Gauhati High Court
Victor Cane Industries vs Commissioner Of Taxes And Ors. on 1 September, 2001
Equivalent citations: [2002]125STC483(GAUHATI)
Author: D. Biswas
Bench: D. Biswas
JUDGMENT
R.S. Mongia, CJ (Actg)
1. The appellant is a partnership firm having its place of business at Makum in the District of Dibrugarh, Assam. The firm is engaged in the manufacture of cane baskets and furniture and is a registered dealer under the Assam Sales Tax Act, 1947 as also under the Central Sales Tax Act, 1956. In order to foster industrial growth and development in the country, the Central Government and various State Governments from time to time have introduced a number of schemes offering Incentive and subsidies to various industries keeping in view the Industrial growth. Such benefits are limited for a certain duration of time, which is from the date of commencement of commercial production by an industrial unit. The main purpose being that during the period of.... new industrial unit may secure a foothold in the industrial world.
2. The Government of Assam, in the Department of Industries, had also under its industrial policy, with a view to provide impetus to speedy industrial development, in the otherwise industrially backward state announced a package of incentive by Natification dated 8.3.1969. With the passage of time, the necessity for the revision of the scheme already in existence was felt and the Government of Assam by a Notification dated 12.10.1982 announced new package of incentive, which was called, 'The 1982 Scheme. The scheme was to be given, effect from 15.10.1982 and was to last upto 31.3.1985. Apart form the other subsidies and incentives, one of them was sales tax exemption. Lateron the State of Assam passed an Act known as the Assam Industries (Sales Tax Concession) Act, 1986 (Assam Act I of 1987) (hereinafter called the 1986 Act). This was with the object to consolidated and amend the provisions of law relating to sales tax in the matter of concessions to industries. By this Act the provisions of the Assam Sales Tax Act were amended to provide that no dealer would be liable to pay tax under the Assam Sales Tax Act in respect of sales of such goods produced by a new industrial unit as may be specified in the notification for a period of 5 years from the date of comencement of production. The aforesaid Act was brought into force with effect from 1.1.1988. The Government of Assam issued a notification as contemplated by the 1986 Act on 13th July, 1988. It provided that no dealer would be liable to pay tax under the Assam Sales Tax Act in respect of the sale of goods produced by the industrial unit in Assam for a period of 5 years from the date of commencement of production. However, the said notification, inter alia, provided that the sales made during the period 15th October to 31st July would be exempted only on furnishing certificate of eligibility issued by the authority as specified in Sub-rule (a) of Rule 4 of Assam Industries (Sales Tax) Concession Rules, 1988. The appellant being a new industry established under the 1982 scheme of the Government of Assam, applied for eligibility certificate as contemplated under the scheme and was issued eligibility certificate on 28.3.1988, which was valid from 20.10.1987 to 21.10.1992. The appellant being a new industry established under the 1982 Industrial Policy of the Government of Assam was generally exempted from the payment of tax under the Assam Sales Tax Act, 1947, who submitted its sales tax return for the period ending 31 st March 1988, 30th September 1998 and 31st March 1989 before the Superintendent of Taxes, Tinsukia with no tax liability under the Assam Sales Tax Act. It was the case of the appellant that as the goods produced by the appellant in its unit were generally exempted from tax under Section 3A of the Assam (Sales Tax) Act, 1947, the sales made by it in course of inter State Trade and Commerce were also exempted from the payment of tax by virtue of Section 8(2A) of the Central Sales Tax Act, 1965. It is further alleged that the appellant sold the goods produced in the new industrial unit in course of the inter State Trade and Commerce without charging Central Sales Tax Act as according to the appellant it was exempted from the payment of tax under Section 8(2A) of the Central Act. The Superintendent of Taxes, Tinsukia completed the assessment for the period ending 31.3.1988, 30.9.1988 and 31.3.1989 granting exemption and determining the tax liability to be nil in view of Section 8(2A) of the Central Sales Tax Act, 1965. These assessments were done on 29.4.1989, 20.12.1989 and 28.12.1989 respectively.
