TaxTMI 
TaxTMI 
2019 (8) TMI 416
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.... of the Companies Act, 1956. The petitioner is a Civil Works Contractor engaged in the business of construction. The petitioner is also having Registration Certificate under the provisions of the Gujarat Value Added Tax Act, 2003 ("VAT Act" for short). 3.02. Earlier there was dispute between the State authorities and civil works contractors as to whether the Civil Works Contractors are liable for payment of tax and whether the sale of immovable property in construction scheme can be treated as a deemed sale liable for the Tax. However, the controversy came to be resolved by the Apex Court in view of the judgement delivered in the case of M/s. Larsen & Turbo Ltd. on 26/09/2013, reported in (2014) 1 SCC 708. In the said judgement Apex Court held that the construction contractors are liable for the tax liability and sale of immovable properties in the construction schemes shall be treated as deemed sales liable for payment of tax thereon. Therefore, the Government of Gujarat framed a composition scheme vide Government Resolution No.GST/1014-884-VAT Cell" dated 14/10/2014. By way of the aforesaid Government Resolution dated 14/10/2014, works contractors were extended benefit to pay ....
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....ondent No.2 denied the benefit of the scheme to the petitioner. It is submitted that the the respondent No.2 has failed to appreciate the object and purpose of the scheme framed by the Government in its true spirit and consequently, has erred in rejecting the application preferred by the petitioner for availing the benefit of the scheme. It is contended that since the ground on which the application of the petitioner has been rejected is against the provisions of the scheme framed by the Government, impugned order is required to be quashed and set aside and consequently, holding that the petitioner is eligible for the benefit of the composition scheme framed by the Government. 5.00. SUBMISSION OF THE REVENUE : 5.01. Ms.Maithili Mehta, learned AGP appearing on behalf of the respondents State vehemently opposed the present petition. She contended that the assessments for the said years 2009-10 and 2010-11 were already carried out and prior to such assessment, the petitioner had not claimed any benefit under the scheme in question. She contended that as per the scheme of the year 2014, once the assessment was already carried out in regular mode, without any disclosure or without....
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....009-10 was already concluded on 30.03.2015. Therefore also, petitioner is not entitled to the benefit of the scheme. It is contended that no error has been committed by the revenue in rejecting the application of the petitioner seeking benefit of the scheme. She therefore, prayed to dismiss the petition. However, she has fairly admitted tht the extension was with retrospective effect. 6.00. Heard Mr.Hemani, learned counsel for the petitioner assessee and Ms.Maithili Mehta, learned AGP appearing for the respondents revenue and considered the material on record. 6.01. From the impugned order, it is clear that the application made by the petitioner seeking benefit of the scheme has been rejeted by the respondent authority on the ground that assessment has been framed and the assessment came to be framed prior to payment of taxes under the scheme. Therefore, short question whcih arises for consideration of this Court is whether the petitioner isentitled to the benefits of the scheme or not. 6.02. Clause 10 of the scheme provides that benefit of the composition scheme can be availed even in those cases where "appeal" is pending. The application preferred by the petitioner seeki....
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....led to benefits of the scheme, more particularly when the scheme has been extended with retrospective effect. The respondent authority erred in rejecting the application and denying the benefits of the scheme. When the petitioner made application for availing benefits under the Scheme and the petitioner deposited the requisite amount to avail the benefits of the scheme and when the scheme has been extended with retrospective effect, the petitioner is entitled to have benefits of the scheme. 7.00. The settled legal position on the issue is as under :- 7.01. Prof. H.W.R. Wade, in 'Administrative Law' (6th) Edition, highlighted conception of unfettered discretion in the following words :- "... The common theme of all the authorities so far mentioned is that the notion of absolute or unfettered discretion is rejected. Statutory power conferred for public purposes is conferred as it were upon trust, no absolutely - that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended. Although the Crown's lawyers have argued in numerous cases that unrestricted permissive language confers unfett....
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....must be determined by construing the Act as a whole and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reasons, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court." 7.03. In the case of Breen v. Amalgamated Engineering Union (1971) 2 QB 175, Lord Denning MR said thus : "The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevantly. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith; nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food which is a landmark in modern administrative law." ....
