Chattisgarh High Court
M/S Bharat Aluminium Co.Ltd vs State Of Chhattisgarh 13 Wps/4265/2017 ... on 15 November, 2018
Bench: Ajay Kumar Tripathi, Parth Prateem Sahu
1
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Judgment Reserved on: 19/09/2018
Judgment Delivered on : 15 /11/2018
Writ Petition (T) No. 44 of 2013
1. M/s. Bharat Aluminium Co. Ltd. A company duly incorporated under
the Companies Act, 1956 having its registered office Bharat
Aluminium Company Limited, Aluminium Sadan Core-6, Scope
Office3 Complex, Lodhi Road, New Delhi and it works at PS & PO
Balconagar, Korba, Chhattisgarh, through its authorised signatory
Mr. Pravin Saharia, S/o Shri B.L.Saharia aged about 28 years R/o
Balco Nagar, Korba, Chhattisgarh, 495684
2. Mr. Pravin Saharia S/o Shri B.L.Saharia, aged about 28 years, R/o
Balconagar, Korba, Chhattisgarh 495684, PS & PO Balconagar
authorised signatory and Manager Indirect Taxation of the above
named company.
---- Petitioners
Versus
1. State of Chhattisgarh Through The Secretary, Department of
Commercial Taxes, DKS Mantralaya Bhavan, Raipur, Chhattisgarh.
2. Commissioner of Commercial Tax, Vanijyik Kar Bhavan, Civil Lines,
Raipur, Chhattisgarh.
2. Assistant Commissioner of Commercial Tax, Korba, Chhattisgarh.
---- Respondents
For Petitioners : Shri Neelabh Dubey, Advocate.
For Respondents/State : Shri UNS Deo, Government Advocate. 2
Hon'ble Shri Ajay Kumar Tripathi, Chief Justice Hon'ble Shri Parth Prateem Sahu, Judge C.A.V. Order Per Ajay Kumar Tripathi, Chief Justice
1. Notification No. F 10-180/2007/CT/V(59), dated 17.12.2012 issued under Entry 8 of Schedule III of the Chhattisgarh Value Added Tax Act, 2005 (Annexure P/3) has been challenged in the present writ application.
2. The Entry in question reads as under:
**NRrhlx<+ 'kklu okf.kfT;d dj foHkkx ea=ky;
egkunh Hkou] u;k jk;iqj vf/klwpuk jk;iqj] fnukad 17@12@12 dzekad ,Q 10&180@2007@okd@ikap ¼59½ & NRrhlx<+ ewY; laof/kZr dj vf/kfu;e] 2005 ¼dzekad 2 lu~ 2005½ dh vuqlwph&3 ds vuqdzekad 8 ds dkWye ¼2½ esa fofufnZ"V izko/kkuksa ds vuqlj.k esa] jkT; 'kklu ,rn~ }kjk mDr izfof"V ds varxZr fuEu vuqlwph ds dkWye ¼2½ esa fofufnZ"V eky dks vf/klwfpr djrk gS] vFkkZr~%& vuqlwph v-dz- Ekky dk uke ¼1½ ¼2½ ¼,d½ Pkkjdksy dks NksM+dj lHkh izdkj dk dksy ,oa dksd] ftldk mi;ksx fo|qr@'kfDr mRiknu esa gks] ftlesa dsfIVo 'kfDr mRiknu la;a= 'kkfey gS A 2- ;g vf/klwpuk jkti= esa izdk'ku fnukad ls izHkko'khy gksxh A NRrhlx<+ ds jkT;iky ds uke ls rFkk vkns'kkuqlkj] lgh@& ¼tsfo;j frXxk½ la;qDr lfpo 3 jk;iqj] fnukad 17@12@12 dzekad ,Q 10&180@2007@okd@ikap& Hkkjr ds lafo/kkj ds vuqPNsN 348 ds [k.M ¼3½ ds vuqlj.k esa] bl foHkkx dh vf/klwpuk dzekad ,Q 10&180@2007@okd@ikap ¼59½] fnukad 17@12@12 dk vaxzsth vuqokn jkT;iky ds izkf/kdkj ls] ,rn~ }kjk izdkf'kr fd;k tkrk gS A NRrhlx<+ ds jkT;iky ds uke ls rFkk vkns'kkuqlkj] lgh@& ¼tsfo;j frXxk½ la;qDr lfpo**
3. The Petitioner is a registered dealer under the Value Added Tax Act, 2005 (hereinafter called 'the VAT Act'). It is the case of the Petitioner that in terms of the VAT Act, the credit or tax paid by a registered dealer on purchases made from another registered dealer is available as 'input tax credit' under Section 13 of the VAT Act. The goods on which the input tax credit is available are mentioned in Part I, Part II and Part IV of Schedule II appended to the VAT Act. The credit is either utilized or adjusted against the tax payable on sales made by the registered dealer, if claims for such credit is made. The utilization or adjustment is called 'input tax rebate'.