3. On 9.5.1991 a show cause notice was issued to the appellant by the Assistant Commissioner of Taxes, Tinsukia Zone directing the appellant to show cause by appearing before the authority as well as in writing as to why the assessment orders for the periods ending as mentioned above should not be cancelled and proceedings be not initiated under Section 31(1) of the Assam Sales Tax Act, 1947 read with Section 9(2) of the Central Sales Tax Act. The appellant showed cause, inter alia, contending that in view of the specific provision in the Assam Sales Tax Act providing that no dealer would be liable to pay tax in respect of sales of goods produced by it in the new industrial unit for a period of 5 years and thereby granting general exemption from sales tax, no tax is payable under the Central Sales Tax Act by virtue of Section 8(2A) of the Central Sales Tax Act, 1956. It was also pointed out that similar matter was pending before this Court in the case of M/s O.K. Enterprises v. State of Assam in Civil Rule No. 1776/90 and by the order dated 17.9.1990 this Court had issued rule and granted stay in respect of further proceedings.
4. By an order dated 31.7.1992 passed by the respondent Assistant Commissioner of Taxes, Tinsukia, the assessment orders for the period ending 31st March, 1988, 30th September 1988 and 31st March 1989 were cancelled and the Superintendent of Taxes, Tinsukia was directed to complete the assessment as per the provisions of the Act. The appellant challenged the legality and validity of the aforesaid order dated 31.7.1992 by way of a writ petition (C.R. 1978/92). While issuing rule on 15.9.1992, this court stayed the operation of the order dated 31.7.1992. However, the writ petition was ultimately dismissed by the learned Single Judge by the judgment and order dated 5.9.1997. Hence the present appeal.
5. Before adverting to the arguments of the learned counsel for the parties, the provisions of Section 8(2A) of the Central Sales Tax Act as well as the provisions of Section 31 of the Assam Sales Tax Act, 1947 may be reproduced :
"8.(2A) Notwithstanding anything contained in Sub-section (1A) of Section 6 or Sub-section (1) or Clause (b) of Sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation - For the purpose of this Sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods;"
"31. Revision by Commissioner. - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any person appointed under Section 8 to assist him, is erroneous in so far as it is prejudicial to the Interests of the revenue, he may, after giving the dealer an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such orders thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, of cancelling the assessment and directing a fresh assessment.
(2) In the case of any order other than an order to which Subsection (1) applies passed by any person appointed under Section 8 to assist him, the Commissioner may, either of his own motion or a petition by a dealer for revision, call for the record of any proceeding under this Act in which any such order has been passed and may make such enquiry or cause such enquiry to be made, and subject to the provisions of this Act, may pass such order thereon, not being an order prejudicial to the dealer, as he thinks fit.
(3) In the case of a petition for revision under Sub-section (2) by a dealer, the petition must be made within ninety days from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier :
Provided that the Commissioner before whom the petition is filed may admit it after the expiration of the period of ninety days if he is satisfied that for reasons beyond the control of the petitioner or for any other sufficient cause, it could not be filed within time.
(4) The Commissioner shall not revise any order under that section in the following cases :
(a) where an appeal against the order lies under Section 30 or 31A but has not been made and the time within which such appeal may be made has not expired, or in the case of an appeal to the Board, the dealer has not waived his right of appeal; or
(b) where the order is pending on appeal under Section 30; or
(c) where the order has been made the subject of an appeal to the board.
Explanation. - An order by the Commissioner declining to interfere shall, for the purpose of this section be deemed not to be an order prejudicial to the dealer."
The learned counsel for the appellant, inter alia, raised the following arguments:
(1) Condition precedent for invoking the powers under Section 31(1) of the Assam Sales Tax Act did not exist enabling the Assistant Commissioner of Taxes to exercise suo motu powers of revising the already completed assessment;
(2) On the date the Assistant Commissioner of Taxes passed the order, i.e., 31.7.1992 cancelling the assessment made by the Superintendent of Taxes the law laid down by this Court and various other Courts specially by the Apex Court in Pine Chemical v. Commissioner of Sales Tax, 1992 (2) SCC 683 held the field which laid down that in cases like that of the appellant the tax on the sale of the product which is exempt under the State Act is also exempt from tax under the Central Act on the sale in course of inter-state trade and commerce. Consequently there was no illegality in the order of assessment passed by the assessing authority and it was not erroneous.
