Madhya Pradesh High Court
Den Networks Ltd. Thr. vs The Commissioner on 25 January, 2019
1
VATA-40-2018
(DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.)
THE HIGH COURT OF MADHYA PRADESH
VATA-40-2018
(DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.)
Gwalior, Dated 25.01.2019
Shri Pavan Dwivedi, learned counsel for the
appellant.
Shri Praveen Newaskar, learned Government
Advocate for the respondents/State.
With the consent of learned counsel for the parties, the matter is finally heard.
2. The precise question which arises for consideration in this Appeal under Section Madhya Pradesh Value Added Tax Act, 2002(referred as "Act 2002") is whether it is lawfully for the Authorities to invoke the penalty clause contained in Sub-section (6) of Section 20 of Madhya Pradesh Value Added Tax Act, 2002 for non-registration under Section 10 of Madhya Pradesh Vilasita, Manoranjan, Amod Evam Vigyapan Kar Adhiniyam, 2011(referred as "Act 2011").
3. The relevant facts giving rise to the issue briefly are that the Appellant, a Limited Company, is engaged in the business of entertainment through Cable DTH 2 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) and advertising at by receiving and then providing television signals to Cable Operators of various localities who in turn further transmit the same to their subscribers.
4. State legislature enacted Madhya Pradesh Vilasita, Manoranjan, Amod Evam Vigyapan Kar Adhiniyam, 2011 w.e.f 1st April, 2011, to levy tax on luxuries, entertainments, amusements and advertisements exhibited in the State of Madhya Pradesh.
5. As per Section 3 thereof every hotelier or proprietor whose turnover during a period of twelve months immediately preceding the commencement of the Act of 2011 exceeds rupees five lacs incurs liability to pay tax in respect of any advertisement, luxury or entertainment provided by him in Madhya Pradesh. Sub-section (2) of Section 3 of the Act further stipulates that every hotelier or proprietor to whom sub-section (1) does not apply, shall be liable to pay tax under this Act in respect of any advertisement, luxury or entertainment provided by him in Madhya Pradesh with effect from the date on 3 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) which his turnover in a year first exceeds [rupees ten lacs] but for the, purpose of assessment of the tax for that year, only so much of his, turnover as is in excess of such limit, shall be taken into consideration.
6. Furthermore, Sub-section (1) of Section 10 of 2011 Act stipulates that every hotelier or proprietor liable to pay tax under this Act shall obtain registration certificate from the appropriate Commercial Tax Officer or any other officer authorized by the Commissioner in this behalf in such manner and form as may be prescribed under the Madhya Pradesh Vilasita, Manoranjan, Amod Evam Vigyapan Kar Adhiniyam, 2011.
7. Sub-section (2) of Section 10 of the 2011 Act stipulates the time within which the registration to be obtained. It stipulates that every hotelier or proprietor required to obtain a registration certificate shall within sixty days from the date of commencement of this Act or if he was not carrying on business on that date shall within thirty days of his becoming liable to pay tax, apply for grant of a registration certificate.
4
VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.)
8. Sub-section (3) of Section 10 provides for the consequence of non-registration. It stipulates:
"(3) Where a hotelier or proprietor required to obtain a registration certificate under sub-section (1) fails to apply for the same within the time specified in sub-section (2), the appropriate Commercial Tax Officer or any other officer authorized by the Commissioner in this behalf may, after giving him a reasonable opportunity of being heard, direct him to pay by way of penalty a sum not exceeding five thousand rupees, subject to a minimum of five hundred rupees."
9. In the present case, it is not in dispute that the petitioner's annual turnover is more than Five Lacs in a given financial year. As such, the provisions of 2011 Act are applicable. The petitioner got registered on 03/03/2012 i.e. much after the period prescribed under Section 10(2) of 2011 Act. Thereafter, paid tax under the Act of 2011 for the period from 01/04/2011 to 02/03/2012 to the tune of Rs.1,824.860/-. That by assessment order dated 02/03/2013, the tax under 2011 Act for the period from 01/04/2011 to 30/03/2012 was assessed to Rs.18,24,860/-. Besides, penalty two times the tax i.e. Rs.36,49,720/- was also imposed by the Assessing Officer under Section 10 of 5 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) 2011 Act read with Section 20(6) of VAT Act, 2002.
