TaxTMI 
TaxTMI 
2016 (7) TMI 857
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.... competent appellate authority under the Act. The challenge raised in the petition to Constitutional validity of Section 41C of the Act is also subsequently not pressed into submission. 3. The basic dispute raised in this petition is, when an unit is established as per the Government Resolution dated 04.05.1983 which provides for a mechanism to calculate the Notional Tax Liability of the unit covered under Package Scheme of Incentives, 1983 ('1983 Scheme' for short), whether a different mechanism for calculating the Notional Sales Tax Liability can be introduced with retrospective effect from 01.01.1980 by inserting Section 41B to the Act and Rule 31AA to the Rules, so as to defeat the rights vested in the units established under the 1983 Scheme prior to the insertion of Rule 31AA. 4. According to the petitioners, Section 41B and Rule 31AA, to the extent they are inconsistent with para 2.11 of the 1983 GR, are bad in law, whereas; according to respondent No.2Commissioner of Revenue, the method of determining Cumulative Quantum of Benefits ('CQB' for short) laid down under Section 41B read with Rule 31AA is in consonance with the method prescribed under para 2.11 o....
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....Commissioner of Sales Tax, issued a Certificate of Entitlement to the petitioners on 01.04.1989. As per the said Certificate of Entitlement, the petitioners were exempted from payment of sales tax in respect of the sales and purchases relating to the said industrial unit effected during the period of validity of the said certificate. Thus, according to the petitioners, as the unit was established in the backward area under the 1983 Scheme, the petitioners were entitled for total exemption from the payment of sales tax. The petitioners' unit was also totally exempted from the payment of purchase tax on purchase of raw materials and sales tax on sale of finished products upto the financial ceiling of Rs. 25,96,600/. 9. Subsequent thereto, the State Government has, by its Amendment Act of 1995 titled as, The Maharashtra Tax Laws (Levy and Amendment) Act, 1995 inserted Section 41B and Rule 31AA to the Sales Tax Act. Section 41B empowers the Commissioner of Sales Tax, respondent No.2 herein, to compute the cumulative quantum of benefits raised under entry No.136 of the Schedule to the Notification issued under Section 41 right from 01.01.1980 and also to determine as to whether the....
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....titioners to a worse position than the other similarly placed units in a developed area. It is also taking away the vested rights, acquired by the petitioners under the 1983 Scheme. According to the petitioners, such a vested right cannot be disturbed by any future unilateral revision of the policy. 12. In this view of the matter, it is urged by learned counsel for petitioners that this Court may be pleased to declare Section 41B read with Rule 31AA of the Bombay Sales Act, 1959 to be ultra vires and illegal in so far as it affects the vested rights of the petitioners. The provisions are unconstitutional as well for they contravene the mandate of Articles 14 and 19(1)(g) of the Constitution of India. 13. On behalf of respondent No.2, an affidavit in reply is filed by the Assistant Commissioner of Sales Tax contending, inter alia, that the petition is filed on gross misinterpretation of the 1983 Scheme and ignoring the express and explicit provisions thereof. It is denied that the provisions of Section 41B and insertion of Rule 31AA is contrary to the provisions of the said Scheme. It is submitted that the 1983 Scheme was comprehensive providing specifically how the Notional Sales....
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....ement Certificate. Calculation of CQB, according to the petitioners, was required to be made as per para 2.11 of 1983 GR by considering the maximum tax that would have been payable under the Act and Rules, including the exemption provisions contained therein, if the petitioners' unit was not covered under the 1983 Scheme. As against it, according to respondent No.2, the calculation of CQB was liable to be made as per para 2.11 of the 1988 GR read with Section 41B and Rule 31AA by considering maximum rate of taxes levied under the Schedule to the Act, by ignoring the exemption provisions contained therein. 18. Hence in order to properly appreciate the rival contentions advanced before us by the learned counsel for the petitioners and respondents, it would be enlightening to reproduce the relevant provisions of Government Resolution of 1983 Scheme as under: "2.11 Notional sales tax liability : (a) Sales tax/purchase tax/additional tax that would have been payable by the eligible unit on the purchases of raw materials and sales tax/turnover tax/additional tax that would have been payable by the eligible unit on the sales of finished products/byproducts/ scrap goods of the eli....
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....lative quantum of benefits. (1) The cumulative quantum of benefits received by a dealer (hereinafter referred to as, "the said dealer") to whom a certificate of entitlement has been granted by the Commissioner under entry 136 of the Schedule to the notification issued under section 41 shall be calculated by the Commissioner in respect of any period commencing on or after the January 1, 1980 in the manner prescribed herein. (2) The cumulative quantum of benefits received by the said dealer to whom the said certificate has been granted under the 1979 package scheme of incentives including the amended 1979 Package Scheme of Incentives and the 1983 Package Scheme of Incentives shall be the aggregate of the following sums, that is to say,- (a) a sum equal to the amount of purchase tax which would have been payable on the purchases of raw materials to the Government by the said dealer under any of the provisions of the Act and the amount of additional tax in relation to such purchase tax which would have been payable to the Government if the exemption granted under the said entry was not available; (b) a sum equal to the amount of sales tax which would have been payable by a s....