4. Prior to issuance of Annexure P/3 i.e. the notification dated 17.12.2012, the input tax credit was available on coal which was a declared goods as per Section 14 of the Central Sales Tax Act, 1956. After issuance of the impugned notification, the purchasers of coal are deprived the benefit of input tax credit. This is so since the goods notified or mentioned in Schedule III of the VAT Act, the benefit of input tax credit is not available.
5. Before the amendment, the list of goods notified in Scheduled III are following till coal came to be added at Sl.8 :
4
"SCHEDULE III __________________________________________________________ S.No. Description of goods __________________________________________________________ (1) (2) __________________________________________________________
1. Petrol, diesel, aviation turbine fuel, natural gas, kerosene oil, liquefied petroleum gas and compressed natural gas.
2. Capital expenditure on land and civil construction for use in manufacture or trade, including office building and other related constructions.
3. Second hand capital goods.
4. Furniture and Fixtures including air conditioners and refrigerators.
5. Motor cars, two wheelers, parts and accessories thereof.
6. Capital goods used in generation of energy / power including captive power plant.
7. Capital goods used in manufacture, providing service or trading activities not liable to tax under the Act.
8. Such other goods, as may be notified by the State Government."
____________________________________________________________
6. Petitioner's claim that coal is an essential and inevitable input for manufacture of taxable finished goods i.e. Aluminium since electricity generated from such coal is captively consumed in the manufacture of taxable finished goods. Denial of input tax rebate on such an essential input is contrary to the purpose and object behind the VAT scheme as would be evident from the white paper released on VAT by the Empowered Committee of the State Finance Ministers. It is argued that inclusion of coal in Schedule III of the VAT Act defeats the very purpose of the VAT scheme and therefore the said notification should be declared ultra vires.
7. Learned counsel representing the Petitioners submits that the coal is an essential input in production of the taxable finished goods i.e. Aluminium, produced by the Company. There is no reasonable intelligentia to separate it from other input goods.
8. Though, Entry at Sl. 8 in Schedule III gives power to the State Government to notify 'such other goods', it does not have power to sub- classify a goods.
5
9. It is also argued the Entry does not lay down any policy or guidelines. Therefore, the same is irrational and arbitrary. Even for legislation, there must be a policy guidelines and in absence thereof, the same violates Article 14 of the Constitution.
10. The State, in their return have taken a stand that the challenge in the writ application thrown to Annexure P/3 is devoid of merit and substance. No amount of innovation in submission is going to take away the factual position that even earlier the coal including coke in all its forms but excluding charcoal was inserted in Schedule III of the VAT Act on 10.12.2007. A challenge was thrown in Writ Petition (T) No. 1673 of 2009, which was the case of Chhattisgarh Sponge Iron Manufacturers Association & Another v. State of Chhattisgarh & Others. The effort made by the Sponge Iron Manufacturers Association (supra) to assail the said Entry miserably failed before a Division Bench of this Court when the writ application was dismissed vide order dated 16.02.2010. The Court is informed that the decision of the Division Bench holding the said Entry in Schedule III issued by the State Government was declared to be intra vires and this judgment was not assailed before any higher forum and therefore, the said judgment still holds the field.
11. To be fair to the Petitioners, they have themselves annexed the Division Bench judgment as Annexure P/6.
12. We have gone through the order of the Division Bench from where it is evident that the arguments made before us are not different from the line of challenge thrown by those Petitioners when such an entry was made in the year 2007. The State Government had subsequently withdrawn such an entry 6 but the Legislatures in their wisdom decided to bring back the said entry by the new notification contained in Annexure P/3 dated 17.12.2012.
13. The learned Division Bench while dealing with the line of arguments gave its reasoning for throwing out the challenge to such entry for the following reasons:
"23. In Pandit Banarsi Das Bhanot Versus The State of Madhya Pradesh and others (AIR 1958 SC 909), it was held that the power conferred on the State Government by Section 6(2) to amend the schedule relating to exemption is in consonance with the accepted legislative practice relating to the topic and is not unconstitutional.
24. In M/s. Hiralal Rattanlal etc. etc. (1973) 1 SCC 216 also, the Hon'ble Supreme Court, after referring all its earlier judgments, observed that it is impossible for the Legislature to select the goods which should be subject to single point sales or purchase tax. Before making such selections, several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered. These factors may change from time to time. Hence in the very nature of things, these details have got to be left to the executive. It was further held that it is not unconstitutional for the Legislature to leave it to the executive to determine the details relating to the working of the taxation laws, such as the selection of the person on whom the tax is to be levied, the rates at which it is to be charged in respect of different classes of goods and the like.
