Bombay High Court
United Spirits Limited vs State Of Maharashtra And 2 Ors on 29 April, 2022
Author: R.D. Dhanuka
Bench: R. D. Dhanuka, S. M. Modak
1 wp l 10092.20
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODGING ) NO. 10092 OF 2020
M/s. United Spirits Limited, ...Petitioner
having its corporate office at 2601 A-Wing ,
Marathon Futurex, Mafatlal Compound
Mills, N.M. Joshi Marg, Lower Parel,
Mumbai - 400 013.
....Versus....
1. State of Maharashtra,
through the Commissioner of Sales Tax,
Vikrikar Bhavan, Mazgaon,
Mumbai - 400 010.
2. The Deputy Commissioner of Sales Tax,
Mum-VAT-E-610, Commissioner of Sales
Tax,
Vikrikar Bhavan, Mazgaon,
Mumbai - 400 010.
3. Assistant Value Added Tax Officer,
The VAT & UTGST Department, Udyog
Bhavan, Third Floor, Navi Daman - 396
210
4. ASK Agencies & Investments Private
Limited, ASK House, 106, Marol Co-
operative Industrial Estate, Off. Andheri
Kurla Road, Andheri (E), Mumbai - 400
059.
5. Damania Enterprises, ...Respondents
Rua Anceto Rosario, Nani Daman, Teen
Batti, Katheria, Nani Daman - 396 210.
Mr.Rohan P. Shah with Mr.Srisabari Rajan, Mr.Cyrus Jal,
Mr.Pravin Musalia, Mr.Mohd. Anajwala and Ms.Alya Khan i/b
Vashi & Vashi for the Petitioners.
2 wp l 10092.20
Ms. Jyoti Chavan, AGP for the State - Respondent Nos.1 to 3.
Mr. Vikram Naik i/b M/s.VOX Law for the Respondent No.4.
Mr. Anupam Dighe with Ms.Chandni Tanna i/b M/s.India Law
Alliance for the Respondent No.5.
Mr. Sriniwas Balasaheb Bharati, Deputy Commissioner of Sales
Tax present in Court.
CORAM : R. D. DHANUKA &
S. M. MODAK, JJ.
DATE OF RESERVE : 23RD FEBRUARY, 2022.
DATE OF PRONOUNCEMENT : 29TH APRIL, 2022.
ORAL JUDGMENT (Per R.D. Dhanuka, J. :-
1. Rule. Ms.Chavan, learned AGP waives service for the respondent nos.1 to 3. Mr.Naik, learned counsel waives service for the respondent no.4. Mr.Dighe, learned counsel waives service for the respondent no.5. Mr.Sriniwas Balasaheb Bharati, Deputy Commissioner of Sales Tax present in Court. Rule is returnable forthwith. By consent of the parties, both the writ petitions were heard together and are being disposed of together.
2. In Writ Petition (Lodging) No.10092 of 2020, the petitioner has prayed for a writ of certiorari for quashing and setting aside the impugned order dated 31 st March, 2020 to the extent that it imposes the tax and interest in respect the sales made by the petitioner to M/s. ASK Agencies and Investments Private 3 wp l 10092.20 Limited (for short "ASK Agencies") from its customs bonded warehouse during the financial year 2015-16.
3. The petitioner also prays for a declaration that the impugned order dated 31st March, 2020 passed by the respondent no.2 to the extent that it imposes tax of Rs.8,11,36,789/- and interest thereon in respect of the sales made by the petitioner to Damania Enterprises during the financial year 2015-16 is arbitrary, illegal and ultra vires and for quashing and setting aside the same. The petitioner also prays for a writ of mandamus to direct the respondent no.2 to confirm that the tax on the goods in question has in fact been paid by Damania Enterprises on resale in Daman and to direct the respondent no.2 or respondent no.3 to file a report in this regard before this Court.
4. It is the case of the petitioner that during the period between 2015-16, the petitioner imported the goods from various countries and upon receipt of the imported goods, the petitioner effected the sales to M/s ASK Agencies. According to the petitioner, when the goods were sold to M/s ASK Agencies, VAT was discharged by M/s ASK Agencies at the rate of 50% and 60% as applicable as the "first point of sale".
5. On 16th March, 2020, the petitioner requested it's Chartered Accountant to verify whether M/s ASK Agencies had sold the goods purchased from the petitioner under Bond to Bond sales in Maharashtra during the year 2015-16 and collected MVAT on the said sales.. The Chartered Accountant 4 wp l 10092.20 issued a certificate confirming payment of MVAT by M/s ASK Agencies with respect to the goods in question.
6. The said M/s ASK Agencies issued an undertaking to the Deputy Commissioner of Sales Tax in respect of the purchase made from the petitioner from the customs bonded warehouse to the effect that the tax paid shall be treated as due discharge and tax liability of the petitioner on the subject products (if any).
7. It is the case of the petitioner that during the relevant period, the petitioner effected the sales to Damania Enterprises at Rs.8,35,87,125/-. It is the case of the petitioner that in the VAT returns of the said Damania Enterprises for the assessment year 2015-16 and 2016-17, provided by the said Tax Consultants, the goods purchased from the petitioner had been shown to have resold and the tax had been paid by Damania Enterprises.
8. It is the case of the petitioner that the representatives of the petitioner visited the offices of Daman VAT authorities to examine the tax payments made by Damania Enterprises in respect of the subject transactions. The concerned authorities however, refused to provide any details on the ground that Damania Enterprises was under investigation.
9. On 28th July, 2020, the petitioner issued a letter requesting the respondent no.3 to provide the petitioner a copy of the VAT and CST returns filed by Damania Enterprises for the period 5 wp l 10092.20 June, 2015 to January, 2017, to confirm that the goods sold by the petitioner to Damania Enterprise for the period June, 2015 to January, 2017 were resold by Damania Enterprises and to confirm that Damania Enterprises had paid applicable tax on the resold goods to third parties. It is the case of the petitioner that the respondent no.3 however, refused to accept the said letter from the representative of the petitioner after perusing the said letter. The petitioner accordingly issued the said letter by post.
10. On 18th July, 2019, the petitioner received a notice from the respondent no.2, the Assessing Officer for both Central Sales Tax and VAT in Maharashtra in the year 2015-16. The petitioner appeared before the respondent no.2 on various dates and filed various documents. On 31st March, 2020, the respondent no.2 passed the impugned assessment order, served on the petitioner on 30th June, 2020. By the said assessment order, the respondent no.2 disallowed the exemption sought by the petitioner under section 5(2) of the Central Sales Tax Act in respect of the sales made by the petitioner from its customers bonded warehouse to the said M/s ASK Agencies in Mumbai, Maharashtra and imposed tax in respect of the said sales transactions.
