TaxTMI 
TaxTMI 
2017 (11) TMI 1025
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.... of the Pondicherry Value Added Tax, 2007and is it sustainable in Law? 3. Whether non-issuing of notification has been issued by the Government for constitution of Pondicherry Value Added Tax Appellate Tribunal and non - appointing of a Judicial Officer to exercise the function conformed under the new Act is sustainable in Law? 4. Whether the Assessing Officer bas got power to levy the higher rate of tax by overlooking the Government order and is it sustainable in Law?" 3. Short facts leading to the revision are that the petitioner, engaging in the business of cotton fabrics, registered under the PVAT Act, 2007 and under the CST Act, 1956, with effect from 25.3.2009. M/s.Gas World at No.177, Thiruvalluvar Salai, Pillaithottam, Puducherry-605 013, is trading in Liquefied Petroleum Gas (LPG) registered, as a branch of the petitioner, with effect from 19.1.2010. 4. According to the petitioner, cotton fabrics is exempted under the Pondicherry Value Added Tax Act, 2007 (hereinafter referred to as "PVAT Act"). LPG is taxable under the PVAT Act, 2007. In the returns, the petitioner reported the sale of LPG for domestic purpose, taxable at 1% and for commercial use,....
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....ent, proposed in the notice, dated 24.10.2014, and determined the tax liability, vide order, dated 19.12.2014, for the year 2011-2012. Similar proceedings were issued for the assessment year 2012-13 and orders were passed on 26.4.2012. 6. Being aggrieved, the petitioner filed an appeal before the Appellate Assistant Commissioner (CT), Commercial Tax Department, Puducherry, 2nd respondent herein, and after hearing both sides, the 2nd respondent passed an order, dated 27.8.2015, setting aside the assessment order, dated 19.12.2014, passed by the 1st respondent, for the Assessment Year 2011-2012. 7. Aggrieved by the same, the Deputy Commercial Tax Officer-II, Commercial Taxes Department, Pondicherry, the 1st respondent herein, filed Tax Appeal No.15 of 2015, to the Pondicherry Value Added Tax Appellate Tribunal and upon consideration of the materials on record, the Appellate Tribunal discussed the case, as follows: "10. The 1st respondent (petitioner), who is doing business in cotton fabrics and is a registered dealer, was also associated with M/s.Gas World, who dealt with Liquefied Petroleum Gas, selling gas cylinders of 12 kgs for domestic use and of 17 kgs for commer....
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....at the rate of 12.5% for commercial cylinders and not 1% uniformly for both LPG for domestic and LPG for commercial use. 12. The books of accounts of the 1st respondent (petitioner) were summoned and there was no response and consequently details were collected from selling agency namely, M/s.SHV Energy Private Limited, Sriperumbathur, Chennai and more than sufficient opportunity was granted. It was only after verifying the sales turn over reported by the 1st respondent (petitioner) and the details received from the selling agency, discrepancy regarding quantities of LPG for commercial use and LPG for domestic use were found out. It was found that the 1st respondent (petitioner) had reported higher taxable turn over of LPG of domestic use taxable at 1% than the LPG for commercial use taxable at 12.5% and the 1st respondent (petitioner) had misclassified and reported the sale turn over of goods at higher rate of ax as if they were goods liable for tax at lower rate of tax. 13. It is seen from the records that the 1st respondent (petitioner) relied on the Judgment in W.P.No.21718/2012 in commonly known as Murugan and Company of the Hon'ble High Court of Madras. ....
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....said notice relied on the policy prevalent in LPG trade that 12 kg cylinders are meant for domestic use and 17 kg cylinders are meant for commercial use. Thiru.A.Selvakumar, Manager of M/s.Linen World in his statement dated 30.09.2013 given 'before the OCTO-II has confirmed the Gas World is selling 12 kg LPG cylinder for domestic use and 17 kg LPG cylinder for commercial purpose." 16. It is therefore seen that the tax to be paid has been worked as follows: Sl. No. Description (In Rs.) 1 Total turnover proposed 1,51,51,450/- 2 Total taxable turn over proposed 1,10,95,809/- 3 Total exempted turn over proposed (turn over of cotton fabric reported) 40,55,641/- 4 Total Tax due on taxable T.O. Proposed 13,43,210/- 5 Less tax paid 3,46,790/- 6 Balance tax to be paid 9,96,420/- 17. In so far as this appeal is concerned, the appellant challenged the order of the 2nd respondent, dated 27.8.2015 relating to the assessment year 2011-2012 (i.e. for the period 1.7.2011 to 31.12.2011). The 2nd respondent held without giving any concrete reasons as follows: "16. In respect of the appellant's....
