Gujarat High Court
Reliance Industries Ltd. vs State Of Gujarat on 16 March, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/SCA/22283/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 22283 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 1257 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1258 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1364 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1365 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1451 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1671 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 22284 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 22285 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 22286 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 22287 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 22288 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
Page 1 of 12
C/SCA/22283/2017 JUDGMENT
order made thereunder ?
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RELIANCE INDUSTRIES LTD.
Versus
STATE OF GUJARAT
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Appearance:
UCHIT N SHETH(7336) for the PETITIONER(s) No. 1,2
MR.KAMAL TRIVEDI, LD. ADVOCATE GENERAL, with MR.CHINTAN DAVE,
AGP (99) for the RESPONDENT(s) No. 1
DS AFF.NOT FILED (N)(11) for the RESPONDENT(s) No. 1,2
NOTICE SERVED BY DS(5) for the RESPONDENT(s) No. 1,2
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 16/03/2018
COMMON ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This group of petitions involves similar facts and identical question of law. They have been heard together and would be disposed of by this common judgment. In all material aspects, facts being common, we may record facts as arising in Special Civil Application No.22283 of 2017 which are as under.
2. Petition is filed by Reliance Industries Limited challenging a notice dated 03.11.2017 issued by the Additional Commissioner of State Tax, Ahmedabad, seeking to take into revision an order of assessment Page 2 of 12 C/SCA/22283/2017 JUDGMENT dated 30.03.2013 passed by the Deputy Commissioner OF Commercial Tax (hereinafter to be referred to as the 'Assessing Officer' for short). The petitioner has also challenged the consequential notice also dated 03.11.2017, under which, the petitioner was directed to produce necessary accounts in this respect.
3. The petitioner in the course of its manufacturing activities, sends goods outside the State by way of branch transfer and suffers reduction of tax credit to the extent of 4% in terms of section 11(3)(b) of the Gujarat Value Added Tax Act ('the VAT Act' for short). According to the department, when the input happens to be fuel, this reduction of tax credit of 4% should be applied twice. The petitioner contends that the reduction in terms of section 11(3)(b) can apply only once and not again. This issue through the appeal route had travelled to the High Court. The High Court by a judgment in case of State of Gujarat v. Reliance Industries Limited reported in [2013] 58 VST 376 (Guj) held that the legislature intended to limit the tax credit only once. Even if the input happens to be fuel, such reduction cannot be applied twice. The department Page 3 of 12 C/SCA/22283/2017 JUDGMENT carried the judgment of the High Court to the Supreme Court. In case of State of Gujarat v. Reliance Industries Limited, reported in 2017 (12) Scale 75, the Supreme Court allowed the appeal of the Government. The Supreme Court by reversing the judgment of the High Court, held and observed as under:
"19) The upshot of the aforesaid discussion would be to hold that reduction of 4% would be applied whenever a case gets covered by subclause (ii) and again when subclause
(iii) is attracted.
20) This, however, would be subject to one limitation. In those cases where VAT paid on such raw material is 4%, as in the case of furnace oil, reduction cannot be more than that. After all, Section 11 deals with giving credit in respect of tax that is paid. Therefore, if some reduction is to be made from the said credit, it cannot be more than the credit given. Thus, so far as furnace oil is concerned, tax credit shall be reduced by 4%. On the other hand, tax credit given in case of natural gas and light diesel oil (other fuels), it shall be reduced by 4% under subclause (ii) and 4% under subclause (iii) of clause (b) of sub section (3) of Section 11."
4. This judgment of the Supreme Court in case of Reliance Industries Limited (supra) is the foundation of the impugned notices. The revisional authority has referred to such judgment in the notices to hold Page 4 of 12 C/SCA/22283/2017 JUDGMENT a belief that the order of assessment is required to be taken in revision. The petitioner contends that the revisional powers of the Commissioner are hedged with certain limitations; one of them being the period of limitation prescribed under the statute. Counsel for the petitioner would point out that in terms of section 75 of the VAT Act, the revisional powers can be exercised only within a period of three years from the date of order of assessment. In the present case, the order of assessment was passed on 30.03.2013 and the notice of revision which was issued on 03.11.2017 thus, clearly beyond the period of limitation. This is a sole ground on which the impugned notices are challenged. Petitioner relies on certain judgments of this Court to which reference shall be made at a slightly later stage.