11. By the said assessment order, the respondent no.2 also sought recovery of the concessional duty in respect of the sales transactions made to Damania Enterprises on account of failure to furnish "C" Forms and imposed interest under section 9(2) of the Central Sales Tax Act read with section 30(2) and 30(3) of the MVAT Act in respect of the balance tax payable including the 6 wp l 10092.20 demands made. By the said assessment order, the respondent no.2 determined the tax payable by the petitioner under the said Central Sales Tax Act at Rs.36,19,02,888/-. It is the case of the petitioner that out of the said amount of Rs.36,19,02,888/-, the petitioner has already paid Rs.13,36,28,471/-. The petitioner therefore, filed this writ petition. The respondentNos. 1 to 3 filed the reply in this writ petition affirmed on 8 th September, 2020, The respondent no.5 filed the reply on `5 th October, 2020. The respondent no.4 filed the reply on 22nd October, 2020.
12. Mr. Rohan Shah, learned counsel for the petitioner invited our attention to various documents annexed to the petition and submits that the petitioner has impugned the assessment order for the financial year 2015-16 only to the extent that it imposes
(a) tax upon the petitioner in respect of the Bond to Bond sales on which VAT has been already paid on "first point of sale" by another entity and (b) their right of tax on the petitioner despite the tax being paid by the Purchasing Dealer (Damania Enterprises) in the Designation State (Daman) on account of non-issuance of "C" Forms. He submits that the said relief is not pressed in view of the "C" Form having been already issued. Learned counsel for Daman Vat Authority made a statement before this Court on 17th September, 2020 that Damania Enterprises has paid the tax in question on re-sale of goods. "C" forms were subsequently issued by Daman Vat Authorities and upon directions of this Court, "C" forms were served upon the respondents.
7 wp l 10092.20
13. In so far as the tax demanded from the petitioner in respect of Bond to Bond sales is concerned, it is submitted by the learned counsel that the goods were sold and transferred by the petitioner from its Bonded Warehouse at Panvel to the bonded warehouse of M/s ASK Agencies at Kalamboli, Navi Mumbai. He invited our attention to paragraph 20 of the affidavit in reply filed by the respondent no.2 in this regard. He submits that based on the law laid down by the Honh'ble Supreme Court applicable at that stage, in case of (Hotel Ashoka ) Indian Tourism Development Corporation vs. Assistant Commissioner of Commercial Taxes and another reported in 2012-TIOL SC-VAT, since the transaction was bond to bond sale to the effect from the bonded warehouse, the sale was treated as a "sale in the course of import" and no tax was paid by the petitioner on the said transaction.
14. It is submitted by the learned counsel that when the said goods were subsequently sold by M/s ASK Agencies in terms of the Notification Vat- 1511- C.R.-57/Taxation-1 dated 30 th April, 2011, VAT was discharged at the applicable rate, on the full value, as the "first point of sale". He relied upon the Chartered Accountants certificate at Exhibit "D" to the petition and would submit that they confirmed the fact that VAT had been paid by M/s ASK Agencies in respect to the goods in question. He also invited our attention to an undertaking executed by the said M/s ASK Agencies confirming payment of VAT.
8 wp l 10092.20
15. Learned counsel for the petitioner placed reliance on the affidavit in reply filed by the respondent no.4 i.e. M/s ASK Agencies in this petition on 14 th October, 2020 confirming the payment of VAT on subsequent sale on the subject goods " as the first point of sale". He also invited our attention to VAT return filed by the said M/s ASK Agencies substantiating the payment made by it during the relevant period. He submits that the assessment of tax paid by the said M/s ASK Agencies is undisputed by the respondents. The assessment order in respect of the tax paid by the said M/s ASK Agencies have become final.
16. Learned counsel for the petitioner invited our attention to the judgment of this Court in case of Commissioner of Sales Tax, Maharashtra vs. M/s.Radhasons International reported in (2019) 64 GSTL 404 (Bom) delivered on 8th February, 2019 and the judgment of the Hon'ble Supreme Court in case of Nirmal Kumar Parsan vs. Commissioner, Commercial Taxes reported in 2020 (1) TMI 800 (SC) delivered on 21st January, 2020 respectively. He submits that the respondent no.2 has disallowed the claim of the petitioner for "sale in the course of import" in light of these subsequent judgments of this Hon'ble Court and the Hon'ble Supreme Court in case of Commissioner of Sales Tax vs. M/s.Radhasons International (supra).
17. It is submitted by the learned counsel that the levy of tax by the respondent no.2 upon the petitioner is ultra vires section 3 of MVAT Act read with Notification Vat- 1511- 9 wp l 10092.20 C.R.-57/Taxation-1 dated 30th April, 2011 on the ground that the levy could be only at the "first point of sale".
18. It is submitted by the learned counsel that as per the scheme of taxation prescribed under sections 3 and 41 of the MVAT Act read with notification No. Vat- 1511- C.R.-57/Taxation-1 dated 30th April, in relation to sales of liquor which are purchased from the registered dealers on or after 1 st May, 1011, tax was required to be paid only at the "first point of sale". He relied upon Exhibit "D" to the said notification issued under section 41(5) of the MVAT Act, 2002.
19. Learned counsel for the petitioner also placed reliance on Trade Circular 4T of 2013 dated 26th June, 2013 issued by the Commissioner of Tax, Maharashtra under the said MVAT Act and also Trade Circular T-8 of 2011 dated 4th May, 2011. He submits that the goods in question would therefore, suffer a single levy at the point of first sale. The said levy in this case was crystallized, and the levy has been extinguished on account of the payment of VAT by M/s ASK Agencies. He submits that since the respondents have already levied the tax in question on the goods in question and has recovered the same from the M/s ASK Agencies, fresh levy that is now proposed in the hands of the petitioner is ultra vires section 3 of the MVAT read with the Notification dated 30th April, 2011 and is beyond the scope and jurisdiction of the charging section and other provisions of the MVAT Act.
10 wp l 10092.20
20. It is submitted by the learned counsel that the said M/s ASK Agencies has rightly discharged the tax as "first point of sale" as per the law laid down at the relevant time decided in case of Indian Tourism Development Corporation (supra). He submits that all the legal proceedings particularly the tax matters on the date when they are being decided by any Court or statutory authority, would be governed by law on the line as laid down by the Hon'ble Supreme Court which prevails on such date. In support of this submission, learned counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Ram Bai vs. Commissioner of Income Tax, (1999) 3 SCC 30, in case of Tripura Ispat vs. Union of India 2021(1) TMI 753.
21. It is submitted by the learned counsel that admittedly the subject transaction was undertaken in the year 2015-16. At the relevant time, the principles of law laid down by the Hon'ble Supreme Court in case of Indian Tourism Development Corporation (Hotel Ashoka) (supra) was to the effect that where goods were in a Bonded Warehouse and were sold prior to clearance from such Warehouse, such sale would be regarded as a sale "in the course of import" and would not be liable to Sales Tax / VAT. The petitioner accordingly did not discharge sales tax when it sold imported goods in its Customs Bonded Warehouse to M/s ASK Agencies and delivered such goods to the Customs Bonded Warehouse to M/s ASK Agencies.
22. It is submitted that, the M/s ASK Agencies rightly discharged the tax on the resale as the "first point of sale". The 11 wp l 10092.20 respondents thus could not have applied the law subsequently declared by this Court or the Hon'ble Supreme Court in case of Grandsons International (supra) or Nirmal Kumar Parsan (supra). The levy on the petitioner amounts to double taxation which is impermissible as per the law settled by the Hon'ble Supreme Court in the case of Union of India vs. Tara Iron and Steel Co. Ltd. 1977 (1) LET J61 (SC) and the judgment in case of Bravura Distributors (P) Ltd. vs. Collector of Customs CC, New Delhi 2004 (170) LET 513 (SC).