10. In Appeal, the Appellate Authority affirmed the order by his order dated 01/08/2014.
11. In the Second Appeal, the Appellate Board upheld the penalty affirming the applicability of Sub- section (6) of Section 20 of VAT Act, 2002. It held:
^^¼8½ foykflrk dj vf/kfu;e dh /kkjk 10¼2½ esa dh xbZ vis{kk vuqlkj iath;u izek.k i= gsrq vkosnu fofgr le;kof/k esa izLrqr u fd, tkus dh =qfV ds ifjizs{; esa /kkjk 10¼3½ ds v/khu 'kkfLr vkjksfir fd, tkus dh O;oLFkk dh xbZ gS] tks izfdz;kRed =qfV ls lacaf/kr gS rFkk bldk vkjksi.k Hkh jftLVªhdj.k dh dk;Zokgh ds nkSjku fd;k tkuk visf{kr gSA blds foijhr foykflrk dj vf/kfu;e dh /kkjk 8 lgifBr osV vf/kfu;e dh /kkjk 20¼6½¼,½ ds v/khu 'kkfLr dk nkf;Ro viath;r vof/k esa dj fu/kkZj.k vf/kdkjh }kjk dj ns;rk ds fu/kkZj.k ds ifjizs{; esa j[kk x;k gSA nwljs 'kCnksa esa dj ns;rk u gksus dh fLFkfr esa /kkjk 20¼6½¼,½ ds v/khu dksbZ 'kkfLr ns; ugha gSA Li"V gS fd nksuksa 'kkfLr;ksa dk nkf;Ro fHkUu&fHkUu ifjfLFkfr;ksa@rF;kRed fLFkfr ds ifjizs{; esa vkrk gSA mYys[kuh; gS fd blh izdkj dh O;oLFkk e/;izns'k lkekU; fodz; dj vf/kfu;e] 1958] e/;izns'k okf.kfT;d dj vf/kfu;e] 1994 ,oa osV vf/kfu;e ds v/khu gSA ,slh fLFkfr esa vihykFkhZ dk rdZ fd /kkjk 10¼3½ ds rgr~ 'kkfLr dh O;oLFkk gksus ls osV vf/kfu;e dh /kkjk 20¼6½¼,½ ds v/khu 'kkfLr ns; ugha gS] ekU; fd, tkus ;ksX; ugha gSA**
12. The question is whether the Authorities and the Board are justified in invoking Sub-section (6) of Section 20 of the VAT Act, 2002 for non-registration under the Act of 2011.
13. Article 265 of the Constitution of India provides for "No tax shall be levied or collected except by 6 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) authority of law." Article 366(28) defines the expression "Taxation" and 'Tax' as "Taxation includes the imposition of any tax or impost whether general or local or special and 'tax' shall be construed accordingly.
14. In Godfrey Phillips India Ltd. & Another vs. State of U.P. and Others:[(2005) 2 SCC 515], a tax on 'luxuries' in Entry 62 of List II of Schedule VII of the Constitution of India was construed to mean a tax on "the activity of enjoyment or indulgence in that which is costly or which is generally recognized as being beyond the necessary requirements of an average member of society. It is held:
"93..........In our judgment, the word "luxuries" in the Entry refers to activities of indulgence, enjoyment or pleasure........"
15. As regard to interpretation of taxing statute, trite it is that it is to strictly construed. In A.V. Fernandez vs. The State of Kerala:[AIR 1957 SC 657], it is held:
"29.......... in construing fiscal statutes and in determining the liability of a 7 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter."
16. In Commissioner of Sales-tax U.P. vs. Modi Sugar Mills Ltd.:[AIR 1961 SC 1047], it is held:
"11. .........In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply any assumed deficiency. "
17. As regard to penalty under taxing statute it is observed in Commissioner, Central Excise & Customs, Mumbai and Others vs. ITC Ltd. and Others:[(2007) 1 SCC 62], it is held: 8
VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) "19.........Before a penalty can be levied, the procedures laid down therein must be complied with. For construction of a penal provision, it is trite, the golden rule of literal interpretation should be applied. The difficulty which may be faced by the Revenue is of no consequence........."
