TaxTMI 
TaxTMI 
2017 (4) TMI 1505
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....appeal preferred under the GVAT Act: (i) Claim of Tax Deducted at Sourtce ("TDS", for short) of Rs. 22,287/- on the strength of original TDS Certificates. (ii) Adjustment of demand raised under the CST Act against the amount of refund accrued under the GVAT Act with circumferential effect on the calculation of interest. The appellant has raised following issues in the second appeal preferred under the CST Act: (i) Impounding of Rs. 1,81,49,641/- under section 9(2) of the CST Act; (ii) Removal of interest of Rs. 13,83,697/- since the demand of Rs. 19,21,802/- is required to be recovered from the refund accrued under the GVAT Act. (3) These appeals were heard on 14-03-2017 and 17-03-2017. The appellant is engaged in the business of sales of machinery to public sector companies in oil and gas sector. Mr.Abhay Desai, the learned Chartered Accountant appearing for the appellant submitted that the first appellate authority had while partly allowing the appeal, had granted appellant's claim for Tax Deducted at Source ('TDS', for short) at Rs. 24,31,372/- only against the total claim of Rs. 24,53,659/-, i.e claim was allowed less by Rs. 22,287/- without showing any reasons for su....
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....he Assessing Authority that the excise invoices were prepared with the sole object of calculation and deposit of Central Excise duty payable and that they were raised on the net value and were showing excise duty and Central Sales Tax separately, only for discharging tax obligation and that these invoices were not served to the customer and that the customer was supplied with only the running bill showing a consolidated price inclusive of taxes. However, the Assessing Authority was not convinced and had impounded the amount of Rs. 1,81,49,641/- under Section 9(2) of the CST Act read with section 31(3) of the GVAT Act, terming it as excess collection of tax without citing any reason in support thereof in the assessment order. Mr. Desai submitted that the appellant had reiterated its claim at the first appeal stage and the first appellate authority was explained the relevant facts including the issue of running bills inclusive of tax, with supporting evidences which were already available in the assessment file and the appeal file. (5) Mr.Desai had, in his support, cited judgment of the Honorable Allahabad High Court in the case of M/s. Swadeshi Polytex Limited, (Trade Tax Revision ....
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....authority was convinced by the submissions of the appellant, and had allowed the appellant's claim of removing the impounding of excess tax relying on section 8A of the CST Act as well as on the judgment of the Swadeshi Polytex Limited (supra), however, as the proposed relief was in excess of prescribed limit set for pre-audit, a draft order was prepared by the first appellate authority and was sent to the higher authority for pre-audit. In the pre-audit proceedings, the higher authority prevailed over the first appellate authority and ultimately the first appellate authority rejected the appellant's plea and confirmed the order of the assessing authority. Mr. Desai further submitted that the first Appellate Authority had passed the Appeal Order following the directions of the higher authority. Mr. Desai submitted that these facts can be confirmed from the records of the First Appeal available in the Office of the first Appellate Authority. Mr.Desai submitted that the Honorable High Court of Gujarat has quashed the similar action of reversing the draft Appeal Order in the case of M/s. Tanuj Agency Private Limited, Special Civil Application No.4984 of 2016, dated 08-06-2016. Mr.Desa....
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....d Appeal Nos.1039 to 1041 of 2005 dated 27-12-2003. In this case, the company had entered into contract with the customer for lease of machinery and had shown the amount of rent, i.e. specified sale of right to use goods, received in the periodical returns and had also paid tax on such specified sale. Subsequently, after quite some time, when the company came to know about the decision of the Hon'ble Supreme Court in the case of 20th Centuty Finance Corporation v. State of Gujarat, (2000) 119 STC 182 (SC), it filed appeal and claimed refund of tax so paid due to misinterpretation. The Tribunal had dismissed the appeal on the ground that the amount of excess collect did not belong to the company nor it belonged to its lessees. Mr.Parmar submitted that the facts of this case are similar to the facts of the appellant's case and as per the reasoning of the Tribunal in para 12 and 13 of the said decision in Essar Services Limited (supra), there is excess collection in the present case also by the appellant and that, the appellant should not be permitted to lodge its claim of refund on the basis of subsequent amendment in section 8(2) of the CST Act. (12) Mr.Parmar has also relied on th....