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....stic use is 1% only with effect from 01.01.2012. But the Appellate Assistant Commissioner (CT), Commercial Taxes Department, Puducherry, second respondent has imposed rate of Tax for sale of Liquefied Petroleum Gas for domestic use is 1%, other than domestic is 12.5%, with effect from 01.04.2011 to 31.12.2011 and 14.5% with effect from 01.12.2012, without any authority /notification. The second respondent has no power to impose the higher rate of Tax on his own Whims and Fancies and the order of the 2nd respondent has been confirmed by the Appellate Tribunal, without going into the merits and factual matrix." 10. In support of the substantial questions of law and inviting the attention of this Court to Section 44(2) of the Pondicherry Value Added Tax Act, 2007, Mr.P.Suresh, learned counsel for the petitioner submitted that no notification has been issued by Government of Pondicherry, appointing a Presiding Officer to Pondicherry Value Added Tax Appellate Tribunal and therefore, the entire proceedings are vitiated. 11. Drawing the distinction between Section 49 of the Pondicherry Value Added Tax Act, 2007 and Section 48 of the Tamil Nadu Value Added Tax Act, 2006, learned coun....
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.... after considering the material on record, the Tribunal has recorded a categorical finding of misclassification and thus, confirmed imposition of tax, which finding does not fall any interference. For the abovesaid reasons, he prayed for dismissal of the Civil Miscellaneous Appeal. Heard the learned counsel appearing for the parties and perused the materials available on record. 16. Let us have a cursory look at the relevant provisions for the purpose of adverting to the rival contentions. Section 44 of the PVAT Act, 2007, deals with appeal and revision and the same is extracted hereunder: "(1) The Government shall appoint a Judicial Officer who is otherwise qualified to be appointed as a District and Sessions Judge to be the Appellate Tribunal and to exercise the functions conferred under the Act: Provided that the Government may entrust the duties of the Appellate Tribunal to the Principal District and Sessions Judge, Puducherry. (2) The Appellate Tribunal shall, with the previous sanction of the Government, make, by notification, regulations consistent with the provisions of this Act and the rules made thereunder for regulating the procedure and ....
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....continue to be valid till the final disposal. (3) The provisions of this Act shall not affect any right, title, obligation or liability already acquired, accrued or incurred under the repealed Act, and subject thereto, anything done or any action taken including any appointment, notice, order, in exercise of any power conferred by that Act, shall be valid till specifically rescinded or withdrawn. (4) Any person liable to pay any tax, fee, penalty, interest or other amount under the repealed Act for any period before the commencement of this Act, shall continue to be liable and such tax, fee, penalty, interest or other amount shall be collected under the provisions of this Act. (5) All arrears of tax, interest, penalty, fee or other amount due at the commencement of this Act, whether assessed or levied before such commencement or assessed or levied after such commencement, may be recovered as if such tax, penalty, interest, fee or other amount is assessed or levied under the provisions of this Act and all methods of recovery including levy of interest, penalty or prosecution provided under this Act shall apply to such arrears as if such amounts are assesse....
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....) Any rule, regulations, notifications or orders made or issued under the repealed Act and continuing in force on the day immediately before the commencement of this Act, shall continue to be in force on or after the commencement of this Act in so far as they are not inconsistent with the provisions of this Act. (9) Notwithstanding anything contained in sub-section (1), the industrial unit existing prior to the commencement of this Act and are exempted from payment of tax due under the repealed Act would continue to be exempt from payment of tax under this Act till the expiry of the period of exemption as prescribed under that Act. Such dealer will not be eligible for the input tax credit until the period of exemption expires. However the input tax credit will be allowed if such dealer opts to pay tax due under this Act. The dealer may exercise this option by submitting in writing before the assessing officer within one month of the commencement of this Act and the option once exercised cannot be revoked." 19. Thus, as rightly contended by the learned Government Advocate (Pondicherry), when notification had already been issued, under the erstwhile Pondicherry General Sa....
