Gauhati High Court
M/S Godrej & Boyce Manufacturing Co. Ltd vs The State Of Assam And 3 Ors on 17 January, 2017
Bench: Hrishikesh Roy, Nelson Sailo
THE GAUHATI HIGH COURT AT GUWAHATI
(The High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
PRINCIPAL SEAT AT GUWAHATI
Revision Petition No.17/2014
1. M/S GODREJ & BOYCE MANUFACTURING CO. LTD.
A PUBLIC LTD. COMPANY HAVING ITS
REGIONAL OFFICE AT GODREJ BHAWAN,
PLOT NO. 30, BLOCK GN SECTOR V,
SALT LAKE CITY, KOLKATA- 700091,
HAVING ONE OF ITS OFFICE SITUATED
AT ULUBARI, G S ROAD, GHY-7, ASSAM.
...... Petitioner.
-Versus-
1. THE STATE OF ASSAM,
REP. BY THE COMMISSIONER & SECY. TO THE GOVT. OF ASSAM,
DEPARTMENT OF FINANCE AND TAXATION, DISPUR, GHY-6.
2. THE COMMISSIONER OF TAXES
KAR BHAWAN, DISPUR, GHY-6.
3. ASSISTANT COMMISSIONER OF TAXES
UNIT-C, GUWAHATI, ASSAM
KAR BHAWAN, DISPUR, GHY-6.
4. THE SUPERINTENDENT OF TAXES
UNIT-C, GUWAHATI, ASSAM.
...Respondents.
Revision Petition No.18/2014
1. M/S GODREJ & BOYCE MANUFACTURING CO. LTD.
A PUBLIC LTD. COMPANY HAVING ITS
REGIONAL OFFICE AT GODREJ BHAWAN,
PLOT NO. 30, BLOCK GN SECTOR V,
SALT LAKE CITY, KOLKATA- 700091,
HAVING ONE OF ITS OFFICE SITUATED
AT ULUBARI, G S ROAD, GHY-7, ASSAM.
...... Petitioner.
-Versus-
1. THE STATE OF ASSAM,
REP. BY THE COMMISSIONER & SECY. TO THE GOVT. OF ASSAM,
DEPARTMENT OF FINANCE AND TAXATION, DISPUR, GHY-6.
2. THE COMMISSIONER OF TAXES
KAR BHAWAN, DISPUR, GHY-6.
3. ASSISTANT COMMISSIONER OF TAXES
UNIT-C, GUWAHATI, ASSAM
KAR BHAWAN, DISPUR, GHY-6.
4. THE SUPERINTENDENT OF TAXES
UNIT-C, GUWAHATI, ASSAM.
...Respondents.
Revn. Petition No.17/2014 & Revn. Petition No.18/2014 1 of 6
BEFORE
HON'BLE MR. JUSTICE HRISHIKESH ROY
HON'BLE MR. JUSTICE NELSON SAILO
Advocates for the petitioner: Ms. M.L. Gope &
Ms. N. Hawelia, Advocate.
Advocates for the Respondents: Mr. B. Choudhury, Standing Counsel,
Finance & Taxation Department.
Date of hearing & judgment: 17.01.2017.
JUDGEMENT AND ORDER (ORAL)
(Hrishikesh Roy, J).
Heard Ms. N. Hawelia, the learned counsel appearing for the petitioner. Also heard Mr. B. Choudhury, the learned Standing Counsel for the Finance & Taxation Department, representing the respondents.
2. These Revision Petitions are filed under Section 81 of the Assam Value Added Tax Act, 2003 (hereinafter referred to as "the AVAT Act"). The challenge here is to re-assessment of tax under Section 18 of the Assam General Sales Tax Act, 1993 (hereinafter referred to as the "AGST Act") and the primary contention is that the re-assessment was done beyond the period of limitation and therefore the same are not tenable in law. The transaction for the present proceedings relate to the assessment years 2001-02 and 2002-03 respectively.