25. In J.K.Udaipur Udyog Ltd. And another (2004) 137 STC 438, a scheme was framed by the State granting exemption to industrial units from payment of sales tax on Intra-State and Inter-State sale of goods and by-products manufactured within the State of Rajasthan. By a subsequent notification extent of percentage of exemption available to sick industries was sought to be corrected. The respondent company in a writ petition before the High Court contended that as per the scheme originally framed, the company availed the benefit of exemption for a period of 11 years, as the rights of the company under the scheme were claimed to be crystallized with effect from the date of certification of their application under the particular clause of the scheme which could not be taken away by corrigendum with retrospective effect. Allowing the appeal of the State against the judgment of the High Court, it was held that the right to exemption was not a vested right but was a defeasible privilege which the State Government could amend according to public interest; the mere fact that the respondents which had availed of the exemption were prohibited from 7 collecting the sales tax from their customers or that they had not collected sales tax from the customers was of no consequence. The seller might or might not be entitled to recover the same from the purchaser. The State Government was entitled to recover the same from the respondents irrespective of the fact that they might have lost the chance of passing on their liability to pay sales tax to their purchasers.
26. If we examine facts of the present case in the light of the principles of law laid down in the aforesaid judgments, we find that the tax was leviable on the sale of coal as per Section 8 of the Act in view of entry 40 of Schedule II Part II read with Section 14 of the Act, 1956, as the coal has been declared as goods of special importance under Section 14(ia). The petitioners purchased coal after paying tax to the dealer as an input for production of sponge iron. Initially, goods coal was not mentioned in Schedule III and as such, a registered dealer using coal as an input for manufacturing of sponge iron was entitled for rebate of input tax in accordance with Section 13(1)
(b) of the Act which provides that where a registered dealer purchases any goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III within the State of Chhattisgarh from another such dealer after payment to him of input tax, for use or consumption of such goods for/in the manufacture or for/in mining in the State of any goods specified in Schedule II for sale within the State of Chhattisgarh or in the course of interstate trade or commerce.
27. Input tax rebate is not available on the goods mentioned in Schedule III. Entry 8 of Schedule III empowers the State to include other goods in Schedule III by notification.
28. From bare reading of the provisions contained in Section 8 and 13 of the Act, it is manifestly clear that a registered dealer trading in goods specified in Schedule II are liable to pay tax.
29. The Legislature in its wisdom extended the benefit of input tax rebate to a registered dealer under Section 13(1)(b) towards any input tax paid by him for purchase of goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III. Entry No. 8 of Schedule III is a part of the statute itself and not the creation of notification which confers power on the State Government to include any goods in Schedule III.
Exemption/rebate extended to the dealer under Section 13 is a privilege made available to the dealers trading in goods not included in Schedule III. Since the Legislature has consciously conferred power to the State Government to enlarge Schedule III by adding goods, by no stretch of imagination, the same can be construed to be excessive delegation of power by the legislature to the State, as entitlement of input tax rebate necessarily is a concession allowed by the State Government and the petitioners do not enjoy the aforesaid concession as indefeasible right to avail forever.
8
30. Accordingly, we reject the challenge to the constitutional validity of entry No. 8 of Schedule III on the aforesaid ground.
31. Second argument that power to amend Schedule II is delegated to the State Government under Section 15-A of the Act and, therefore, to remove coal from entry 40 in Part II of Schedule II, Schedule II is required to be first amended by specifically deleting the coal from that entry and coal can be transposed and included in Schedule III only after deleting the coal from Schedule II is also unacceptable. Rebate of input tax under Section 13 is available to the registered dealer who purchases any goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III within the State of Chhattisgarh from another such dealer after payment to him of input tax for manufacture of any goods specified in Schedule II for sale within the State or in the course of inter-State trade or commerce or for sale outside the State. Thus, it is clear that Section 13(1)(b) makes a provision for rebate of input tax only with respect to goods other than those specified in Schedule III. Exclusion of coal including coke in all its form, but excluding charcoal in Schedule III, vide impugned notification of Annexure-P/1, disentitles the dealers who purchase the same as input for manufacture of finished product included in Schedule-II.
32. For the foregoing reasons, we hold that Entry 8 of Schedule III of the Act and notification of Annexure P/1 issued by the State Government in exercise of powers of the aforesaid entry is intra vires."
14. As we have already noticed that the aforesaid Division Bench judgment still holds the field and line of argument made by the learned counsel for the Petitioners does not seem to be any different from the earlier stand, the Division Bench judgment is binding upon us and therefore, this writ application also has to fail.
15. We do not see any reason to either disagree with the view taken by the Division Bench or to revisit the challenge de novo.
16. The writ application stands dismissed for the reasons as above.
Sd/- Sd/-
(Ajay Kumar Tripathi) (Parth Prateem Sahu)
CHIEF JUSTICE JUDGE
Subbu