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.... within a further period of sixty days, if it is satisfied that the appellant had sufficient cause for not presenting the appeal within the period of sixty days: Provided further that no appeal filed by any person objecting to an order passed under subsection (3) of section 47 shall be entertained unless it is accompanied by satisfactory proof of the payment of tax admitted by the appellant to be due or of such instalments thereof as might have become payable, as the case may be, and twenty-five percent of difference of the tax as ordered by the Appellate Assistant Commissioner and the tax admitted by the appellant: Provided also that the Appellate Tribunal may, if it thinks fit, for reasons to be recorded in writing and subject to furnishing of such security as the Appellate Tribunal may deem fit, admit an appeal against the order of the Appellate Assistant Commissioner with part payment or without any payment of tax as ordered by the Appellate Assistant Commissioner required under this sub-section with a view to mitigate undue hardship which is likely to be caused to the person if the payment of such amount is insisted on. (2) The appeal shall be in the prescribed form and shall ....
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....fter the exercise of due diligence were not within his knowledge or could not be produced by him when the order was made: Provided that no such application shall be preferred more than once in respect of the same order. (b) The application for review shall be preferred in the prescribed manner and within one year from the date on which a copy of the order to which the application relates was served on the applicant in the manner prescribed and where the application is preferred by any party other than a departmental authority it shall be accompanied by such fee not exceeding one hundred rupees as may be prescribed. (7) Except as provided in the rules made under this Ordinance, the Appellate Tribunal shall not have power to award costs to either of the parties to the appeal or review. (8) Every order passed by the Appellate Tribunal under the third proviso to sub-section (1), sub-section (3), proviso to subsection (5) and sub-section (6) shall be communicated in the manner prescribed to the appellant, the respondent, the authority from whose order the appeal was preferred, the Commissioner if he is not such authority, and the Secretary. (9) Every order passed by the Appellate Tribun....
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....d period of sixty days, if it is satisfied that the officer empowered under sub-section (1) or the person against whom an appeal has been preferred, as the case may be, had sufficient cause for not filing the memorandum within the first mentioned period. (3) The appeal and the memorandum of crossobjections shall be in the prescribed form and shall be verified in the prescribed manner and the appeal shall be accompanied by such fee as may be prescribed: Provided that no fee shall be payable by the officer empowered under subsection (1). (4) In disposing of an appeal, the Appellate Tribunal may, after giving the appellant a reasonable opportunity of being heard, and for sufficient reasons to be recorded in writing - (a) in the case of an order of assessment - (i) confirm, reduce, enhance, restore fully or partially, as the case may be, or annul the assessment or the penalty or both; or (ii) set aside the assessment and direct the assessing authority to make a fresh assessment after such further inquiry as may be directed; or (iii) pass such other orders as it may think fit; or (b) in the case of any other order, confirm, cancel or vary such order: Provided that at the hearing o....
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.... direction as it thinks fit, in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to its satisfaction, in such form and in such manner as may be prescribed. (7)(a) The appellant or the respondent may apply for review of any order passed by the Appellate Tribunal under sub-section (4) on the basis of the discovery of new and important facts which after the exercise of due diligence were not within his knowledge or could not be produced by him when the order was made: Provided that no such application shall be preferred more than once in respect of the same order. (b) The application for review shall be preferred in the prescribed manner and within one year from the date of which a copy of the order to which the application relates was served on the applicant in the manner prescribed and where the application is preferred by any party other than a departmental authority, it shall be accompanied by such fee as may be prescribed. (8) Except as provided in the rules made under this Act, the Appellate Tribunal shall not have power to award costs to either of the parties to the appeal or review. (9) Every order passed by the....
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....in v. University of St. Andrews reported in 1909 AC 147, the Hon'ble Apex Court held that, Unless there is any ambiguity it would not be open to the Court to depart from the normal rule of construction which is that the intention of the Legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and construed in the light of surrounding circumstances and constitutional principle and practice. (iii) In Ram Rattan v. Parma Nand reported in AIR 1946 PC 51, the Hon'ble Mr.S.R.Das, held as follows: "The cardinal rule of construction of statutes is to read the statutes literally, that is, by giving to the words their ordinary, natural and grammatical meaning. If, however, such a reading leads to absurdity and the words are susceptible of another meaning, the Court may adopt the same. But if no such alternative construction is possible, the Court must adopt the ordinary rule of literal interpretation. In the present case, the literal construction leads to no apparent absurdity and therefore, there can be no compelling reason for departing from that golden rule of construction.....