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....ng with public the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions and held : "...This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and nondiscriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the depart....
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....n of the court by proper and adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the court under the Constitution to invalidate the governmental action. This is one of the most important functions of the court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the court must be ready to condemn it . It is a matter of historical experience that there is a tendency in every Government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the cou....
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....smen in distress and only one petrol pump is available, there should be clear, transparent and objective criteria/procedure to indicate who out of the two is to be preferred. Lack of transparency in the system promotes nepotism and arbitrariness. It is absolutely essential that the entire system should be transparent right from the stage of calling for the applications up to the stage of passing the orders of allotment." 7.10. In the case of Shrilekha Vidyarthi v. State of U.P., reported in (1991) 1 SCC 212 : AIR 1991 SC 537 : 1993 AIR SCW 77, the Apex Court unequivocally rejected the argument based on the theory of absolute discretion of the administrative authorities and immunity of their action from judicial review and observed : "...We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available ar....
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.... ".... Every action of the public authority or the person acting in public interest or its acts give rise to public element, should be guided by public interest. It is the exercise of the public power or action hedged with public element becomes open to challenge. If it is shown that the exercise of the power is arbitrary, unjust and unfair it should be no answer for the State, its instrumentality, public authority or person whose acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions as private citizens, simplicitor, do in the field of private law. Its actions must be based on some rational and relevant principles. It must not be guided by traditional or irrelevant considerations.... This Court has rejected the contention of an instrumentality or the State that its action is in the private law field and would be immune from satisfying the tests laid under Article 14. The dichotomy between public law and private law rights and remedies, though may not be obliterated by any straight jacket formula, it would depend upon the factual matrix. The adjud....
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.... all cases relevant criterion should be pre-determined by specific rules or regulations and published for the public. Therefore, the public authorities are required to make necessary specific regulations or valid guidelines to exercise their discretionary powers, otherwise, the salutory procedure would be by public auction. The Division Bench, therefore, has rightly pointed out that in the absence of such statutory regulations exercise of discretionary power to allot sites to private institutions or persons was not correct in law." 7.15. What needs to be emphasized is that the State and/or its agencies/instrumentalities cannot give largesse to any person according to the sweet will and whims of the officers of the State. Every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well defined policy, which shall be made known to the public by publication in the Official Gazette and other recognized modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed ....
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....e of traders desirous to get benefit under this scheme where the assessment, reassessment or revision proceedings are in progress and where the liability of tax, interest and penalty is arising then in such cases the benefit would be granted. 10) The benefit under this scheme will also be available to the cases in which the appeal proceedings are pending. But the trader availing such benefit will have to withdraw his appeal to the extent of the transactions shown in the paragraph 1(b), or appeal will have to be revised accordingly. NEGATIVE COVENANTS: 2 The followings are the negative covenants which provide for those Who shall not be eligible for availing benefit of the composition scheme in question: 11) (a) In the concerned project or the trader, for the transactions other than specified in the paragraph No. 1(b) the trader will not get benefit under this scheme. b) In the concerned project or the trader, case wise, lf there are any irregularities or tax evasion found committed in transactions other than as specified in the paragraph No. 1(b) dealings, then the benefit of this scheme will not be available even for eligible transactions as specifi....
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....heme nowhere debars a trader from availing the benefit in a case where the assessment, reassessment or revision proceedings are not pending; ➢ If a view is taken that the benefit of the scheme can be availed only pending the assessment, reassessment or revision proceedings, then even the "eligible traders" would not be in a position to avail the benefit in respect of the "eligible transactions" in the following scenarios since in either of the following scenarios, the assessment / reassessment / revision proceedings would not be pending: ➢ Where a trader has not filed return at all; ➢ Where a trader has filed return but his case is not selected for assessment, reassessment or revision; ➢ Where a trader has filed return and assessment, reassessment or revision proceedings are concluded. ➢ The State Government never intended to debar the "eligible traders" having the "eligible transactions" from availing the benefit of the scheme on the mere count that the assessment / reassessment / revision proceedings are pending. Had that been the case, then the Legislature would have taken care of such a situation wh....