TaxTMI 
TaxTMI 
2010 (11) TMI 864
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....ers an appeal, the issue or question is required to be decided by the STAT whose order is binding on all the officers/authorities in the Commercial Taxes Depart ment, the applicant and all other dealers of similar goods or transaction for which a clarification has been sought. The binding effect of the ruling of the ARA is removed, on such an appeal being preferred, as the question/ issue is now required to be determined by the Tribunal. The STAT does not fall within the ambit of any of clauses (i) to (iii) of section 67 of the Act and, on the question being finally decided by the STAT, (whichever view it may take, either affirming or overruling the clarification of the ARA), it is the order of the STAT which would bind the quasi-judicial authorities, (assessing, appellate, revisional authorities), and the assessee-dealers under the Act. As observed hereinabove the remedy of an appeal, under the proviso to section 67(4), is not available to a dealer who has not sought a clarification, despite his being bound by the ruling of the ARA under section 67(4)(ii) of the Act. The remedy, hitherto, was for him to suffer an adverse assessment order, thereafter have the appeal under section 3....
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.... of the Act is to be accepted the appellate remedy under section 33(1)(c) would be wholly unnecessary as the order of the ARA would not bind such of those dealers who had not sought a clarification from the ARA. Unlike the proviso to section 67(4) which restricts the right of appeal only to the applicant-dealer, the words used in section 33(1) are "any dealer". The remedy of an appeal under section 33(1)(c) is available to all such dealers in whose cases the assessing/appellate/revisional authorities under the Act have passed orders following the ruling of the ARA. As a result a dealer can now prefer an appeal directly to the STAT, even against an assessment order, without having to prefer an appeal under section 31, provided the assessment order was passed following the ruling of the ARA. A direct appeal is provided to the STAT under section 33(1)(c) as the appellate authority under section 31, being an officer/authority in the Commercial Taxes Department, is also bound by the ruling of the ARA. Likewise a non-applicant dealer would be bound by the ruling of the ARA, under section 67(4)(ii), till such a ruling is set aside, or a view contrary thereto is taken, by the STAT. The ....
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....sitate the conclusion that the said provision is applicable only in the case of an applicant-dealer, and none other. In K.S. Biyani [2005] 142 STC 111 (AP), the question which fell for consideration was whether an appeal lay against an order of the ARA, passed under section 67 of the Act, inasmuch as section 33 made no mention of any such order. Prior to its amendment by Act 4 of 2009, with effect from March 3, 2009, section 33 enabled any dealer, objecting to an order passed or proceeding recorded by (a) any authority/proceeding in an appeal under section 31; or (b) by the Additional Commissioner or Joint Commissioner or Deputy Commissioner under section 21 or section 32 or 38; to prefer an appeal to the Appellate Tribunal. On the ground that section 33 did not provide for an appeal against an order passed under section 67 of the Act, it was contended before a Division Bench of this court that no appeal lay against the order of the ARA to the Tribunal. It is in this context that the Division Bench held that section 67 laid down a complete mechanism as far as the ARA is concerned; the proviso to section 67(4) made it clear that any order passed by the ARA under section....
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.... a clarification/ruling devoid of any principle. II. Would a harmonious construction of the other sub-sections of section 67 with section 67(4)(ii), require the ruling of the ARA to bind only the applicant: It is contended on behalf of the petitioners-dealers that, on a harmo nious construction of various sub-sections of section 67 of the Act, it is evident that the intention of the Legislature is to restrict the binding effect of the ARA's ruling only to the applicant; it is not possible for the applicant to ascertain whether the issue raised in his case has already been raised in respect of any other applicant or assessee, and is pending before any of the forums mentioned in section 67(2); it is difficult for the authority to verify whether the question raised by the applicant is already pending before any officer or authority, as is referred to in section 67(2), in respect of dealers throughout the length and breadth of the State; by necessary implication it must be construed that the power to entertain an application is qua the applicant/dealer, otherwise it would result in the anomaly of the ARA being restrained from entertaining any application just for the reason that ....
