Chattisgarh High Court
Commissioner Of Sales Tax Mp Now ... vs Ms Betul Oil & Flours Pvt Ltd Ganjpara ... on 4 August, 2010
HIGH COURT OF CHATTISGARH AT BILASPUR
STR NO 205 of 97
Commissioner of Sales Tax MP now Chhattisgarh
...Petitioners
Versus
Ms Betul Oil & Flours Pvt Ltd Ganjpara Raipur
...Respondents
! Miss Deepali Pandey Panel Lawyer for the State ^ Mr NK Vyas counsel for the non applicant assessee CORAM : HONBLE SHRI IM QUDDUSI & HONBLE SHRI NK AGARWAL JJ Dated : 4//8/2010 : Judgement ORAL ORDER (Passed on 4th August, 2010) I.M. Quddusi, J;
1. Heard.
2. The Board has referred the following questions of law under Section 44 of the Chhattisgarh General Sales Tax Act, 1958 (in short "the State Act") for our opinion:
"1. Whether under the facts & circumstances of the case, the Tribunal was justified in deciding that the holder of eligibility certificate is totally exempted on all the goods, whereas the eligibility certificate is issued with reference to specified goods for specific quantity.
2.Whether under the facts & circumstances of the case, the Tribunal was justified to hold that under Notification No.422-6596-V.- ST dated 9.2.1977 the holder of eligibility certificate is exempted in respect of goods other than raw material.
3.Whether under the facts & circumstances of the case and in view of the restrictions & conditions specified in Col. No.3 of Notification No. 422-6596-V.-ST dated 9.2.77 the Tribunal was justified in holding that the dealer is eligible for exemption of goods which are not specified as raw material in his registration certificate issued under M.P.G.S.T. Act.
4. Whether under the facts & circumstances of the case the Tribunal was justified in holding that exemption limited in eligibility certificate by way of specification of goods and its quantity is not in confirmation with the law."
3. Brief facts of the cases are that the non-applicant is a new industrial unit eligible for Eligibility Certificate (in short "EC") for exemption from the State Tax, Entry Tax and the Central Tax. The non-applicant was granted EC on 3.7.1985 under the State Act valid from 21.8.1982 to 20.7.1989. In the EC, the packing materials were not specified. On the application made by the non-applicant, packing materials like Bardana, drums and tins were specified in the EC. The non-applicant manufactured oil and oil-cakes, packed them either in the drums, tins or gunny bags and sold them either within the State or in the course of inter-State trade or commerce. The original assessment orders were completed during the validity of the EC. The last of such assessment order was passed on 15.5.1989 in respect of the year 1986-87. After the expiry of EC, it was amended on 25.9.1989 giving the amendment retrospective effect. As a result of retrospective amendment, the original assessments were reopened under Section 19 (1) of the State Act and the sales tax authorities held that in view of the amended EC, packing materials were never specified in the EC and were liable to tax. The sales tax authorities also held that the declarations issued by the non-applicant on the strength of the EC were violative of the provisions of Section 14-A of the State Act and accordingly, they were reassessed and penalties were also imposed.
4. The non-applicant filed appeals against the appellate orders of the Appellate Deputy Commissioner before the Tribunal and the Tribunal set aside these appellate orders and held that the EC could not be amended retrospectively and reopening of the cases under Section 19(1) of the State Act after amending the EC retrospectively after the expiry, was illegal. The non-applicant belonged to the class of dealers exempted from payment of tax under the State Act, Central Act and under the Entry Tax Act and cannot be assessed to tax under any of the three Acts during the validity of the EC. The class of dealers, being exempted from payment of tax, cannot be restricted to certain class of goods. However, the instant reference has been made by the Board on the application of the revenue.
5. Similar Sales Tax References on the similar questions of law have been disposed of by the Division Bench of this Court vide order dated 30.6.2010, leading case of which was STR No.194/97. The Division Bench has held that "the Notification has been withdrawn in the instant case and re- assessment was done only because the Industries Department vide Corrigendum dated 25.9.1989 retrospectively deleted packing material from the EC. In our view, re-assessment on the basis of retrospective amendment of the EC issued by the Industries Commissioner after expiry of the period of eligibility, is impermissible and the Tribunal was justified in holding that exemption given to a dealer under EC under the statutory notification, cannot be withdrawn by amending the EC retrospectively after its expiry".
6. The decision of the Division Bench is based on the judgment of the Hon'ble Apex Court in the matter of State of UP & others Vs. Deepak Fertilizers & Petrochemical Corporation Ltd. reported in 2007 AIR SCW 3646 in which the assessee was entitled for exemption from taxes on the sale of potassium phosphatic fertilizers from 1.11.1994 to 31.3.1995 as per notification issued by the State of U.P. dated 2.11.1994, but the same was withdrawn by the notification dated 1.4.1995. The Hon'ble Apex Court, considering Section 25 of the UP Trade Tax Act pari materia to Section 12 of the State Act, held that the above notification amounted to increasing the liability to tax of the dealer with retrospective effect and the same cannot be issued in view of the proviso to Section 25 of the Act and denying exemption retrospectively is illegal and invalid.
7. In view of the above facts and circumstances, in our opinion when the assessee was entitled for exemption from payment of tax under the State Act for a period of seven years as the assessee was the first industry established in the specified area in the notification, the withdrawal of notification with retrospective effect subsequently was illegal and invalid and hence the tribunal was justified in allowing the appeal of the non-applicant-assessee.
8. On the basis of above discussions, we answer the questions of law referred to us in affirmative i.e. in favour of the assessee and against the revenue.
9. The reference is answered and disposed of accordingly.
JUDGE JUDGE