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.... could be attributed to the words so as to bring all matters fairly within the scope of such a statute even though outside the letter, if within its spirit or reason. But both Maxwell and Crawford administered a caution in resorting to such a construction. Maxwell says at p.68 of his book: "The construction must not, of course, be strained to include cases plainly omitted from the natural meaning of the words." Crawford says that a liberal construction does not justify an extension of the statute's scope beyond the contemplation of the Legislature. The fundamental and elementary rule of construction is that the words and phrases used by the Legislature shall be given their ordinary meaning and shall be constructed according to the rules of grammar. When the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act speaks for itself. It is a well recognized rule of construction that the meaning must be collected from the expressed intention of the Legislature." (viii) In Commissioner of Sales Tax v. M/s.Mangal Sen Shyamlal reported in 1975 (4) SCC 35 = AIR 1975 SC 1106, the Hon'....
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....of legislation or intention when the language of the provision is plain and unambiguous. It cannot add or subtract words to a statute or read something into it which is not there. It cannot rewrite or recast legislation. It is also necessary to determine that there exists a presumption that the legislature has not used any superfluous words. It is well settled that the real intention of the legislation must be gathered from the language used. ......But the intention of the legislature must be found out from the scheme of the Act. (xii) In Indian Dental Association, Kerala v. Union of India reported in 2004 (1) Kant. LJ 282, the Court held that, The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intention expressed in the Acts themselves. The object of all interpretation is to discover the intention of Parliament, "but the intention of Parliament must be deduced from the language used", for it is well-accepted that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those wo....
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....e statutory provisions. In that situation the judges should not proclaim that they are playing the role of a lawmaker merely for an exhibition of judicial valour. They have to remember that there is a line, though thin, which separates adjudication from legislation. That line should not be crossed or erased. This can be vouchsafed by an alert recognition of the necessity not to cross it and instinctive, as well as trained reluctance to do so . (See Frankfurter: Some Reflections on the Reading of Statutes in Essays on Jurisprudence, Columbia Law Review, p. 51.) 16. It is true that this Court in interpreting the Constitution enjoys a freedom which is not available in interpreting a statute and, therefore, it will be useful at this stage to reproduce what Lord Diplock said in Duport Steels Ltd. v. Sirs [(1980 (1) All.ER 529] (All ER at p. 542c-d): "It endangers continued public confidence in the political impartiality of the judiciary, which is essential to the continuance of the rule of law, if judges, under the guise of interpretation, provide their own preferred amendments to statutes which experience of their operation has shown to have had consequences that memb....
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....ed, and hence the court should neither add nor delete words in a statute. However, in exceptional cases this can be done where not doing so would deprive certain existing words in a statute of all meaning, or some part of the statute may become absurd." (xvii) In Satheedevi v. Prasanna reported in (2010) 5 SCC 622, the Hon'ble Supreme Court held as follows: "12. Before proceeding further, we may notice two well-recognised rules of interpretation of statutes. The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. If the words used are capable of one construction, only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act. The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise Kanai Lal Sur v. Paramnidhi Sadhukhan [AIR 1957 SC 9....
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....t and pending at the commencement of this Act shall continue to be heard and disposed by the said officer or authority subject to the same terms and conditions prescribed for this purpose under the repealed Act until such officer is appointed or such authority is constituted under this Act; (b) any application, appeal, revision or other proceedings arising out of the repealed Act after the commencement of this Act will also continue to be heard and disposed by the officer appointed or authority constituted under the repealed Act subject to the same terms and conditions prescribed for this purpose under the repealed Act until such officer is appointed or such authority is constituted under this Act; (c) any application, appeal, revision or other proceedings arising under this Act will also be heard and disposed by the officer appointed or authority constituted under the repealed Act subject to the terms and conditions prescribed for this purpose under this Act until such officer is appointed or such authority is constituted under this Act; and 29. When the statutory provisions specifically state that the appeals, revisions or other proceedings, will continue to ....