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....ould be a futile exercise; and some of the officers of the Depart ment have held that the ruling of the ARA is binding only on the applicant. As is evident from the title of section 67 the clarification/ruling, which the ARA is required to give, is in "advance". The word "advance" means made or given ahead of time. It is only a ruling given ahead of time which is an "advance ruling". The object of giving a clarification in advance is to ensure uniformity in orders of assessment, appellate and revisional orders (other than a revisional order passed by the Commissioner), with regards classification of goods under different entries of the various Schedules to the Act, or the rate of tax applicable to such goods, etc., thereby avoiding conflicting orders being passed by different assessing/appellate/revisional authorities under the Act. It is in furtherance of this object that section 67(2) and (3) of the Act respectively prohibit the ARA, and the officers or authorities in the Commercial Taxes Department, from entertaining an application seeking clarification, or to decide any issue for which an appli cation has been made by an applicant under the section and is pending before the ....
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....quired to be prescribed by way of Rules. Rule 66 of the Rules prescribes the procedure for filing of applications, and disposal thereof, by the Authority for Clar ification and Advanced Ruling. Rule 66(2)(ii) prescribes that the application fee shall be paid by way of crossed demand draft in favour of the Commissioner of Commercial Taxes and, under rule 66(3), on receipt of the application the ARA is required to cause a copy thereof to be forwarded to the assessing or registering authority concerned, and call for any information or records. Sub-rule (4) enables the ARA, after examining such application and any records called for, by order, to either admit or reject the application within 30 days of receipt thereof. Under sub-rule (5) a copy of every order, made under sub-rule (4), shall be sent to the applicant and the authority specified in sub-rule (3). It is evident, from the aforementioned Rules, that the Commissioner of Commercial Taxes is made aware of an application being filed by an appli cant-dealer before the ARA. These Rules also require the assessing/ registering authority, and the applicant, to be informed of an application being admitted, in which event alone can t....
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....14 (SC); [1985] 4 SCC 404). Rules should be consistent with the provisions of the Act. (State of U.P. v. Babu Ram Upadhya [1961] 2 SCR 679). A statutory rule cannot enlarge or restrict the meaning of a section. If a rule goes beyond, or is contrary to, what the section contem plates, the rule must yield to the statute. (Central Bank of India v. Their Workmen [1960] 1 SCR 200.) It is no doubt difficult for the quasi-judicial authorities under the Act, and the assessee-dealers, to be aware of whether or not a matter is pending before the ARA, and likewise for the ARA to know whether quasijudicial proceedings were initiated in respect of other dealers under the Act in respect of similar goods or transaction for which a clarification is sought by the applicant-dealer. While that may necessitate Rules being amended to make provision for intimation, of admission of an application before the ARA, to the Commissioner who in turn can, in exercise of his powers under section 77 of the Act, issue instructions to all the assessing and other quasi-judicial authorities under the Act, (officers of the Commercial Taxes Department subordinate to the Commissioner), regarding pendency of an applic....
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....tutory rules. (Union of India v. Tulsiram Patel [1985] 3 SCC 398). Principles of natural justice can be excluded by a statute. (State of U.P. v. Sheo Shanker Lal Srivastava [2006] 3 SCC 276). Not only can the principles of natural justice be modified but, in exceptional cases, they can even be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion. (Tulsiram Patel [1985] 3 SCC 398). If a statutory provision either specifi cally, or by necessary implication, excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the Legislature or the statutory authority and read into the concerned provision the principles of natural justice. (Union of India v. Col. J.N. Sinha [1970] 2 SCC 458 and Tulsiram Patel [1985] 3 SCC 398). Where an authority functions under a statute, and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by the statute can be claimed nor can the right be narro....
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....le 14 of the Constitution of India. The submission that it is only the applicant who can seek review of the ruling of the ARA under section 67(5) of the Act is not tenable. On a literal construction thereof, it cannot be said that the power of review under section 67(5) can only be exercised by the ARA suo motu or at the instance of the applicant-dealer, for the words used therein are "affected parties". Any dealer who is affected by the ruling/clarification of the ARA would also be entitled to seek review, amendment or revocation of such a ruling. As section 67(4)(ii) also binds dealers, other than the applicant, they would fall within the ambit of "affected parties" under section 67(5) of the Act. Unlike the proviso to section 67(4) where a time-limit of 30 days is prescribed for the applicant-dealer to prefer an appeal before the STAT against the ruling of the ARA, section 67(5), by the use of the words 'at any time', does not prescribe any period of limitation for invoking the ARA's power to review, amend or revoke its earlier ruling. All that is required of an affected dealer, to invoke the said provision, is to show "good and sufficient cause" for seeking review, amendm....