3. The petitioner is represented by the learned counsel Ms. N. Hawelia and she submits that the assessment for the concerned years was completed on 17.03.2006 and 26.10.2006 respectively and the show-cause notice(s) issued on 10.06.2011 for the two completed assessment, is well beyond the 8 years limitation period for re- assessment under Section 18 of the AGST Act and hence the consequential re- assessment of tax, is barred by time.
4. The assessee claims that they are entitled to the benefit of concessional rate of taxation at 4%, on account of the Govt. Notification of 03.01.2003 and therefore the rate of tax at which assessment were completed, is contended to be in accordance with law. Therefore the petitioner argues that re-assessment at higher rate of tax (13.2%) is impermissible, when the original assessment stood concluded, without any further challenges before the higher authorities.
Revn. Petition No.17/2014 & Revn. Petition No.18/2014 2 of 6
5. Representing the Revenue, Mr. B. Choudhury, the learned standing counsel however cites Kamakhya Plastics (P) Ltd. vs. State of Assam, reported in (2012) 49 VST (Gau), to contend that the notification of January 03, 2003, under which the tax was assessed at the concessional rate of 4%, is to apply prospectively from the date of the notification and therefore the assessment to tax at lower rate through retrospective application of the concessional notification of 03.01.2003, had resulted in the taxable turnover escaping assessment. Therefore he argues that the Revenue is justified in re-assessment of tax, for the Assessment Years 2001--02 and 2002--
03.
6. The petitioners liability to tax was assessed originally under Section 17(4) of the AGST Act, by computing the turnover at the concessional rate of 4% (instead of 13.2%), on account of the reduced rate of tax, notified on certain class of goods, under the Govt. Notification of 03.01.2003, which was given retrospective effect from 01.05.2001. The benefit of lesser tax rate was availed by the assessee, under the cover of this notification for the steel furnitures supplied by them. The original assessment at the concessional rate finalized on 17.03.2006 and 26.10.2006 respectively, was accepted by the assessee as well as the Revenue, as no challenge was made to the said assessment, before any of the higher authorities.
7. Long thereafter, this Court on 17.03.2011, in the Kamakhya Plastics (P) Ltd. (Supra) declared that the notification dated January 03, 2003, can't be retrospectively applied and must operate prospectively, from the date of notification. This verdict gave a handle to the State to recover tax which escaped assessment, on account of the assessment having been made under the concessional rate, under the cover of the notification of 03.01.2003. But what is of relevance here is that the High Court clarified in the judgment itself that the right of the State to recover tax is enforceable only if, such right did not stand extinguished by law.
8. Purporting to act on the authority of the Division Bench decision in the Kamakhya Plastics (P) Ltd. (Supra), the show cause notice of 10.06.2011 was issued under Section 18 of the AGST Act, read with Section 108 of the AVAT Act. It was projected in the notice that the assessee undeservingly availed the benefit of concessional rate of tax under the cover of the Notification of 03.01.2003, during the period, when the said notification was held to be inapplicable, in Kamakhya Plastics (P) Ltd. (Supra). Accordingly re-assessment was proposed, to levy tax at Revn. Petition No.17/2014 & Revn. Petition No.18/2014 3 of 6 13.2% for the concerned transactions, in the Assessment Years 2001--02 and 2002--03.
9. In their reply to the show cause notice, the assessee, inter alia, contended that the judgment in Kamakhya Plastics (P) Ltd. (Supra), can't be applied for the petitioner, as their assessment was finalized on 17.03.2006 and 26.10.2006 respectively and the power under Section 18 of the AGST Act cannot be invokved as the re-assessment is proposed beyond eight years of the assessments.
10. Notwithstanding the above contention, re-assessment of tax at the higher rate of 13.2% was made on 20.07.2011, under Section 18 of the AGST Act, read with Section 108 of the AVAT Act. The Assistant Commissioner of Tax held that finalization of assessment at the concessional rate of 4% can't be allowed as the concerned transactions are accessible to levy tax at the normal rate of 13.2%, under the AGST Act. Thus additional tax was found to be payable for the concerned transactions. To the quantified sum, interest component was also added in the re- assessment order of 20.07.2011.