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....s Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra [1975] 35 STC 571(SC). Mr. Desai submitted that in fact, Hon'ble Bombay High Court in the case of Commissioner of Sales Tax v. Ramkrishna Kulvantrai [1976] 37 STC 564 (Bom), relying on Khemka & Co (supra) has also confirmed the view that excess amount cannot be forfeited under section 9(2) of the CST Act. Mr.Desai also submitted that the decision of this Tribunal in the case of Essar Services Limited (supra) relied upon by the department is not applicable in instant case as the judgment deals with the impounding of tax under local Act and not under the CST Act. (17) We have considered rival submissions and facts of the case. We have also gone through the orders passed by the authorities below and the documents as well as case laws produced before this Tribunal. (18) So far as the issue no.(i) and (ii) under the GVAT Act and issue no.(ii) under the CST Act mentioned in Para (2) above, are concerned, they are, in absence of any contrary submission from the State, allowed on the basis of submissions made by the appellant in the rectification application. (19) So far as issue no.(i) under the CST Act is concerned, we are of....
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....ceptable. We are supported in this view by our decision in Essar Services Limited (supra) wherein, in Para 13, it is observed that .....' Though the appellant has denied that the appellant has made claim on the basis of decision of the Hon'ble Apex Court in the case of 20th Century Finance Corporation (supra), the facts still remain that the appellant has paid the tax as per the returns and only at the assessment stage, the appellant has put forward its case with regard to the refund of the amount paid on the basis of the decision of the Hon'ble Apex Court in the case of 20th Century Finance Corporation (supra). The appellant is therefore, not permitted to lodge its claim of refund on the basis of the decision of the Hon'ble Apex Court in the case of 20th Century Finance Corporation (supra) and on that basis it cannot be said that the appellant has discovered the mistake of law under which it has paid the tax nor the appellant can put forward its claim at the assessment stage on the basis of alleged discovery of mistake of law." Though, this decision is given under the provisions of the local Act, facts of both the cases and applicable principle of law are identical. (22) However,....
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.... (4) or sub-section (8) of section 8, which he knows, or has reason to believe, to be false; or (aa) fails to get himself registered as required by section 7, or fails to comply with an order under sub-section (3A) or with the requirements of sub-section (3C) or sub-section (3E), of that section; or (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter-State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) or clause (c) or clause (d) of sub-section (3) or sub-section (6) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; or (e) has in his possession any form prescribed for the purpose of sub-section (4) or sub-section (8) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; or (f) collects any amount by way of tax in contravention of the p....
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....d enforce payment of tax under the general sales tax law of their State, shall on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any interest or penalty payable by a dealer under the CST Act as if the tax or interest or penalty payable by such a dealer under the CST Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose provisions relating to, inter alia, penalties are applicable accordingly. (28) The Apex Court, in Khemka & Co (supra) followed by the Bombay High Court in Ramkrishna Kulvantrai (supra) followed by this Tribunal in Asian Paints Industrial Coatings Limited (supra), has interpreted section 9(2) of the CST Act in following terms: "Per Ray, C.J., and Khanna, J. - Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Penalty is within assessment proceedings just as tax is within assessment proceedings when the relevant Act by substantive charging provision levies tax as well as penalty. The Central Act conta....
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....enalties, one is irresistibly driven to the conclusion that provisions relating to penalties are special and specific provisions in each Act. They are not part of the 'general sales tax law' of either State or of the Union. Therefore, the reference to penalties in the concluding portion of section 9(2), preceding the proviso, must be interpreted to relate only to the special provisions relating to penalties provided for specifically in the Central Act. The intention to impose a charge upon the subject must be shown by clear and unambiguous language. If the language leaves room for coming to the conclusion that only penalties specified in the Central Act are enforceable by the machinery for enforcement of liability under the general sales tax law of a State, the legislative intent could safely be presumed to be to confine penalties mentioned in the concluding part of section 9(2) to only those mentioned specifically in the Central Act. " In short, the combined reading of section 9(2), 10, 10(f) and the decision of the Apex Court in Khemka & Company (Agencies) Private Limited (supra) and the decision of this Tribunal in Asian Paints Industrial Coatings Limited (supra) makes it abu....