18. Returning to the issue in the case at hand, the penalty imposed is for violation of Sub-section (2) of Section 10 of 2011 Act, which mandates compulsory registration under 2011 Act. The penalty for non- registration is en-grafted under Sub-section (3) of Section 10. The provision no where empowers the Authority to treat the non-registration under Section 10 of 2011 Act as a violation of provisions of VAT Act, 2002. And as evident from Section 8 of 2011 Act, the applicability of 2002 Act has been subjected to the provisions of 2011 Act. Section 8 of the 2011 Act envisages:
"(8) Subject to the provisions of this Act and the rules made thereunder, the provisions of the Vat Act and the rules made, order and notifications issued thereunder, including the provisions relating to returns, assessment, self-assessment, reassessment, payment and recovery of tax, accounts, detection and prevention of tax evasion, refund, 9 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) appeal, revision, rectification, offences and penalties and other miscellaneous matter, shall mutatis mutandis apply to a hotelier or proprietor in respect of tax, interest or penalty levied and payable under this Act as if these provisions were mutatis mutandis incorporated in this Act, and it shall be deemed that the rules made and orders and notifications 9 issued under those provisions were mutatis mutandis made or issued under the relevant provisions as so incorporated in this Act."
19. When an applicability of an Act is subjected to the provisions of another Act it conveys:
"70........the idea of a provision yielding place to another provision or other provisions subject to which it is made as has been held in Surinder Singh v. Central Government and Others [AIR 1986 SC 2166, para 6], South India Corporation (P) Ltd. v.
Secretary, Board of Revenue, Trivandrum and another [AIR 1964 SC 207], Ashok Leyland Ltd. v. State of Tamil Nadu & Anr. [(2004) 3 SCC 1] and S.N. Chandrashekar and another v. State of Karnataka and Others, [(2006) 3 SCC 208]....."
(Please see: AIR 2007 SC 1984)
20. In K.R.C.S. Balakrishna Chetty and Sons & Co. vs. the State of Madras:[AIR 1961 SC 1152], it is observed by Their Lordships:
"6.....The use of the words "subject to"
has reference to effectuating the 10 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) intention of the law and the correct meaning, in our opinion, is "conditional upon"
21. In Union of India & Others vs. Brigadier P.S. Gill and Krite Kumar Awasthi vs. Union of India & Others:[(2012) 4 SCC 463], the Supreme Court dwelling upon the issue which cropped up in the context of Section 30 and Section 31 of the Arms Tribunal Act, 2007 as to whether the aggrieved party can file appeal against any such final decision or order of the Tribunal under Section 30 of the Act of 2007 before the Supreme Court without taking resort to procedure prescribed under Section 31 thereof. While taking into consideration the law laid down in K.R.C.S. Balakrishna Chetty & Sons & Co. vs. State of Madras:[AIR 1961 SC 1152]; State of Bihar vs. Bal Mukund Sah [(2004) 4 SCC 640]; B.S. Vadera vs. Union of India:[AIR 1969 SC 118] and Chandavarkar Sita Ratna Rao v. Ashalata S. Guram:[(1986) 4 SCC 447], Their Lordships were pleased to observe:
"22. There is in the light of the above decisions no gainsaying that Section 30 of the Act is by reason of the use of the words "subject to the provisions of Section 31" made subordinate to the 11 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) provisions of Section 31. The question whether an appeal would lie and if so in what circumstances cannot, therefore, be answered without looking into Section 31 and giving it primacy over the provisions of Section
30. That is precisely the object which the expression "subject to the provisions of Section 31" appearing in Section 30(1) intends to achieve.
23. We have, therefore, no hesitation in rejecting the submission of Mr. Tankha that the expression "subject to the provisions of Section 31" are either ornamental or inconsequential nor do we have any hesitation in holding that right of appeal under Section 30 can be exercised only in the manner and to the extent it is provided for in Section 31 to which the said right is made subject."
22. In the case at hand evidently, the provisions of the Act of 2002 are subjected to that of the provisions of 2011 as is evident from Section 8 of the Act of 2011 which rules out the applicability of Sub-section (6) of Section 20 of the Act of 2002.
23. When the impugned orders tested on the anvil of above analysis, the order directing for imposition of penalty under Sub-section (6) of Section 20 for violation of Section 10 of the Act of 2011 cannot be approved of.
24. Consequently, the orders passed by Assessing 12 VATA-40-2018 (DEN Networks Ltd. vs. Commissioner, Commercial Tax & Ors.) Officer, Appellate Authority and Appellate Board for imposition of penalty under Sub-section (6) of Section 20 of the Act of 2002 for non-registration under the Act of 2011 are set-aside. The matter is relegated to Assessing Officer for fresh consideration under sub- section (3) of Section 10 of the Act of 2011.
25. Appeal stands disposed of finally in above terms.
(Sanjay Yadav) (Vivek Agarwal)
Judge Judge
pwn*
PAWAN
KUMAR
2019.01.31
16:04:54
+05'30'