6. The learned Single Judge however held that in view of the Judgment of the Apex Court reported as 1995 (1) SCC 58 which had reversed the earlier Judgment of the Apex Court reported as 1992 (2) SCC 683 the decision of the Assistant Commissioner of Taxes was in conformity with the law laid down by the Apex Court. It was further said that mere dismissal of the SLP in limine by the Apex Court against the judgment of the Gauhati High Court reported as (1995) 97 STC 186 would not make any difference inasmuch as the/SLP had been dismissed in limine.
We have heard the learned counsel for the parties.
7. The point urged by the learned counsel for the appellant is that under Section 31 of the Assam Sales Tax Act the power of revision by the Commissioner can only be invoked if the Commissioner is of the opinion that the orders of the assessing authority is erroneous and pre-judicial to the interest of the revenue. In the present case, the order of assessment was in confirmity with law and on the day when the Assistant Commissioner of Taxes passed the order on 31.7.1992. The order of the Commissioner was rather against the dicta of the Apex Court in Pine Chemicals case, 1992 (2) SCC 683 which judgment was rendered on 16th of January 1992. What is to be seen is as to what is the law prevalent on the date when the assessment order is passed. Even if, subsequently the law is changed or reversed the assessment already completed cannot be allowed to be reopened. Reference was made to a Division Bench Judgment of the Punjab & Haryana High Court in State of Punjab v. Free Wheels (India) Ltd. 107 STC 332.
8. Therefore, the question to be answered is, was the order erroneous when the order of assessment was passed? The answer has to be in negative, inasmuch as when the order of assessment was passed or even the order of the Assistant Commissioner was passed on 31.7.1992, the Law as laid down by this court and other Courts including the Apex Court in Pine Chemicals case 1992 (2) SCC 683 was that the exemption of payment of taxes in exemption generally and no sales tax is payable by the Industries like the appellant for a specified period under Section 8(2A) of the Central Sales Tax Act on sales effected in course of inter state trade and commerce. The Division Bench of the Court in the case of Muli Bash Hasta Silpa Samabaya Society Ltd. and another v. The State of Assam and others (1992) 1 GLR 46 had observed in paragraphs 11 and 12 of the reported judgment as under:
" 11. All products of village industries when sold by a product or organisation certified as aforesaid are exempt from tax under the State Law. The exemption is of a general nature and not under particular circumstances or under specified conditions the exemption has to be treated as a general one within the meaning of Sub-section (2A) of Section 8 of the Central Sales Tax Act, 1956. The decision in Commissioner of Sales Tax, Madhya Pradesh v. Kapoor Dori Niwar & Co., Gwalior Vol. 22 STC, P. 152, Hindustan Safety Glass Works (P.) Ltd. v. State of U.P. and another Vol. 34, STC, P. 209, Murarilal Ahujav. Board of Revenue and others, Vol. 61, STCP 393 and the observations of the Supreme Court in Indian Aluminium Cables Ltd. v. State of Haryana, Vol. 38 STC, P. 108 (SC) support our view."
"12. We, therefore, hold that when the members of the first petitioner Association effect sale of the goods mentioned in the writ petition, such"sales are exempt 'generally' under Item 52 of Schedule III of the Assam Sales Tax Act, 1947 for the purpose of State Sales Tax Act and they are also exempt from the payment of Central Sales Tax under the Central Sales Tax Act, 1955 by virtue of Section (2A) of Section 8."