23. It is submitted by the learned counsel that in the impugned order, the respondent no. 2 had taken the notice of the fact that the VAT had been already paid on the goods in question by M/s ASK Agencies. The fact of the payment of such tax is not refuted by the respondents. M/s ASK Agencies has already executed an undertaking confirming payment of VAT and also requested the respondents that the such tax payment would be considered as due discharge of the tax liability of the petitioner on the goods in question. He submits that adjudication of tax liability on the petitioner by the respondents to recover tax from the petitioner is contrary to and in the teeth of Articles 265 and 300-A of the Constitution of India.
24. It is submitted by the learned counsel that the impugned order arrives at a finding that the sales made by the petitioner, from its bonded warehouse to the bonded warehouse of M/s ASK Agencies would in fact be the "first point of sale". He submits that even if the finding of the Assessing Authority is considered as correct, without prejudice to the rights and 12 wp l 10092.20 contentions of the petitioner, the entire situation would be revenue neutral. If the tax duty is to be recovered from the petitioner on sale, the corresponding obligation would be to refund the tax collected to M/s ASK Agencies for the very same transaction. In relation to other indirect taxes, the Hon'ble Supreme Court has recognized that where the situation is revenue neutral, there is no jurisdiction for seeking to recover a tax or impose interest or penalty. In support of this submission, learned counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Commissioner of Central Excise vs. Angadpal Industrial Pvt. Ltd., 2015 (325) E.L.T. 228 (S.C.) and Commissioner of Central Excise, Pune vs. Coca-Cola India Pvt. Ltd. 2007 (213) E.L.T. 490 (S.C.).
25. It is submitted that in the said judgment of the Hon'ble Supreme Court, it is held that the transaction in question was liable to VAT under the State VAT law as the sale occurred within the State. Under the constitutional scheme of taxation, pre-GST, VAT was leviable for intra-State sale and CST was leviable for inter-State sale. In this case, the petitioner had sold the imported goods which were in their Bonded Warehouse located at Panvel to Bonded Warehouse of M/s ASK Agencies at Kalamboli, Navi Mumbai.
26. Without prejudice to the aforesaid submissions, it is submitted that no central sales tax which is leviable for inter- State sale could have been levied as the transactions between the two entities were in Maharashtra. The impugned order is 13 wp l 10092.20 contrary to the constitutional scheme of taxation and the judgment of the Hon'ble Supreme Court in Nirmal Kumar Parsan (supra).
27. Learned counsel placed reliance on the following provisions of law.
Article 286(1)(b)
286. Restrictions as to imposition of tax on the sale or purchase of goods (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India Section 5 of Central Sales Tax Act, 1956
5. When is a sale or purchase of goods said to take place in the course of import or export.
(1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in sub-section (1) the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and 14 wp l 10092.20 was for the purpose of complying with, the agreement or order for or in relation to such export.
(4) The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority.
(5) Notwithstanding anything contained in sub-section (1) if any designated Indian carrier purchases Aviation Turbine Fuel for the purposes of its international flight, such purchase shall be deemed to take place in the course of the export of goods out of the territory of India. Explanation. For the purposes of this sub-section, "designated Indian carrier" means any carrier which the Central Government may, by notification in the Official Gazette, specify in this behalf.
Section 3 of MVAT Act The dealers, holding a valid registration certificate under the earlier laws, whose turnover of either of sales or purchases exceeds the specified limits during the financial year 2004-05, shall be deemed to be registered dealer under MVAT Act and shall, therefore be liable to pay tax w.e.f. 1st April, 2005.
1. The dealers, holding a valid registration certificate under the earlier laws, whose turnover of either of sales or purchases has not exceeded the specified limits during the financial year 2004-05, but who have opted to continue their registration certificate (by applying to assessing officer in specified format), shall also be deemed to be registered dealer under MVAT Act and shall, therefore be liable to pay tax w.e.f. 1st April, 2005.
2. New dealers, whose turnover of sales exceeds the prescribed limits during any year, commencing on or after 1st April, 2005, are liable to pay tax from the date on which such limit exceeds.
3. A successor in business of any dealer shall become liable to pay tax on and from the date of succession.
15 wp l 10092.20
4. A dealer, applying for voluntary registration, shall be liable to pay tax from the date of registration.
Section 41(5) of MVAT Act In exercise of the powers conferred by sub-section (5) of section 41 of the Maharashtra Value Added Tax Act, 2002 (Mah. IX of 2005), the Government of Maharashtra hereby, with effect from 1st April 2017, amends the Government Notification, Finance Department No. VAT-1511/C.R.-57/Taxation-1, dated the 30th April 2011 as follows, namely:-- In Schedule I, appended to the said notification, in entries at serial No. 1, 2, 4 and 5, in column (4), for the letters, sign and figures "MRP x 30/130" wherever they occur, the letters, sign and figures "MRP x 35/135" shall be substituted.
Section 23 (2) of the MVAT Act Where the return in respect of any period is filed by a registered dealer by the prescribed date and if the Commissioner considers it necessary or expedient to ensure that return is correct and complete] and he thinks it necessary to require the presence of the dealer or the production of further documents, he shall serve on such dealer, a notice requiring him on a date and at a place specified therein, either to attend and produce or cause to be produced all documents on which such dealer relies in support of his return or to produce such documents or evidence as is specified in the notice". Notice in such cases is issued in Form 301 calling the dealer to attend & to produce or cause to be produced evidence i.e. books of account & other documents/evidence in support of the returns filled by him. Time limit for passing the order is 4 years from the end of the year to which return relates. As per 3rd proviso inserted by Maharashtra Value Added tax (Amendment) Act, 2013, (Mah Act No. 4 of 2013 dtd 20-04- 2013 time limit for passing order for 2008-09 is extended from 31st March 2013 to 30th June 2013.
Definition of Custom Area under Section 2(11) of the Customs Act 14 "customs area" means the area of a customs station [or a warehouse] and includes any area in which imported goods or 16 wp l 10092.20 export goods are ordinarily kept before clearance by Customs Authorities.
Definition of Warehouse Section 2(43) of the Customs Act "warehouse" means a public warehouse appointed under Section 57 or a private warehouse licensed under Section 58.
Definition of Warehouse Goods - Under Section 2(44) of the Customs Act "warehoused goods" means goods deposited in a warehouse;
Section 67 and 68 of the Customs Act Section 67 - Removal of goods from one warehouse to another. The owner of any warehoused goods may, with the permission of the proper officer, remove them from one warehouse to another, subject to such conditions as may be prescribed for the due arrival of the warehoused goods at the warehouse to which removal is permitted.
Section 68 - Clearance of warehoused goods for home consumption. - The importer of any warehoused goods may clear them for home consumption if -
(a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form;
(b) the import duty leviable on such goods and all penalties, rent, interest and other charges payable in respect of such goods have been paid; and
(c) an order for clearance of such goods for home consumption has been made by the proper officer: Provided that the owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of rent, interest, other charges and penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon. Provided further that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force.
