2023 (8) TMI 533 - HC - VAT and Sales Tax

Revisional Authority's Jurisdiction Confirmed for Tax Revision | Milk Cream Taxable under VAT Act

The court upheld the jurisdiction of the Revisional Authority to exercise suo moto revisional powers, rejecting the petitioner's argument that it was done ... Classification of goods - milk cream - tax free item in view of Entries 16 and 23 in Schedule-B of the Act or taxable @ 12.5%/13.75% - exercise of suo moto revisional powers by the 1st respondent - HELD THAT:- As per Section 46(1) of the Act, the 1st respondent may, of his own motion, call for the record of any proceedings which are pending before, or have been disposed of by, any Authority subordinate to him for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein, and on finding the proceedings or the orders prejudicial to the interest of revenue, he may pass such order in relation thereto as he may think fit - Similar provision is contained in the Punjab General Sales Tax Act, 1948. A Division Bench of the Punjab and Haryana High Court in HOTEL OBEROI MOUNTVIEW VERSUS ASSESSING AUTHORITY, UT., CHANDIGARH [1996 (1) TMI 392 - PUNJAB AND HARYANA HIGH COURT] held that though the Revisional Authority has to act of his own motion; he can indeed exercise such power whenever he receives any information about any illegality or impropriety committed by any of his subordinate authorities; that such information may come from any source – whether it be the department or any other person, including an assessee; and the object of giving this power of Revision to the Commissioner is for proper administration of the Act, and it is his duty to see that neither the assessee should be allowed to escape from the tax net, nor should he be required to pay tax ,which he is not liable to pay under the law. In fact the Supreme Court in THE BOARD OF REVENUE, MADRAS VERSUS RAJ BROTHERS AGENCIES [1973 (2) TMI 114 - SUPREME COURT] also held that even an assessee can invoke the suo moto revisional power of the Board of Revenue under the Madras General Sales Tax Act, 1959. The Supreme Court held that such a suo moto revisional power is conferred on the Board to remedy any injustice and it was open to an assessee or the Revenue to bring to the notice of the Board any error made by the subordinate authorities. It held that it is upto the Board to consider whether the case is a fit case for exercising its revisional jurisdiction. The information to exercise suo moto revisional power can come from any source and can even come from the assessee or from the Department itself. In the instant case also, a scientific or technical meaning of the term ‘milk cream’, as is sought to be projected by the assessee, should not be adopted and the popular meaning of milk cream as is commonly understood, should be taken note of, i.e. that it is a product which is different from milk. This is because a person who wishes to buy milk cream would not go to the market and ask for milk. He would only ask for milk cream because it is a separate product though also a milk product. There are no merit in this Revision petition, it is accordingly dismissed. Issues Involved:1. Jurisdiction of the Revisional Authority to exercise suo moto revisional powers.2. Classification of 'milk cream' under the Himachal Pradesh Value Added Tax Act, 2005.Jurisdiction of the Revisional Authority:The petitioner contended that the 1st respondent could not have exercised suo moto revisional powers as it was done under a direction from the Excise and Taxation Commissioner, making the proceedings without jurisdiction. The court rejected this contention, stating that as per Section 46(1) of the Act, the 1st respondent can call for records of any proceedings to satisfy himself of their legality or propriety. The court cited precedents from the Punjab and Haryana High Court and the Supreme Court, affirming that information to exercise suo moto revisional power can come from any source, including the department or the assessee. Therefore, the court found no merit in the petitioner's contention.Classification of 'Milk Cream':The petitioner argued that 'milk cream' should be classified under the same entry as 'fresh milk' and 'pasteurized milk' in the Himachal Pradesh VAT Act, making it tax-free. The petitioner relied on the HSN Classification Entry no. 16 and a precedent from the Supreme Court, suggesting that 'milk cream' should be treated as milk. The Department refuted this, stating that 'milk cream' is neither fresh milk nor pasteurized milk and is taxable at 12.5%/13.75%.The Tribunal and the court both held that 'milk cream' is a different product from milk in composition and common parlance. The court emphasized that in the absence of a statutory definition, terms in taxing statutes should be construed in their commercial or trade understanding. The court concluded that 'milk cream' should not be interpreted scientifically or technically but in its popular meaning, which is distinct from milk.Conclusion:The court dismissed the revision petition, holding that the suo moto revisional power was exercised within jurisdiction and that 'milk cream' is taxable as it is a distinct product from milk. Pending miscellaneous applications were also disposed of.