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.... wherein the vires of section 67(4)(iii) of the Act was under challenge, that the petitioners did not choose to submit a reply to the show-cause notice or prefer an appeal to the STAT. It is not open to the quasi-judicial authorities, or the Tribunal, constituted under the Act to examine the vires of a provision of the Act whereby they were created. In such facts and circumstances, we are satisfied that ends of justice would require exercise of our extraordinary jurisdiction under article 226 of the Constitution of India, (which, in L. Chandra Kumar v. Union of India [1997] 105 STC 618 (SC); [1997] 228 ITR 725 (SC); AIR 1997 SC 1125, has been held to be a part of the basic structure of the Constitution of India), to direct the STAT, in case an appeal is filed by the petitioner in W.P. No. 2119 of 2010, to exclude the period, during which the said writ petition was pending on the file of this court, in computing the period of limitation for filing an appeal under the Act. In case the petitioner in W.P. No. 1582 of 2010 files a reply to the show-cause notice, within three weeks from today, the objections raised therein shall be considered on its merits and appropriate orders passed, ....
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....exercise of his powers under section 32(2) of the Act (upon setting aside the order of the Appellate Deputy Commissioner dated September 10, 2010 and restoring the order of the Deputy Commissioner (Commercial Tax) dated February 21, 2010), is under challenge. The peti tioner, a partnership firm dealing in non-petroleum and non-crystalline paraffin wax of less than 0.75 per cent oil and normal waxes, is registered on the rolls of the second respondent. The petitioner has been paying VAT at four per cent from the year 2006 onwards claiming that their goods fall under sub-entry (189) of entry No. 100 of Schedule IV to the Act. The first respondent, after conducting an audit of the accounts of the petitioner for the tax period April, 2006 to November, 2008, opined that the goods sold by them did not fall under sub-entry (189) as the customs tariff code did not tally with the HSN code mentioned in sub-entry (189). The petitioner was called upon to pay tax at 12.5 per cent from September, 2006 onwards. The first respondent passed the assessment order dated February 21, 2009 levying tax at 12.5 per cent treating the goods as falling under the residuary Schedule V to the Act. Aggrieved ....
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.... pleaded, and the grounds taken must be based on factual foundation. (Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO [2007] 5 SCC 447; [2008] 10 RC 426). The foundational facts as to how section 67(4)(ii) of the Act is in violation of article 14 of the Constitution of India have not been stated at all. The test to be applied to determine whether a statutory provision is in violation of article 14 is of "palpable arbitrariness" in the context of the felt needs of the times and societal exigencies informed by experience. (Shashikant Laxman Kale v. Union of India [1990] 4 SCC 366). It is only when a provision of a taxing/fiscal statute is so manifestly/palpably arbitrary as to be in violation of article 14 of the Constitution of India would it be required to be struck down. No such case has been made out. The submissions made by the learned counsel for the petitioners is on the construction of various sub-sections of section 67 of the Act. They would contend that these provisions require the binding effect of the ruling of the ARA to be confined only to the applicant-dealer. For convenience sake, the submissions in this regard are broadly classified i....
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....ion 245S of the Income-tax Act. The learned counsel would rely on K.S. Biyani & Co. v. Authority for Advance Ruling under A.P. VAT Act, Hyderabad [2005] 142 STC 111 (AP) and Prudential Assurance Company Ltd. v. Director of Income-tax [2010] 324 ITR 381 (Bom). On the other hand learned Special Standing Counsel for Commercial Taxes would submit that section 67(4)(ii) of the Act binds dealers, other than the dealer who sought a clarification, in respect of goods or transac tions in relation to which a clarification was sought; any other construction would render either clause (i) or clause (ii) of section 67(4) redundant; that an appeal is now provided under section 33(1)(c) of the Act, consequent to its amendment by Act 4 of 2009, to any dealer who has suffered an order passed by an authority following the ruling of the ARA, would show that the ruling under section 67(4)(ii) applies to dealers other than the applicant also; and any other construction would render such an appellate remedy wholly unnecessary. Before examining the rival contentions it is necessary to note the rele vant provisions of the Act and the Rules made thereunder. Section 67 of the Act relates to clarificat....