17 wp l 10092.20 Section 15 of the Customs Act Date for determination of rate of duty and tariff valuation of imported goods. -
(1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force,
(a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section;
(c) in the case of any other goods, on the date of payment of duty:
Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be. (2) The provisions of this section shall not apply to baggage and goods imported by post.
28. Ms. Chavan, the learned A. G. P. for the respondents on the other hand raised issue of maintainability of this writ petition on the ground that the petitioner could have filed an appeal against the impugned assessment order before the Appellate Authority under the provisions of MVAT Act. In support of this submissions, the learned A. G. P. placed reliance on the judgment of this Court delivered on 16th February, 2022 in Writ Petition No. 12297 of 2021 in case of M/s Mestra A. G. Switzerland Vs. The State of Maharashtra and others and more particularly paragraph No. 17, 19, 24, 25, 26 and 27.
18 wp l 10092.20
29. It is submitted that petitioner is admittedly a registered dealer under the provisions of the MVAT Act along with Central Sales Tax Act, 1956. Prior to 01 st April, 2005, system for levy of tax in Maharashtra in general was Single Point Tax collection system. As a consequence to National consensus for introduction of Value Added Tax, the earlier Bombay Sales Tax Act, 1959 was replaced by the Maharashtra Value Added Tax 2002, which envisages levy of tax on the sale at each stage and contemplates allowing of set off tax paid on purchase. It is submitted that, vide notification dated 30th April, 2011, exemption was granted to specified classes of dealers in respect of sale of liquor to the specified extent subject to fulfilment of specific condition prescribed in the said notification. However, under the provision of MVAT Act, the concept of First Point Sale or Single Point Taxation Scheme under the Bombay Sales Tax Act was replaced by the Multi point Taxation at each stage of transaction.
30. It is submitted that, there is no such provision under the MVAT Act and in the said notification that Value Added Tax cannot be levied if tax has already been paid on the first point of sale by another entity. She submits that, the petitioner is not eligible for exemption of tax on local sales effected by the petitioner to M/s ASK Agencies under the said notification and it is taxed rightly in assessment order as per provisions of law. It is submitted by the learned A. G. P. that U/Sec. 8(4) of the Central Sales Tax Act which provides for concessional rate applies only if purchasing dealer submits a declaration in prescribed Form - C. If the Selling Dealer pays CST at the rate 19 wp l 10092.20 of 2% i. e. at the concessional rate, then he has to produce the declaration in C Forms along with other relevant documents to his Sales Tax Assessing Authority to be eligible to get these goods at concessional rate. She submits that, no such C Form has been produced. If, however, the petitioner produces the declaration in C Form even before the Appellate Authorities, the same can be considered even at this stage.
31. It is submitted by the learned A. G. P. that, the respondents are not assessing the said M/s ASK Agencies and the said assessment order is even otherwise not the subject matter of this writ petition. In this writ petition, the petitioner has impugned the assessment order passed by the respondents in its own case which was passed by the assessing officer U/Sec. 23 of the MVAT Act. Notice was issued by the assessing officer to the petitioner before passing assessment order of the petitioner for the assessment year 2015-2016. The respondents have complied with all the provisions of law before passing the impugned assessment order and, thus no interference of this Court is warranted.
32. The learned A. G. P. invited our attention to the judgment dated 21st January, 2020 of the Hon'ble Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others in Civil Appeal No. 7863 of 2009 and the judgment of this Court in a case of the Commissioner of Sales Tax, Mharashtra State Vs. M/s Radhasons International in Sales Tax Reference No. 52 of 2009 delivered on 08th February, 2019. She submits that 20 wp l 10092.20 judgment of this Court in case of the Commissioner of Sales Tax, Mharashtra State Vs. M/s Radhasons International applies to the facts of this case.
33. It is submitted that, in view of the latest judgment in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra), the judgment of the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) relied by the petitioner would not come to the aid of the case of the petitioner. She submits that, the Assessing Officer has rightly relied upon the latest judgment in a case of M/ s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) and has rightly levied the tax after considering the said judgment and also the provisions of the MVAT Act against the petitioner. She submits that, the said levy of tax in the assessment order against the petitioner is not in violation of any of the provisions of the Constitution of India or the MVAT Act.
34. The learned A. G. P. placed reliance on Section 8(1) to 8(4) of the Central Sales Tax Act, 1956 in support of the submission that the petitioner not having submitted the C Form before the Assessing Officer, could not have claimed concessional rate under this provision.
35. The learned A. G. P. invited our attention to the exemption notification issued U/Sec. 14 of the MVAT Act and would submit that petitioner has not contended before this Court or before the 21 wp l 10092.20 Assessing Officer that case of the petitioner would fall under category 1 or category 2 of the said notification. The petitioner has also not canvassed before this Court as to what type of license was held by the petitioner. The petitioner has failed to demonstrate as to how the tax levied in the assessment order of the petitioner would amount to double taxation. The said M/s ASK Agency has not filed any separate petition.
36. It is submitted by the learned A. G. P. that, though in the impugned assessment order, the assessing officer has invoked the provisions of the Central Sales Tax Act and has directed the petitioner/assessee to pay under the provisions of the said Act, to this extent the order being erroneous, the assessing officer is considering to pass an order of rectification.
37. The learned A. G. P. makes an attempt to distinguish the judgment of the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) on the ground that the Supreme Court had considered the issue in respect of the sale of liquor in a duty free shop. She submits that, the petitioner cannot rely upon assessment order passed by the assessing officer in case of M/s ASK Agencies.
38. Mr. Rohan Shah, the learned counsel for the petitioner in his rejoinder argument submits that, the respondents cannot be allowed to pass any order of rectification at this stage. He invited our attention to the impugned assessment order and 22 wp l 10092.20 would submit that the assessing officer has also proceeded on the premise that the impugned transaction which is subject matter of said assessment order was inter-state sale and had levied tax accordingly under the provisions of the Central Sales Tax Act. He submits that, the learned A. G. P. has however, advanced arguments before this Court totally contrary to the reasons recorded by the Assessing Officer in the impugned assessment order.
39. In so far as issue of alternate remedy raised by the learned A. G. P. for the respondents is concerned, it is submitted by the learned counsel for the petitioner that, since assessing officer has exceeded its jurisdiction, the petitioner is entitled to challenge the said order passed by the Assessing Officer. In support of this submission, the learned counsel placed reliance on the judgment of the Supreme Court in a case of Assistant Commissioner of Sales Tax Vs. Commercial Steel Limited reported in 2021 SCC Online SC 884 and in particular para No. 11.
40. It is submitted by the learned counsel for the petitioner that, the respondents have to collect appropriate levy as per the provisions of law and not according to whims of the respondents. The learned counsel placed reliance on Form 8-B issued by the assessing officer thereby calling upon the petitioner to pay Central Sales Tax in the sum of Rs. 1,95,80,782/-. If according to respondents transaction between the petitioner and said M/s ASK Agency did not come under Sec. 5(2) of the Central Sales Tax, then levy under Central Sales Tax upon the petitioner in 23 wp l 10092.20 the said assessment is ex-facie illegal and ultra vires the provisions of the Central Sales Tax Act and the MVAT Act.