11. Aggrieved by the above order, appeals were filed where again, the re- assessment exercise was questioned as being time barred by law. However the Deputy Commissioner of Taxes (Appeals), by his order dated 20.06.2012 held that since the position of law on the applicable rate of taxation, is clarified by the High Court in the Kamakhya Plastics (P) Ltd. judgment, recovery of the escaped tax through the process of re-assessment, is legally permitted.
12. The assessee then approached the Assam Board of Revenue to challenge the decision of the appellate authority but the Appeals were admitted on 30.08.2012, only on the limited question of imposition of interest and penalty. Eventually under the impugned verdict of 09.09.2013, both Appeals were dismissed by the Revenue Board, which held that assessment at the concessional rate of tax at 4% between 01.05.2001--03.01.2003, under the cover of Notification of 03.01.2003 was incorrect and hence the Government is entitled to recover the additional tax, which escaped assessment at the time of the original assessment made on 17.03.2006 and 26.10.2006 respectively. Consequently, the levy of interest on the additional tax was also held to be justified, in the re-assessment proceeding.
13. In order to adjudicate on the legality of the additional tax demand, it is necessary to bear in mind that equitable consideration are out of place and Revn. Petition No.17/2014 & Revn. Petition No.18/2014 4 of 6 "taxation statute is to be strictly construed" (Principle Of Statutory Interpretation by Justice G.P. Singh). Referring to the general principles of taxation, the Constitution Bench in State of West Bengal vs. Kesoram Industries Ltd., reported in AIR 2005 SC 1646, settled the legal position with the following words:
"........................................
111. The judicial opinion of binding authority flowing from several pronouncements of this Court has settled these principles; (i) in interpreting a taxing statute, equitable considerations are entirely cut of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency;
(ii) before taxing any person it must be shown that he fails within the ambit of the charging section by clear words used In the Section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. There is nothing unjust in the tax- payer escaping if the letter of the law falls to catch him on account of Legislature's failure to express itself clearly. (See, Justice G.P. Singh, ibid, pp.638-639).
........................................."
14. The above ratio makes it clear that, equitable considerations have no place in deciding a tax liability and before a person is brought within the ambit of tax, it must be shown that the charging section applies to that person without any ambiguity and in clear terms. It is also provided that if two interpretations are possible, the judicial interpretation can't lean in favour of the Revenue. To apply the ratio in the present facts, we are constrained to hold that if tax escaped assessment on account of erroneous order and re-assessment is time barred, recovery of the escaped tax can't be made through invocation of the re-assessment power.
15. In the present matter, the show cause notice for re-assessment was issued after eight years of the concerned Assessment but the Revenue justifies the exercise on the authority of the pronouncement in Kamakhya Plastics (P) Ltd. (supra). But the High Court while permitting the State to recover tax which escaped assessment, through retrospective application of the concessional rate notification of 03.01.2003, did not simultaneously allow the State to exercise their taxing power in situations, where the right to recovery stood extinguished by operation of law. Hence it is clear that the verdict relied on by the respondent counsel can't be applied blindly to every situation of tax escapement.
16. When the Revenue feels that assessment was erroneous, the recovery of tax may be permissible through re-assessment under Section 18 of the AGST Act and Revn. Petition No.17/2014 & Revn. Petition No.18/2014 5 of 6 here it is clear enough that the process of re-assessment was started beyond the limitation period of eight years of the original assessments. Therefore the re- assessment exercise is legally impermissible even for a situation of wrongful assessment at a lower rate.
17. In the above circumstances, we find merit in the challenge of the assessee to the order of re-assessment and accordingly the impugned exercise and the orders for recovery of additional tax plus interest are found to be unsustainable in law and the same are quashed.
18. With the above direction, the cases are disposed of. No cost.
JUDGE JUDGE Barman Revn. Petition No.17/2014 & Revn. Petition No.18/2014 6 of 6