5. Section 75 of the VAT Act pertains to revision and reads as under:
"75. (1)Subject to the provisions, of section 74 and to any rules made there under,
(a) the Commissioner of his own motion within three years or on an application made to him within one year from the date of any order passed by any officer appointed under section 16 to assist him, may call for and examine the record of any Page 5 of 12 C/SCA/22283/2017 JUDGMENT such order and pass such order thereon as he thinks just and proper [within five years from the date of the said order of the officer appointed under section 16 to assist him.]
(b) The Tribunal, on application made to it against an order of the Commissioner (not being an order passed under subsection (2) of section 73 in second appeal or under clause (a) in revision on an application) within four months from the date of the communication of the order may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper.
(2) Where an appeal lies under section 73 and no appeal has been filed, no proceedings in revision under this section shall be entertained upon application:
Provided that the proceedings in revision may be entertained upon an application where the applicant satisfies the Commissioner that he had sufficient cause for not preferring an appeal against the order in respect of which an application for revision is made.
(3) No order shall be passed under this section which adversely affects any person, unless such person has been given reasonable opportunity of being heard.
(4) Where the Commissioner or the Tribunal rejects any application for revision under this section, the Commissioner or, as the case may be, the Tribunal shall record the reasons for such rejection."
6. In terms of clause(a) of subsection (1) of section 75 thus, the Commissioner has revisional powers which can be exercised on his own motion or Page 6 of 12 C/SCA/22283/2017 JUDGMENT under an application made to him for such purpose. He could take any order in revision passed by the officer appointed under section 16 of the Act to assist him by calling for and examine record of any such order and pass such order as he thinks just and proper. Exercise of such powers however, comes with prescription of limitation. The suomotu power for calling any record of any such order can be exercised within three years. If the same is to be exercised on a motion by the person concerned, the period of limitation prescribed is one year. The statute further provides that the order of revision could be passed within five years from the date of the order taken in revision. There is nothing on record to suggest that in the present cases, the Additional Commissioner had called for the record of the assessment of the petitioner for the particular year within three years of the date of the order so as to enable him to exercise the revisional powers. In fact, looking to the tenor of the notice of revision it was not even possible for him to have done so. This is because the order of assessment was passed on 30.03.2013. Period of limitation would therefore Page 7 of 12 C/SCA/22283/2017 JUDGMENT expire on 30.03.2016. The judgment of the Supreme Court, to which, reference is made and reliance placed in the notices for revision was delivered on 22.09.2017. On all accounts thus, the action of the Additional Commissioner calling for the record of the assessment and issuing notice for revision is beyond the period of limitation prescribed.
7. Similar situation had come up before this Court in number of cases to which reference can be made shortly. Before that, we may briefly note that clause(a) of subsection (1) of section 67 of the Gujarat Sales Tax Act made pari materia provisions concerning the revisional powers of the Commissioner. Under the said section also, the Commissioner is empowered to call for and examine the record of any proceedings of the subordinate officer suomotu within three years or on an application made to him for such purpose within one year from the date of the order passed by such officer.
8. In case of Om Metals & Minerals Ltd. v. Assistant Commissioner of Sales Tax (Appeals) Page 8 of 12 C/SCA/22283/2017 JUDGMENT reported in 42 VST 50 (Guj), the Court in the background of pari materia provisions contained in section 67 of the Sales Tax Act, made following observations:
"13. The composition order under section 55A of the Act as noted hereinabove has been made on 31st March, 1998 and the impugned notice has been issued on September 25, 2001 which is clearly beyond a period of three years from the date of the said order. Section 67 of the Act inter alia lays down that the Commissioner on his own motion within three years from the date of order passed by any officer appointed under section 27 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks just and proper within 12 months from the date of service of notice of revision. In the facts of the present case, the impugned notice has clearly been issued after the expiry of the period of three years from the date of the order sought to be revised, that is, the period of limitation prescribed under clause
(a) of subsection (1) of section 67 and as such, the same is apparently barred by limitation."