41. In so far as the reliance placed by the learned A. G. P. on the judgment of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra), he relied upon para No. 13 of the said judgment and would submit that in the said judgment the Hon'ble Supreme Court has considered sale amenable to the levy of sales tax under the Bombay Sales Tax Act equivalent to MVAT Act. The Assessing Officer, however, placed reliance on the judgment of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) and went contrary to the said judgment while holding that the petitioner is liable to pay Central Sales Tax. The said order is totally without authority of law and exceeding jurisdiction.
42. It is submitted by the learned counsel for the petitioner that, for the assessment year 2016-2017, assessing officer has assessed the petitioner under the provisions of the MVAT Act. The two assessment orders levying tax under two different provisions for similar transaction is ex-facie illegal. The petitioner has already filed separate writ petition impugning said assessment order passed by the assessing officer against the petitioner for the assessment year 2016-2017.
43. The learned counsel for the petitioner relied upon Section 3(2) of the MVAT Act and would submit that the levy under the said provision qua goods is in the hands of the dealer. U/Sec.
24 wp l 10092.20 41(5) of the MVAT Act levy is only licensor. The levy of tax on the transaction has been already extinguished in view of the payment thereof already made by M/s ASK Agencies. He submits that the said transaction between the petitioner and M/s ASK Agencies was second point of sale.
44. It is submitted by the learned counsel for the petitioner that, the assessing officer in case of M/s ASK Agencies has accepted the stand of the said Agencies in its assessment order and has accepted the said assessee as an importer of the said goods transacted which were the subject matter of assessment order of the petitioner. He submits that, the tax on the first point sale was already discharged by M/s ASK Agencies. There was no question of further tax payable by the petitioner for the same transaction. He tendered copy of assessment order of M/s ASK Agencies for the assessment year 2015-2016 in support of his submissions and would submit that, said M/s ASK Agencies was an importer on the date of transaction between the petitioner and said agencies. Tax paid by the said M/s ASK Agencies has been already accepted by the Assessing Officer in the assessment order of the said Agencies for the relevant period.
45. The learned counsel placed reliance on Section 15(1)(b) of the Customs Act, 1952 and would submit that rate of duty would be applicable when the goods are cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented by the assessee for clearance U/Sec. 68(1)(5) of the Customs Act. M/s 25 wp l 10092.20 ASK Agencies had cleared the goods for home consumption. The Hon'ble Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) did not consider provisions of Sec. 15 and 58 of the Customs Act in the said judgment.
46. The learned counsel for the petitioner placed reliance on the judgment of the Hon'ble Supreme Court in a case of LML Limited Vs. Collector of Central Excise Kanpur reported in 2002 (3) TMI 49 SC and more particularly paragraph Nos. 3 and 5 in support of the submission that for the purpose of customs duty, the taxable events occurs on the date on which the goods are cleared from a bonded warehouse for home consumption. It is that date, which is relevant for the purpose of rate of customs duty and any additional duty thereon. He submits that in the said judgment the Hon'ble Supreme Court has held that on the dates on which the goods were cleared from the bonded warehouses, the special additional duty, introduced on 01st January, 1998 was already in existence and the assessee was correctly liable to pay the same. He submits that, principles laid down by the Hon'ble Supreme Court in a case of LML Limited Vs. Collector of Central Excise Kanpur (supra) would apply in the facts of this case.
47. It is submitted by the learned counsel for the petitioner that, in the case of Hotel Ashoka (supra) the Hon'ble Supreme Court has laid down the correct law after adverting to its earlier judgment in the case of LML Limited Vs. Collector of Central Excise Kanpur (supra) and would apply to the facts of this case. The 26 wp l 10092.20 judgment of the Hon'ble Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) delivered on 30th January, 2013 did not deal with identical facts and it is clearly distinguishable in the facts of this case. The Supreme Court did not consider issue of single point levy and discharge of liability already paid by the importer. He submits that, once the said M/s ASK Agencies has been already taxed by respondents, the respondents have no power to tax the petitioner for the same goods which amounts to double taxation.
Reasons and Conclusions :
48. The questions that arise for consideration of this Court are as under :
(i) Whether levy imposed by respondent Nos. 1, 2 and 3 is ultra virus Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 ?
(ii) Whether transaction between the petitioner and M/s ASK Agencies and others were governed by the provisions applicable on the date of transaction and also the principles of law laid down by the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another reported in 2012 (276) ELT 433 (SC) or would be governed by the later decision of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others reported in (2020) (1) TMI 800 SC and also judgment of this Court in a case of
27 wp l 10092.20 Commissioner of Sales Tax Maharashtra Vs. M/s Radhasons International [(2019) 64 GSTL 404 (Bom)] ?
(iii) Whether the levy of tax sought to be recovered from the petitioner amounts to double taxation in view of the respondent Nos. 1 and 2 already having collected at the first point of sale from M/s ASK Agencies or not ?
(iv) Whether entire situation in the impugned transactions would be revenue neutral and thus respondent Nos. 1 to 3 could not have demanded separate tax from the petitioner, in view of the said M/s ASK Agencies already having paid the tax "at the first point sale"?
(v) Whether levy of Central Sales Tax is contrary to the constitutional scheme of taxation and contrary to the principles laid down by the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) or not ?
(vi) Whether levy of tax is contrary to Article 265 and 300A of the Constitution of India ?
49. A perusal of the record indicates that, the impugned levy under the assessment year 2016-2017 is in respect of point to point sales. The petitioner has been also levied highest rate of tax despite having been paid on the resale by the purchasing dealer (M/s Damania Enterprises) in the destination state Daman inspite of non issuance of C-Form. During the pendency 28 wp l 10092.20 of this writ petition C-Forms have been already furnished to the petitioner. The petitioner is at liberty to submit such C-Forms before the assessing authority in so far as high rate of tax demanded from the petitioner for not having been submitted the C-form earlier.
50. A perusal of the record further indicates that, during the financial year 2015-2016 goods were sold and transferred by the petitioner from his bonded warehouse located at Panvel to the bonded warehouse of M/s ASK Agencies at Kalamboli, Navi Mumbai. These facts are admitted by the respondent No. 2 in its affidavit in reply and more particularly paragraph No. 20. It is the case of the petitioner that, since the transaction been of bond to bond sale effected from the bonded warehouse, the law laid down by the Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) to treat as a "sale in the course of import" would apply and tax was rightly not paid by the petitioner accordingly. Under notification dated 30 th April, 2011 issued U/Sec. 41(5) of the MVAT Act, when the said goods were subsequently sold by M/s ASK Agencies to M/s Damania Enterprises, VAT was duly discharged at the applicable rate on the full value, "first point of sale". The certificate relied by the petitioner and annexed at Exhibit - D to the petition acknowledges the fact that the VAT had been paid by M/s ASK Agencies in respect of goods in question.
