2024 (2) TMI 950 - HC - VAT and Sales Tax

Court Overturns Tax on Craft Paper, Cites Precedent and Consistency; Orders Refund of Deposited Amounts.

M/s John Oakey And Mohan Limited Versus The Commissioner Commercial Taxes U.P. Lucknow

The HC ruled in favor of the assessee, overturning the Tribunal's decision to levy entry tax on craft paper purchased from outside the local area. The HC ... Applicability of doctrine of finality and res-judicata - Levy of entry tax on craft paper purchased by the applicant from outside the local area - craft paper purchased by the applicant has been used in manufacturing of coated abrasive sheet (Regmar paper), and is not meant for writing, printing and packing as provided by notification no.104 dated 15.1.09 - non-consideration of identical issue been decided in favour of the applicant by this Hon'ble Court for the assessment year 2010-11 in THE COMMISSIONER COMMERCIAL TAX LKO. VERSUS S/S JOHN OKAY AND MOHAN LTD. [2015 (12) TMI 1898 - ALLAHABAD HIGH COURT] - HELD THAT:- The principles of res-judicata do not apply squarely for one assessment year to the other. However, keeping in mind the doctrine of finality, unless there is a marked change from one assessment year to the other, the department cannot be allowed to take a different stand. The above principle has been upheld by the Supreme Court in a catena of judgments including BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [2006 (3) TMI 1 - SUPREME COURT], wherein the Supreme Court has held Where facts and in a subsequent assessment year are the same, no authority whether qushi-judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision in per-incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter a Bench of superior strength or in some cases to a Bench of superior jurisdiction. In the light of the above, it is clear that as no new facts have emerged in the present case, the questions of law have to be decided in favour of the assessee - Accordingly, the revision petition is allowed. Issues Involved:The issues involved in the judgment are:1. Whether the Tribunal was justified in affirming levy of entry tax on craft paper purchased by the applicant from outside the local area.2. Whether the Tribunal was justified in affirming levy of entry tax on craft paper and not considering the previous decision in favor of the applicant for a different assessment year.Issue 1:The Tribunal upheld the levy of entry tax on craft paper purchased by the applicant from outside the local area, even though it was used in manufacturing coated abrasive sheets and not for writing, printing, or packing as specified in the notification. The High Court noted that a similar issue was decided in favor of the assessee for the assessment year 2010-11, and the department had accepted the decision without appeal. The High Court applied the doctrine of finality, stating that unless there is a marked change from one assessment year to another, the department cannot take a different stand. Citing the Supreme Court's ruling in Bharat Sanchar Nigam Ltd. v. Union of India, the High Court emphasized the importance of precedent when facts remain the same in different assessment years. As no new facts emerged, the High Court decided in favor of the assessee, allowing the revision petition and ordering the return of any deposited amount related to the demand.Issue 2:The second issue raised was whether the Tribunal erred in affirming the entry tax on craft paper without considering the previous decision in favor of the applicant for a different assessment year. The High Court pointed out that the Tribunal had previously ruled in favor of the assessee for the assessment year 2010-11, a decision that was accepted by the department without appeal. The High Court reiterated the principle of finality in judgments, stating that unless there is a significant change in circumstances, the department cannot change its stance from one assessment year to another. Referring to the Supreme Court's ruling in Bharat Sanchar Nigam Ltd. v. Union of India, the High Court emphasized the importance of consistency in tax matters when facts remain the same. As no new facts were presented, the High Court decided in favor of the assessee, allowing the revision petition and ordering the return of any deposited amount related to the demand.