9. It will be seen that this Court had taken the view after relying on earlier judgments of different High Courts as also observations of Supreme Court in India Aluminium Cable Ltd. case. No doubt the view of the Apex Court expressed In Pine Chemicals case 1992 (2) SCC 683 was reversed by the Apex Court itself in 1995 (1) SCC 58, but according to us that should not make any difference on the assessments already completed. On similar matter a Division Bench of Punjab & Haryana High Court in 107 STC 332 observed as under :
"4. From the perusal of Section 40 as reproduced above, it would be apparent that the Commissioner can call for the record of any case pending before or disposed of by any Assessing Authority or appellate authority to satisfy himself as to the legality or propriety of any proceedings or any order and pass such order in relation thereto as he may think fit. The Scope of revisional powers is, thus, only to examine legality or propriety of any proceedings or any order. That being the scope of the revision, the only question that, thus, needs determination is as to whether the appellate authority while accepting the appeals preferred by M/s. Free Wheels (India) Limited as on the day when the appeals were decided had committed any illegality or the orders suffered from any impropriety. All that is stated on behalf of the counsel representing the State of Haryana is that the appellate authority had based its decision on the decision of the Tribunal in M/s. Liberty Footwear Co., Kamal, which decision could not be held to be laying down the correct law in view of the later decision rendered by the Tribunal in M/s. Steel Kraft, Panipat. We do not find any merit in the contention of the learned counsel as on the day when the appellate authority decided the appeals preferred by Free Wheels (India) Ltd., the decision rendered by the Tribunal in M/s. Liberty Footwear Co., had the field. If on a subsequent decision the Tribunal has taken a contrary view it would not make the proceedings that have been finalised far earlier and are based upon an earlier decision of the Tribunal either Illegal or improper. If the contention of the learned state counsel is upheld. It would result into endless litigation as all matter finalised earlier on the basis of law then in existence and holding the field would need reconsideration if law changes in succeeding years. All matters that have been finalised shall be then reported thus, unsettling the settled matters, in any case, as mentioned above, the order passed by the appellate authority which was based upon the law then holding the field could not possibly be styled as illegal or improper. That apart, the Commissioner by powers vested in him by virtue of Section 40 on his own motion can call for the record of any case pending or disposed of by any Assessing Authority or appellate authority other than the Tribunal. The decision of the appellate authority that was set aside by the revisional authority as mentioned above was based upon the decision of the Tribunal, even though, therefore, the revisional authority was not reopening. The case decided by the Tribunal, it virtually amounts to upsetting an order that is based upon the decision of the Tribunal."
10. The matter can be looked from another angle also. This Court in Mahavir Coke Industries v. Income Tax Commissioner; Assam (1995) 97 STC 186 (Division Bench which judgment was pronounced on October 5, 1993 relying on earlier judgment of this Court (1992 (1) GLR 46) as well as Pine Chemical Limited Case 1992 (2) SCC 683 (supra) took the view that industries like the appellant were exempt from the payment of Central Sales Tax under Section 8(2A) of the Central Sales Tax Act. Against the aforesaid judgment the S. L.P. filed by the revenue was dismissed on 3.3.1997 (S.L.P. No. C 5644 of 1997). Thereafter the revenue filed a review petition No. 1370/97 before the Apex Court on the ground that the judgment reported in 1992 (2) SCC 683 (supra) already stood reviewed and reversed in the case reported in 1995 (1) SCC 58 and therefore the order passed in the S.L.P. dated 3.3.1997 may be reviewed.
11. However, the Apex Court dismissed the review petition on 13.7.1997. From this the learned counsel emphasised that the law as it exists on the date of passing of the order has to be seen and the judgment reported in 1995 (1) SCC 58 would be applicable only to the assessments which are made after the date of the judgment. According to the learned counsel, the law laid down in fiscal matters has to be applied prospectively.
12. From the above, it can reasonably said that despite the fact that it was brought to the notice of the Apex Court that the earlier view expressed in 1992 (2) SCC 683 stood reversed in 1995 (1) SCC 58; yet the Apex Court did not review the order passed in the SLP inasmuch as the Division Bench judgment of this High Court in Mahavir Coke Industries case was on the basis of the then existing law i.e., 1992 (2) SCC 683 and could not be said to be wrong just because later on that view was upset in 1995 (1) SCC 58. We agree with the learned counsel that law laid down in Tax matters should normally be applied prospectively. No tax was collected by the appellant from the purchasers as per the law then existing.
13. On the basis of what has been observed above, we are of the view that on the day the assessment order was passed and even on the day when the Assistant Commissioner of Taxes passed the order on 31.7.1992 the law then existing was as per 1992 (2) SCC 683 as also the earlier law of this Court and the various other High Courts. The orders of assessment could not be said to be erroneous and prejudicial to the interest of the revenue. We are in respectful agreement with the view expressed by the Punjab & Haryana High Court (supra) that simply because the law has been changed or earlier law laid down has been reversed, that would entitled the revisional authority to reopen the earlier assessments. The learned Single Judge has not gone into this aspect of the matter.
For the foregoing reasons, we allow this appeal and set aside the judgment of the learned Single Judge. Consequently, the Writ Petition stands allowed and the order of the Assistant Commissioner, Taxes Tinsukia dated 31.7.1992 shall stand quashed.
14. There will be no order as to costs.