29 wp l 10092.20
51. M/s ASK Agencies has submitted an undertaking to the Deputy Commissioner of Sales Tax in respect of purchase made from the petitioner from the customs bonded warehouses in the sum of Rs. 15,45,23,314/- for the financial year 2015-2016. The said M/s ASK Agencies confirmed that as per their VAT return filed, they had not charged any VAT/CST by the petitioner. M/s ASK Agencies had paid MVAT to the tune of Rs. 13,95,21,605/- in the financial year 2015-2016 and Rs. 1,71,82,455/- in the financial year 2016-2017 on subsequent sale by treating the same as first point of sale as per the scheme of taxation on liquor prescribed under Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30 th April, 2011. In the said undertaking M/s ASK Agencies has further clarified that the tax paid by the said M/s ASK Agencies be treated as due discharge of the tax liability of United Spirits Limited on the subject products (if any).
52. The said M/s ASK Agencies (respondent No. 4) has filed affidavit on 22nd October, 2020 in this writ petition and confirmed that during the financial year 2015-2016, the petitioner from its customs bonded warehouse sold goods (liquor) to the aid M/s ASK Agencies and delivered the goods (liquor) to the customs bonded warehouse of the said M/s ASK Agencies. Both the warehouses i. e. warehouse of the petitioner and the respondent No. 4 are situated in Maharashtra. For all the purchases made by the said M/s ASK Agencies from the petitioner during the financial year 2015-2016 for the total value of Rs. 15,45,23,314/- under VAT/CST was discharged by the said Agencies on the basis that 30 wp l 10092.20 the sale between bond to bond at the relevant time was considered as a 'sale in the course of the import' is exempted from payment of CST.VAT under Section 5(2) of the CST Act.
53. In the said affidavit, it is further stated that, the goods that were purchased by the said M/s ASK Agencies from the petitioner were subsequently sold by the said M/s ASK Agencies and paid MVAT to the tune of Rs. 13,95,21,605/- in the financial year 2015-2016 and Rs. 1,71,82,455/- in the financial year 2016- 2017 at applicable VAT rate of 50% and 60% as applicable treating such sale as the "first point of sale" as per the scheme of taxation on liquor prescribed under Section 3 of the Maharashtra Value Added Tax Act, 2002 read with notification No. VAT/1511/ C.R.-57/Taxation-1 dated 30th April, 2011. The said M/s ASK Agencies annexed a copy of VAT return filed by it to show the payment of tax of the relevant period. It is stated that, the tax paid by said Agencies is not disputed by the Tax Department or the respondent No. 4. In the said affidavit, the respondent No. 4 also confirmed the correctness of the certificate of the Chartered Accountant and the undertaking issued by it as accurate.
54. It is not in dispute that the tax deposited on the said transaction between petitioner and the respondent No. 4 as well as the return filed by the respondent No. 4 are accepted by the respondent Nos. 1 to 3.
55. The respondent No. 5 i.e. Damania Enterprises has also filed an affidavit in this petition on 15 th October, 2020. It is stated in the said affidavit that, during the financial year 2015- 31 wp l 10092.20 2016, it had purchased liquor worth Rs. 8,35,87,125/- from the petitioner. Since it was a inter-state sale from the petitioner in Maharashtra to the respondent No. 5 in Daman made for the purpose of resale by the respondent No. 5 under the provisions of Section 8 of the CST Act and lower rate of tax was paid by the petitioner in the origin state i. e. Maharashtra. The respondent No. 5 upon further sale of the goods purchased form the petitioner has paid full tax in Daman. It is reflected in the VAT Return filed by the respondent No. 5 during the relevant period.
56. The respondent No. 5 confirmed that it had purchased the goods from the petitioner during the relevant period for further sale in Daman and not for home consumption. The respondent No. 5 further confirmed that the respondent No. 5 has paid the entire tax, as payable, on the resale made by the respondent No. 5 of the products purchased from the petitioner. It is stated that, the respondent No. 5 could not procure and provide necessary Forms to the petitioner in time. The respondent No. 5 made an application with the Daman VAT Authorities for issuance of Forms to the petitioner in respect of sales made by the petitioner to the respondent No. 5 during the relevant period. The respondent No. 5 confirmed the VAT Return filed by the respondent No. 5.
57. The Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) has held that, no tax on the sale or purchase of goods can be imposed by any State when the 32 wp l 10092.20 transaction of sale or purchase takes place in the course of import of goods into or export of the goods out of the territory of India. If any transaction of sale or purchase takes place when the goods are imported in India or they are exported from India, no State can impose any tax thereon. The Supreme Court considered the situation whether the goods brought from foreign countries by the assessee had been kept in bonded warehouses and they were transferred to duty free shops situated at International Airport of Bengaluru as and when the stock of goods lying at the duty free shops was exhausted.
58. It is held by the Supreme Court that, when the goods are kept in bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country. In our view, since the goods in question were sold by the petitioner from its bonded warehouse at Panvel to the bonded warehouse of the said M/s ASK Agencies at Kalamboli, New Mumbai, the sale was required to be treated as, "Sale in the course of import" and thus the petitioner rightly did not pay any tax on the said transaction being a bond to bond sale. The case of the petitioner was thus covered by the principles laid down by the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra).
33 wp l 10092.20
59. In the later judgment of the Supreme Court in a case of M/ s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) delivered on 21st January, 2020, the Supreme Court considered the question, "Whether the subject sales (of goods imported from foreign country and after unloading the same on the land mass of the State of West Bengal, kept in the bonded warehouse without payment of customs duty) to foreign bound ships as "ship stores" can be regarded as sale within the territory of the State and amenable to sales tax under the West Bengal Sales Tax Act, 1954 or the West Bengal Sales Tax Act, 1994.
60. In the facts of that case, the assessee after importing foreign goods cigarettes had stored the same in the customs bonded warehouse within the land mass of the State of West Bengal and some of those articles were sold to the Master of a foreign going ship as ship stores, without payment of customs duty. Those goods were escorted to the stated ship under the supervision of the officials of the Customs authority. The Supreme Court held that the sale to be in the course of import, must be a sale of goods and as a consequence of such sale, the goods must actually be imported within the territory of India and further, the sale must be part and parcel of the import so as to occasion import thereof. For the purposes of Customs Act, only upon payment of customs duty the goods are cleared by the customs authorities whence import thereof can be regarded as complete. That would be, however, no impediment for levy of sales tax by the state concerned in whose territory the goods had 34 wp l 10092.20 already landed/unloaded and kept in the bonded warehouse. For seeking exemption, it is necessary that the goods must be in the process of being imported when the sale occurs or the sale must occasion the import thereof within the territory of India.
61. The Supreme Court considered the judgment in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) and held that for a sale or purchase to qualify as a sale or purchase in course of import, the essential conditions are that such sale shall occur before the goods had crossed the customs frontiers of India and the import of the goods must be effected or the import is occasioned due to such sale or purchase. For sale or purchase of goods to be regarded as sale or purchase in course of export, Section 5(1) of the CST Act provides for the following conditions:
(i) the sale or purchase shall occasion such export or (ii) the sale or purchase shall be effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. It is held that, stated sales or appropriation of goods kept in bonded warehouse within the land mass/territory of the State of West Bengal were neither in the course of import or export and more so, were effected beyond the customs port/land customs station area and thus it was a sale amenable to levy of sales tax under the 1954 Act and the 1994 Act, as the case may be, read with Section 4 of the CST Act.