9. In case of M/s Tiger Steel Engineering (I) Pvt. Ltd. v. State of Gujarat (GH) vide judgment dated 06.04.2016 passed in Tax Appeal No.38 of 2007, the Division Bench once again in the context of the provisions of section 67 of the Sales Tax Act, observed as under:
"10. From the language employed in the Page 9 of 12 C/SCA/22283/2017 JUDGMENT section 67 of the Act, it is amply clear that the period of limitation of three years commences from the date any order has been passed by any officer appointed under section 27 to assist the Commissioner. In the present case, such order is the composition order dated 19.12.2000. In the light of the clear language of clause (a) of subsection (1) of section 67 of the Act, the period of three years for exercising powers under section 67(1)(a) of the Act would commence from the date of such order, that is, from 19.12.2000. Therefore, such period would come to an end on 18.12.2003. In the present case, it is an undisputed position that the Commissioner had taken the order dated 19.12.2000 in revision by issuing notice dated 2.2.2005. Evidently therefore, the exercise of powers under section 67 of the Act by the Commissioner was beyond the period of limitation."
10. In case of S.K.Industries v. State of Gujarat reported in 100 VST 81 (Guj), the Division Bench of this Court in the context of section 67 of the Gujarat Sales Tax Act, had observed as under:
"21. Facts in the present case are not in dispute. Admittedly, the Commissioner had not exercised the revisional powers under subsection (1) of section 67 within the period of limitation prescribed as interpreted by us in this judgment. In fact, till the period of three years were over, it is doubtful whether the Commissioner could have said to have called for and examine the record of the case since the Commissioner issued the notice to the petitioner calling for the information from the petitioner in this respect after the period of three years."Page 10 of 12
C/SCA/22283/2017 JUDGMENT
11. In context of section 75 of the VAT Act, Division Bench of this Court vide judgment dated 07.04.2017, passed in Special Civil Application No.6928 of 2017, had observed as under:
"[2.1] It is not in dispute that the respondent herein M/s. Khadi Gram Udhyog Sangh, Rajkot was granted the certificate of entitlement for the period between 01/04/2006 to 31/03/2012 by the Commercial Tax Officer dated 18/02/2010. It is not in dispute that the same came to be cancelled by the revisional authority vide order dated 12/08/2013. It is not in dispute that the said certificate of entitlement was cancelled in exercise of revisional powers under Section 75 of the Value Added Tax Act (hereinafter referred to as the Act). Section 75 of the Act provides limitation of three years by the revisional authority to exercise the revisional power. In the present case, the revisional authority exercised the powers after a period of 3 years i.e. beyond the period prescribed under Section 75 of the Act. Under the circumstances, the learned tribunal has rightly allowed the Revision Application preferred by the respondent and has rightly quashed and set aside the order passed by the revisional authority cancelling the certificate of entitlement as the revisional authority exercised the powers beyond the period prescribed under Section 75 of the Act. No error has been committed by the learned tribunal in quashing and setting aside the order passed by the revisional authority. Even otherwise, even on merits also, the issue is covered against the revenue in light of the decision of the Division Bench of this Court dated 22, 29/07/2016 passed in Tax Appeal No.444/2015 by which the Division Bench has held that the authority has no jurisdiction to cancel Page 11 of 12 C/SCA/22283/2017 JUDGMENT the certificate of entitlement retrospectively. Under the circumstances and even on merits also, the order passed by the revisional authority cancelling the certificate of the entitlement retrospectively cannot be sustained."
12. Looked from any angle, the impugned notices for revision cannot be sustained, being clearly in exercise of revisional powers beyond the period of limitation prescribed. Respective notices in each petition are quashed.
13. All petitions are disposed of accordingly.
(AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 12 of 12