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....der admitting the application, and a copy of such order is required to be sent to the applicant, to the authority specified in sub-rule (3), and to the assessing or registering authority concerned. Under sub-rule (11) a copy of the order shall be sent to the applicant, the Commissioner and the officer concerned. While section 67(4)(i) stipulates that the order of the Authority, (i.e., the clarification/ruling given by the ARA) shall be binding on the applicant who sought the clarification, section 67(4)(ii) makes the said order binding in respect of goods or transactions in relation to which a clarification was sought. An applicant-dealer would seek a clarification only in respect of his goods or transactions, and the clarification/ruling would be given only on the question/issue raised by him. As such the question of the clarification/ ruling binding the applicant on matters other than those in respect of their goods and transactions does not arise, more so as the clarification/ruling which the ARA is empowered to give is confined to aspects which relate to the implementation of the Act. If the order of the ARA, under section 67(4), is to bind only the applicant, and not other ....
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.... of Income-tax, A.P. v. Ashoka Engineering Co. [1993] Supp 1 SCC 754). The presumption as to purposive construction applies to taxing statutes as to other Acts. (Commissioner of Central Excise, Pondicherry v. Acer India Ltd. [2004] 137 STC 596 (SC); [2004] 8 SCC 173 and Francis Bennion's Statutory Interpretation, Fourth Edition, page 828). Apart from the emphasis on the letter of the law, the fundamental rule of construction of a taxing statute is not different from that of any other statute. The duty of the court is to give effect to the intention of the Legislature, as that intention is to be gathered from the language employed having regard to the context in connection with which it is employed. (Banarsi Debi v. Income-tax Officer AIR 1964 SC 1742 and AttorneyGeneral v. Carlton Bank [1899] 2 QB 158). The primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. (Unique Butyle Tube Industries P. Ltd. v. U.P. Financial Corporation [2003] 2 SCC 455). The Legislature is deemed to intend and mean what it says. The need for interpretation arises only when the words used in the statute are, on their own terms, am....
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....he statute must be interpreted in their plain grammatical meaning, (Kanai Lal Sur v. Paramnidhi Sadhukhan [1958] SCR 360), and must be construed it in its ordinary sense as it is well recognised that the language used speaks the mind and reveals the intention of the framers. (Commissioner of Income-tax v. T. V. Sundaram Iyengar & Sons (P.) Ltd. [1975] 101 ITR 764 (SC); [1976] 1 SCC 77). The language employed in a statute is the determinative factor of the legislative intent. The Legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect in the words used by the Legislature, the court cannot correct or make up the deficiency, especially when a literal reading thereof produces an intelligible result. (Raghunath Rai Bareja [2007] 2 SCC 230, Prakash Nath Khanna v. Commissioner of Income-tax [2004] 266 ITR 1 (SC); [2004] 9 SCC 686 and Delhi Financial Corpn. v. Rajiv Anand [2004] 11 SCC 625). It would be impermissible to call in aid any external aid of construction to find out the hidden meaning. A statute should be construed according to the intention expressed in the statute itself. (D. D. Joshi (Col.) v. Uni....
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....a sound principle of construction to brush aside words in a statute, as being inapposite surplusage, if they can have a proper application in circum stances conceivable within the contemplation of the statute. (Gurudevdatta VKSSS Maryadit v. State of Maharashtra AIR 2001 SC 1980 and Manohar Lal v. Vinesh Anand [2001] 5 SCC 407). When the legislative intent is found specific mention and expression in the provisions of the Act itself, the same cannot be whittled down or curtailed and rendered nugatory. (Bharathidasan University v. All-India Council for Technical Education [2001] 8 SCC 676). Effect should be given to all the provisions and a construction that reduces one of the provisions to a "dead letter" must be avoided. (Anwar Hasan Khan v. Mohd. Shafi [2001] 8 SCC 540). On a literal construction of clause (ii) of section 67(4), it is evident that the order of the ARA would be binding "in respect of the goods or trans actions in relation to which a clarification was sought" irrespective of whether such goods or transactions relate to the applicant or other dealers. It is no doubt true that such a ruling would bind other dealers, who had not sought a clarification, without th....