62. The Division Bench of this Court in a case of Commissioner of Sales Tax Maharashtra State Vs. M/s Radhasons International (supra) 35 wp l 10092.20 distinguished the judgment of the Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) on the ground that in the facts of that case, it was found that goods which had been brought from foreign countries had been kept in bonded warehouse and they were transferred to duty free shop situated at the international airport of Bengaluru. The further admitted fact was that the goods were kept in bonded warehouse by execution of bond. When the goods were kept in bonded warehouse, it cannot be said that, they had crossed customs frontiers.
63. The assessing officer in the impugned assessment has wrongly placed reliance on the judgment of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) while levying the Central Sales Tax Act to the petitioner. We shall now consider the issue whether the respondent Nos. 1 to 3 could have levied the Central Sales Tax Act to the petitioner relying upon the judgment of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) taking a view contrary to the view taken by the Supreme Court earlier in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra). The learned counsel for the revenue could not dispute that as per the scheme of taxation prescribed U/Sec. 3 and 41 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30 th April, 2011, in relation to sales of liquor which are purchased from 36 wp l 10092.20 registered dealer after 01.05.2011, tax was required to be paid only at the, "first point of sale."
64. In our view Mr. Shah, the learned counsel for the petitioner rightly placed reliance on the trade circular dated 26.06.2013 issued by the Commissioner of Tax, Maharashtra under the provisions of the MVAT and also trade circular dated 04 th May, 2011. The levy in this case was already crystallized when the judgment of the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) was in force. The levy had been already extinguished on account of the payment of VAT made by M/s ASK Agencies.
65. In view of Section 3 and 41 of the MVAT Act read with Notification No. VAT/1511/C.R.-57/Taxation-1 dated 30 th April, 2011, which are applicable to the facts of this case, the tax was required to be paid only in relation to sales of liquor which were purchased from the registered dealer on or after 01 st May, 2011. This position is also reflected in the trade circular dated 4T of 2013 dated 26th June, 2013. In our view, since the goods in question were transferred from the petitioner to M/s ASK Agencies suffer a single levy at the point of first sale, the tax in question already having been levied on the goods in question a fresh levy proposed to be made by the assessing officer in the hands of the petitioner is clearly in the teeth of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 and is 37 wp l 10092.20 beyond scope and jurisdiction of the charging section and other provisions of the MVAT Act.
66. It is not in dispute that transaction between the petitioner and the said M/s ASK Agencies was undertaken in the financial year 2015-2016. Since this Court is of the view that the impugned transaction in question was governed by law prevailing on the date of such transaction declared by the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra), the subsequent judgment of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) cannot be pressed in service by the assessing officer. The Supreme Court in a case of Ram Bai Vs. Commissioner of Income Tax (supra) considered a situation where the revenue had pressed in service the subsequent judgment delivered much after reopening of the assessment taking a view different than the view taken by the Full Bench of Andhra Pradesh High Court and was holding the field.
67. The Supreme Court held that Income Tax Officer could not have applied the tax different than held by the said Full Bench for determination whether land in that case was an agricultural land. In our view, the principles laid down by the Hon'ble Supreme Court in the said judgment would apply in the facts of this case. Merely because the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others 38 wp l 10092.20 (supra) and this Court in a case of Commissioner of Sales Tax Maharashtra State Vs. M/s Radhasons International (supra) took different view much later, on the basis of such different view taken subsequently the assessing officer could not press in service the later judgment. We are respectfully bound by the principles laid down by the Hon'ble Supreme Court in a case of Ram Bai Vs. Commissioner of Income Tax (supra).
68. The Tripura High Court in a case of Tripura Ispat Vs. Union of India, Commissioner, Central Goods and Service Tax reported in 2021 (1) TMI 753 held that, all the legal proceedings from the date when they are being decided by any Court would be governed by the law laid down by the Supreme Court prevails on such date. As it often happens, a decision of the Supreme Court is reviewed, reconsidered or overruled by larger Bench, such subsequent decision would undoubtedly clarify the position in law and such declaration would undisputedly apply to all pending proceedings, the proceedings which are closed in the mean time, cannot be reopened on the basis of subsequent declaration of law by the Supreme Court.
69. It is held that, any other view would lead to total anarchy. Based on the judgment of the Supreme Court several proceedings would have been decided. If years later such view is reversed, the parties who had not carried the proceedings in higher forum and thus not kept the proceedings alive, cannot trigger fresh look at the decision already rendered by the competent court on the basis of the previous judgment of the Supreme Court which was 39 wp l 10092.20 correctly applied at the relevant time. The principles laid down by the Tripura High Court in a case of Tripura Ispat Vs. Union of India, Commissioner, Central Goods and Service Tax (supra) applies to the facts of present case. We are in respectful agreement with the view expressed by the Tripura High Court in a case of Tripura Ispat Vs. Union of India, Commissioner, Central Goods and Service Tax (supra). In our view Mr. Shah, the learned counsel for the petitioner is right in his submissions that all the legal proceedings, particularly the tax matters, on the date when they are being decided by any Court or statutory authority would be governed by the law of the land as laid down by the Hon'ble Supreme Court which prevails on such date. The learned A. G. P. for respondent Nos. 1 to 3 could not distinguish the judgment of the Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) or other judgments cited by the petitioner.
70. The learned A. G. P. for respondent Nos. 1 to 3 could not dispute that on the said transaction between the petitioner and said M/s ASK Agencies was attracting levy only on the "first point of sale". The said M/s ASK Agencies had already paid the tax applicable on the said transaction and that the assessing officer of the said M/s ASK Agencies had also accepted the return as filed by said M/s ASK Agencies. In our view, the assessing officer, thus could not have imposed any levy on the same goods on which tax has already been collected on the first point of sale from said M/s ASK Agencies. Such levy imposed upon the 40 wp l 10092.20 petitioner for the tax already paid by M/s ASK Agencies at the first point of sale would amount to double taxation, which is not permission in law. The Supreme Court in a case of Union of India Vs. Tata Iron and Steel Co. Ltd. (supra) has held that, there cannot be double taxation on the same article. Similar view is taken by the Supreme Court in a case of Gaurav Distributors (P) Ltd. Vs. CC New Delhi (supra).
71. A perusal of the impugned assessment order indicates that the assessing officer has rendered a finding that the sale made by the petitioner from its bonded warehouse to the bonded warehouse of M/s ASK Agencies would be "first point of sale". If the respondent Nos. 1 to 3 have to recover tax from the petitioner, it would be the corresponding obligation of the respondent Nos. 1 to 3 to refund the tax collected to M/s ASK Agencies for the very same transaction. The Supreme Court in a case of Commissioner Central Excise Vs. Angadpal Indl. P. Ltd. (supra) has taken an identical view. In our view, since the respondent Nos. 1 to 3 have already collected the tax from M/s ASK Agencies for the same transaction and if according to respondent Nos. 1 to 3, the petitioner was liable to pay tax in respect of same transaction and not said M/s ASK Agencies, it will be a clear case of revenue neutral.