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....had set up the unit in the backward area based on the terms and conditions in the agreement including the method of calculating the CQB as set out under the 1983 Scheme. However, Section 41B read with Rule 31AA, introduced subsequently by way of amendment in the Act in the year 1995, seeks to provide for a totally different method of calculating the CQB, which amounts to taking away the rights vested in the petitioners under 1983 GR. Therefore, the provisions of Section 41B read with Rule 31AA must be held to be bad in law to the extent they are in conflict with para 2.11 of 1983 GR. 20. According to learned counsel for the petitioners, as per para 2.11 of the 1983 GR, the notional sales tax liability computed cannot exceed the actual tax liability that would have been incurred by the unit, if not covered under the 1983 Scheme. 21. Relying on the decision of the Apex Court in the case of State of Bihar Vs. Suprabhat Steel Ltd. [1999] 112 STC 258 (SC), learned counsel for the petitioners would submit that since Rule 31AA, inserted with effect from March, 24 1995, prescribes a method for calculating CQB retrospectively from 1st January, 1980, contrary to the method prescribed in th....
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....ct. The exemption notifications do not redefine the maximum rate of taxes. Therefore, para 2.11 of the 1983 GR, as also the provisions contained in the earlier Package Scheme of Incentives referred to the maximum rates of taxes provided under the Schedule to the Act and that position has been clarified by inserting Rule 31AA with effect from 1st January, 1980. Thus, according to him, when 1983 Scheme provides for calculating CQB at the maximum rate, to accept the contention of the petitioners that the CQB has to be calculated at the concessional rate would be contrary to the scheme itself. 24. Having heard learned counsel for the petitioners and the respondents, we considered ourselves to be privileged and assured for the fact that the legal issue, involved in this writ petition, is already set at rest and can be no more called as res integra. We are having completely at our disposal the legal position elucidated and set at rest by the judgment of the Division Bench of this Court in Prasad Power Control Pvt. Ltd. and Another Vs. Commissioner of Sales Tax, Mumbai and Others, [2011] 41 VST 436 (Bom) wherein identical question of law relating to the Package Scheme of 1988 was raised.....
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....le to the BST Act. Where the sales/purchases are covered under the partial/total exemptions granted under the BST Act/BST Rules, then, the sales tax/purchase tax in respect of those sales/purchases becomes payable at the rates prescribed under the exemption provisions. In respect of sales/purchases covered under the exemption provisions, the rate of tax applicable is the rate of tax set out in the exemption provisions and not the rate of tax set out in the Schedule to the BST Act. Thus, computation of tax at the maximum rate arises only when the sales/purchases are covered under the exemption provisions. Where the sales/purchases are not covered under the exemption provisions, the tax is payable at the rate prescribed under the Schedule to the BST Act and there is no question of paying taxes at the maximum rates of tax. 31. Para 2.11 of the 1988 GR neither directly nor indirectly provides that in calculating the CQB availed of by a unit covered under the 1988 Scheme, the exemption provisions contained in the BST Act/BST Rules should be ignored. Para 2.11 of the 1988 GR provides that the notional tax liability of a unit covered under the 1988 Scheme would be the tax payable by a ....
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....ate of tax specified under the local sales tax law. If a unit not covered under the 1988 Scheme sells the electrical goods exclusively to a undertaking engaged in the generation and distribution of electrical energy, then the maximum rate of tax payable by that unit would be at six per cent or four per cent depending upon the period of sales/purchases, in spite of the fact that the rate of tax prescribed under the Schedule to the BST Act is 10 per cent. Similarly, if the unit which is not covered under the 1988 Scheme makes sales/purchases to the undertakings which are not engaged in the generation and distribution of electrical energy, then the exemption provisions would not be applicable and the tax payable by that unit would be at 10 per cent as per the Schedule to the BST Act. Para 2.11 of the 1988 GR neither stipulates that in determining the notional tax liability, the exemption provisions under the BST Act/BST Rules have to be ignored nor does it stipulate that the sales to the undertakings engaged in the generation and distribution of electrical energy should be treated as sales to undertakings which are not engaged in the generation and distribution of electrical energy. T....
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.... retrospective effect, but if that law arbitrarily impairs or seeks to take away the rights vested in the citizens, then such a law must be held to be bad in law to the extent it is made applicable retrospectively. In the present case, the petitioners had a vested right in computing CQB as per para 2.11 of the 1988 GR and since that vested right is sought to be divested by introducing rule 31AA retrospectively, it must be held that rule 31AA to the extent it seeks to apply to the units established under the 1988 Scheme prior to the insertion of rule 31AA is bad in law. 28. While dealing with the reliance placed by learned counsel for the Commissioner on various decisions of the Apex Court in support of the contention that the legislature enjoys a greater latitude in relation to laws in the field of taxation, than the law touching the civil rights and the same extends to the enactment of legislation with prospective and retrospective effect, it was held that, "....... There is no quarrel with the above proposition of law laid down by the apex court. However, as noticed above, the apex court has also laid down the proposition of law that any rule which is repugnant to the industr....
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....of 1983 but as stated above, undisputedly both the Schemes are similar, though they cover different periods. It may be reiterated that the terms and conditions of both the schemes are more or less the same and the introduction and applicability of Rule 31AA introduced with effect from 29.05.1995 was challenged in both the cases. Hence, though it is submission of learned counsel for the respondent that the said decision cannot be made applicable to the instant case, we are not ready to accept the said submission. After all, one has to consider the ratio decidendi arrived at any particular decision, to know whether it is binding or not and such ratio decidendi has to be gathered from the principles deductible from the judgment and not the conclusion in a particular case, as held in the various authorities of the Supreme Court viz. The Regional Manager and Anr. Vs. Pawan Kumar Dubey, AIR 1976 SC 1766 Deepak Bhadari Vs. Himachal Pradesh State Inds Development Corporation Ltd. (2015) 5 SCC 518 and others, relied upon by the learned counsel for the petitioners. Needless to state that, the binding precedent cannot be ignored on the specious plea that certain aspects were not considered or....