pursuant to the aforesaid decision of the Hon'ble Supreme Court, the Government of Tamil Nadu issued Notification in G.O.Ms.No.201, Commercial Tax (C2) Department dated 29.12.2004, wherein, in exercise of power conferred under Section 23-A(1) of the Tamil Nadu Tax on Luxuries Act, 1981, the Government exempted stockist in gold, silver, platinum jewellery and other precious stones from payment of luxury tax under the provisions of the aforesaid Act.
6. The notification came into force on 29th December 2004. The petitioner however suffered the impugned Assessment Order dated 17.08.2015. As per the impugned Assessment Order dated 17.08.2015, a sum of Rs.4,46,68,420/- was determined as tax due from the petitioner for the sales effected by the petitioner during the Assessment Year 2002-2003.
7. Thus, it is evident that the petitioner was not liable to pay tax in view of the Exemption granted vide Notification dated 29.12.2004 in G.O.Ms.No.201, Commercial Tax (C2) Department of the State Government ____________ https://www.mhc.tn.gov.in/judis Page No. 4 of 11 W.P.No.4585 of 2020 in the light of the decision of the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited case (referred to supra).
8. The petitioner has approached this Court only in the year 2020 for refund of the amount that was paid pursuant to the impugned order.
9. The impugned order is challenged by the petitioner on the ground that demand confirmed is arbitrary, illegal and was passed in violation of principles of natural justice.
10. The learned counsel for the petitioner has placed reliance on the decisions of this Court rendered in the following two cases:
(i) M/s.NSC Jewellers, represented by its Partner Vs. The Assistant Commissioner (CT) (FAC), Chennai and another in W.P.Nos.26573 to 26575 of 2009 dated 23.12.2009.
(ii) M/s.Mohanlal Jewellery, represented by its Proprietor Vs. The Commercial Tax Officer, Chennai and another in W.P.Nos.26130 to 26132 of 2006 dated 01.08.2019.
and is therefore prays for allowing this writ petition. ____________ https://www.mhc.tn.gov.in/judis Page No. 5 of 11 W.P.No.4585 of 2020
11. Opposing the prayer, the learned Government Advocate for the respondent would submit that the Assessment Order is dated 17.08.2015 wherein, the present writ petition has been filed only on 21.02.2020.
12. It is therefore submitted that the writ petition is liable to be dismissed on account of latches.
13. That apart, it is submitted that the Assessment Order also states that the petitioner has an appellate remedy before the Appellate Assistant Commissioner of Commercial Taxes (CT) I, Chennai - 108, within thirty days from the date of receipt of the order.
14. The petitioner has not given proper reasons instead merely stated that the files were misplaced and therefore, the petitioner was approaching the Court.
15. The learned Government Advocate for the respondent further submits that the decisions cited by the petitioner mentioned above pertain to ____________ https://www.mhc.tn.gov.in/judis Page No. 6 of 11 W.P.No.4585 of 2020 writ petitions filed in the year 2006 and 2009. Therefore, those decisions cannot be applied to the facts of the case.
16. The learned Government Advocate for the respondent would submit that as per the decision of the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited case (referred to supra), the Hon'ble Supreme Court has also dealt with the issue relating to unjust enrichment.
17. The learned Government Advocate for the respondent has drawn attention to paragraphs 97 and 98, wherein, the Hon'ble Supreme Court has also stated that the assessees will have to prove that there was no unjust enrichment.
18. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Government Advocate for the respondent.
19. As a matter of fact, the issue relating to unjust enrichment was considered by a constitutional bench of the Hon'ble Supreme Court in M/s.Mafatlal Industries Limited Vs. Union of India, 1995 (89) ELT 247. ____________ https://www.mhc.tn.gov.in/judis Page No. 7 of 11 W.P.No.4585 of 2020
20. The provisions of the Tamil Nadu Tax on Luxuries Act, 1981 has not been declared as ultra vires. At the same time, the Government has taken note of the decision of the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited case (referred to supra) and thus, had issued notification dated 29.12.2004 in G.O.Ms.No.201, Commercial Tax (C2) Department.
21. In this connection, the decision of the Hon'ble Supreme Court in Unichem Laboratories Vs. Commissioner of Central Excise, (2002) 7 SCC 145, is invited, wherein, the Hon'ble Supreme Court has held that it is not on the part of the duty of the Department to collect or to retain the tax amount, which is not due to it.
22. The respondent ought to have called upon the petitioner to show cause as to why the amount that was paid by the petitioner covered by the impugned order should be refunded back to the petitioner as the petitioner would have passed on the incidence of tax to its customers. ____________ https://www.mhc.tn.gov.in/judis Page No. 8 of 11 W.P.No.4585 of 2020
23. If the petitioner had produced evidence that the incidence of tax was not passed on to the customers, it is not on the part of the duty of the Department/State Government to retain the tax, which was otherwise not due to it.
24. Under these circumstances, I am inclined to set aside the impugned order and remit the case back to the respondent to pass a fresh order after calling upon the petitioner to show cause as to how the tax amount, which has been paid by the petitioner pursuant to the impugned order should not be retained by the State Government on account of unjust enrichment.
25. The respondent shall pass appropriate orders keeping note of Paragraphs 97 and 98 of the decision of the Hon'ble Supreme Court in M/s.Godfrey Phillips India Limited case (referred to supra) and the decision of the Hon'ble Supreme Court in M/s.Mafatlal Industries Limited case (referred to supra).
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26. This Writ Petition stands allowed with the above observations. No costs. Consequently, the connected Writ Miscellaneous Petition is closed.
13.07.2023 Index : Yes/No Internet : Yes/No Speaking Order/Non-Speaking Order Neutral Citation : Yes/No arb To The Commercial Tax Officer, Moore Market (North) Assessment Circle Now re-designated as The Assistant Commissioner (ST), Moore Market Assessment Circle, Wall Tax Road, Chennai - 600 003.
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arb W.P.No.4585 of 2020 and W.M.P.No.5437 of 2020 13.07.2023 ____________ https://www.mhc.tn.gov.in/judis Page No. 11 of 11