72. The assessing officer, in this case will have to recover the tax from the petitioner and will have to refund the tax to the said M/s ASK Agencies. M/s ASK Agencies has already filed an undertaking to the effect that, the adjustment in respect of said 41 wp l 10092.20 tax can be granted to the petitioner and has not made any claim for refund separately. The principles laid down by the Hon'ble Supreme Court in a case of Commissioner Central Excise Vs. Angadpal Indl. P. Ltd. (supra), in a case of Commissioner of Customs and C. Ex. Vs. Textile Corporation Marathwada Ltd. (supra) and in a case of Commissioner of C. Ex. Pune Vs. Coca-Cola India Pvt. Ltd. (supra) would apply to the facts of the case. We are respectfully bound by the principles laid down by the Hon'ble Supreme Court.
73. A perusal of the assessment order passed by the assessing officer clearly indicates that the assessing officer has levied Central Sales Tax against the petitioner and VAT under MVAT Act. The submissions advanced by the learned A. G. P. on behalf of respondent Nos. 1 to 3 are ex-facie contrary and inconsistent with the impugned order passed by the assessing officer. In the concluding arguments, the learned A. G. P. stated that, there appears to be apparent mistake in the assessment order passed by the assessing officer thereby levying Central Sales Tax by considering the transaction between the petitioner and said M/s ASK Agencies as inter state transaction and thus the assessing officer would take appropriate steps shortly to rectify the said mistake in the assessment order. In our view Mr. Rohan Shah, the learned counsel for the petitioner is right in his submissions that no such rectification is permissible at this stage after several years, when such levy under the provisions of the Central Sales Tax Act against the petitioner is already impugned on this ground by the petitioner as without jurisdiction. We cannot allow the assessing officer, now to pass any order of rectification 42 wp l 10092.20 of the order which is already impugned in this petition at this stage and more particularly after concluding the arguments.
74. So far as the submissions of the learned A. G. P. that the respondent Nos. 1 to 3 are not assessing said M/s ASK Agencies and that the said assessment is not the subject matter of this writ petition is concerned, the learned A. G. P. could not dispute that the tax recovered by the assessing officer of the said M/s ASK Agencies was in respect of the same transaction between the petitioner and the said M/s ASK Agencies. It is not the case of the respondent Nos. 1 to 3 in this matter that in respect of same transaction, the petitioner as well as said M/s ASK Agencies both were liable to pay tax.
75. In our view, if according to respondent Nos. 1 to 3, the transaction between the petitioner and said M/s ASK Agencies does not fall U/Sec. 5(2) of the Central Sales Tax Act, the levy under the Central Sales Tax Act upon the petitioner made by the assessing officer in the impugned assessment order is ex-facie illegal and ultra vires the provisions of the Central Sales Tax Act and MVAT Act and on that ground alone, it deserves to be quashed and set aside. Mr. Rohan Shah, the learned counsel for the petitioner is right in his submission that for the assessment year 2016-2017, the assessing officer having assessed the petitioner under the provisions of the MVAT Act, the two assessment orders levying tax under two different provisions for similar transaction is ex-facie illegal. The petitioner has already filed separate writ petitions impugning the said assessment 43 wp l 10092.20 orders passed by the assessing officer against the petitioner for the year 2016-2017.
76. A perusal of the Section 3 of the MVACT Act clearly indicates that, the levy under the said provision qua goods is in the hands of the dealer. Under Section 41(5) of the MVAT Act levy is only on the licensor. The levy of tax on the transaction has been already extinguished in view of the payment thereof already made by M/s ASK Agencies.
77. In the facts of this case, the rate of customs duty would be applicable when the goods were cleared from the warehouse under Section 68, on the date on which a bill of entry for home consumption in respect of said goods was presented by the assessee for clearance U/Sec. 68(1)(5) of the Customs Act. The said M/s ASK Agencies had cleared the goods for home consumption.
78. The Hon'ble Supreme Court in a case of LML Limited Vs. Collector of Central Excise Kanpur (supra) has held that, for the purpose of customs duty, the taxable events occurs on the date on which the goods are cleared from a bonded warehouse for house consumption. It is that date, which is relevant for the purpose of rate of customs duty and any additional duty thereon. It is held that, on the dates on which the goods were cleared from the bonded warehouses, the special additional duty introduced on 01st January, 1998 was already in existence and the assessee was correctly held liable to pay the said duty.
44 wp l 10092.20
79. The learned A. G. P. for respondent Nos. 1 to 3 vehemently urged that this Court shall not entertain this writ petition on the ground that alternate remedy exists against the impugned order passed by the Assessing Officer. In support of this submission, the learned A. G. P. placed reliance on the judgment of this Court in a case of M/s Mestra A. G. Switzerland Vs. State of Maharashtra and others (supra) and more particularly paragraph Nos. 17, 24 and
26. Per contra, Mr. Rohan Shah, the learned counsel for the petitioner placed reliance on the judgment of the Supreme Court in a case of Assistant Commissioner State Tax and others Vs. Commercial Steel Ltd. (supra) and more particularly paragraph No. 17 thereof. The Supreme Court in the said judgment of Assistant Commissioner State Tax and others Vs. Commercial Steel Ltd. (supra) has held that, the existence of an alternate remedy is not an absolute bar to the maintainability of the writ petition under Article 226 of the Constitution of India. But a writ petition can be entertained in exceptional circumstances where there is (I) a breach of fundamental rights, (ii) a violation of the principles of natural justice, (iii) an excesss of jurisdiction or (iv) a challenge to the vires of the statute or delegated legislation.
80. The petitioner in this case has impugned the assessment order on various grounds including on the ground that tax demanded from the petitioner by the assessing officer is in excess of jurisdiction, without authority of law and unsustainable as the transaction is inter state (within Maharashtra). We have found substance in this submission made by the learned counsel for the petitioner. In our view the present case falls under one of the 45 wp l 10092.20 exception carved out by the Hon'ble Supreme Court for entertaining a writ petition under Article 226 of the Constitution of India. Though an alternate remedy against the impugned assessment order is available to the petitioner since the impugned order is in excess of jurisdiction, bar to the maintainability would not apply to the facts of this case. The judgment of this Court in a case of M/s Mestra A. G. Switzerland Vs. State of Maharashtra and others (supra) relied upon by the learned A. G. P., thus would not advance the case of the respondent Nos. 1 to 3.
81. In our view, the impugned assessment order thereby imposing a levy of fresh tax at this stage on the same transaction which has been already paid by M/s ASK Agencies is contrary to and in the teeth of Articles 265, 286 and 300A of the Constitution of India and thus deserves to be quashed and set aside on this ground also.
82. The writ petition accordingly is allowed in terms of prayer clauses (a) to (c). Rule is made absolute in aforesaid terms. There shall be no order as to costs.
[S. M. MODAK, J.] [R. D. DHANUKA, J.]
bsb/April 22
Digitally signed by
VASANT VASANT ANANDRAO
ANANDRAO IDHOL
Date: 2022.04.30
IDHOL 13:18:57 +0530