TaxTMI 
TaxTMI 
2023 (12) TMI 727
X X X X Extracts X X X X
X X X X Extracts X X X X
....Agricultural Produce Market Act, 1972 (for short, 'the Act of 1972') which are pertinent to the instant dispute. The said Act was enacted to provide for better regulation of buying and selling of agricultural produce and the establishment of market for agricultural produce in the State of Assam and for matters connected therewith. In terms with Section 2 (1) (i) of the Act of 1972 "Agricultural produce" has been defined to mean and include any produce whether processed or non-processed of agriculture, horticulture, animal husbandry, pisciculture, sericulture and forest as specified in the Schedule. In terms with Clause (xvi) of Section 2 (1) of the Act of 1972, "Market" has been defined as a regulated market established under the Act of 1972 for the market area and includes a market proper, a principal market-yard and a sub-market-yard or yards, if any. Clause (xvii) of Section 2 (1) of the Act of 1972 defines "Market area" to mean any area declared to be a market area under Section 5 of the Act of 1972. Section 5 of the Act of 1972 empowers the State Government by notification in the Official Gazette to declare the area specified in the notification under Section 4 or any portion ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sail establish check gates at different points within the Market Area whenever felt necessary with the prior approval of the Board. (2) [In case of any specific need for prevention of evasion of cess the Assam State Agricultural Marketing Board may also establish composite check gate(s) for all Market Committees and/or any check gate at any point within any market area of any Market Committee whenever felt necessary with approval of the State Government.]" 5. From a perusal of Sub-Section (1) of Section 21 of the Act of 1972, it reveals that every Market Committee, i.e. a Committee established under Section 7 of the Act of 1972 has been empowered to levy and collect a cess on the agricultural produce bought or sold in the market area at a rate not exceeding two rupee for every one hundred rupees of the aggregate amount for which a specified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable considerations. Sub-Section (2) of Section 21 empowers the Assam State Agricultural Marketing Board to levy and collect cess for any or all of the Market Committees in the market areas in addition to the powers of the Market Committee (but not bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1st Amendment) Act, 2016. The Statement of Objects and Reasons in relation to the Constitution (101st Amendment) Act, 2016 can be discerned from the Statement of Objects and Reasons of the Constitution (One hundred and twenty second) Bill, 2014. The said Statement of Objects and Reasons are reproduced hereinunder:- "STATEMENT OF OBJECTS AND REASONS The Constitution is proposed to be amended to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States including Union Territory with legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. The goods and services tax shall replace a number of indirect taxes being levied by the Union and the State Governments and is intended to remove cascading effect of taxes and provide for a common national market for goods and services. The proposed Central and State goods and services tax will be levied on all transactions involving supply of goods and services, except those which are kept out of the purview of the goods and services tax. 2. The proposed Bill, which seeks further to amend the Constitution, inter alia, provides ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from the said Statement of Objects and Reasons, more particularly Clause 2 (a) that the Constitutional amendment would be carried out to provide for subsuming of various Central indirect taxes and levies such as Central excise duty, Additional excise duty, Excise duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, service tax, Additional customs duty commonly known as Countervailing duty, Special Additional duty of customs, and Central surcharges and cesses so far as they relate to the supply of goods and services. In terms with Clause 2 (b) of the Statement of Objects and Reasons, it was proposed to amend the Constitution thereby subsuming of the State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry Tax, Purchase Tax, Luxury Tax, Taxes on lottery, betting and gambling; and State cesses and surcharges insofar as they relate to supply of goods and services. 9. It is further relevant to take note of that the Constitution (101st Amendment) Act, 2016 was enacted on 08.09.02016 to amend the Constitution. By the said Amending....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Department of Revenue) in exercise of the power conferred by Sub-Section (1) of Section 11 of the CGST Act, 2017 whereby exemption was given to the intra-State supply of services of the description as specified in Column No.3 of the Table from so much of the Central Tax leviable thereon under Sub-Section (1) of Section 9 of the CGST Act, 2017, as is in excess of the said tax calculated at the rate as specified in corresponding entry on Column No.4 of the said Table, unless specified, otherwise subject to the relevant conditions as specified in the corresponding entry in Column No.5 of the said table. At SL. No.54 of the said Table with the Heading 9986, services relating to cultivation of plants and rearing of all form of animals except rearing the horses, for food fibre, fuel, raw material or other similar products or agricultural produce amongst others, services by any Agriculture Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce were exempted. 13. Similar to the notification issued by the Central Government, on 29.06.2017, a notification bearing No.FTX.56/2017/25 was issued by the Finance (Taxation) Dep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unication mentioned that normal realization of cess under Section 21 of the Act of 1972 on specified agricultural commodities from the market area would continue. On the basis of the above, the respondent Board, continued to levy cess under Section 21 of the Act of 1972 even after the CGST Act, 2017 and AGST Act, 2017 coming into force. It is under such circumstances that the instant batch of writ petitions were filed challenging the levy and seeking refund. 15. Before proceeding further, this Court finds it relevant to note that it is well settled by the law laid down that cess means a tax levied for some special purpose which may be levied as an increment to an existing tax. Paragraph Nos.36 to 39 of the judgment of the Supreme Court in the case of Union of India & Another vs. Mohit Mineral (P) Ltd. , reported in (2019) 2 SCC 599 expounds the above proposition which are quoted herein below:- 33. The petitioners have challenged the legislative competence of Parliament to enact the Compensation to States Act, 2017. The petitioners submit that impugned legislation has transgressed the limits of its power granted under the Constitution. It is contended that although the impugned l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which it is an increment. Shinde Bros. v. Commr., Raichur, per dissenting Judge and India Cement Ltd. v. State of T.N. *** The word "cess" means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.) indicates. (Shinde Bros. v. Commr., Raichur, AIR SC at p. 1525)." 37. This Court had considered the expression "cess" in Shinde Bros. v. Commr., Raichur, M. Hidayatullah, J., as he then was in his dissenting opinion has defined the cess ("no contrary opinion was expressed by majority in that regard") in para 39, which is to the following effect : "39. Now the health cess is first assailed on the ground that there is no entry "Health cess" as such in the legislative entries. The word "cess" is used in Ireland and is still in use in India although the word "rate" has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.) indicates. When levied as an ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the Respondent Board and the Market Committees were levying cess in exercise of powers under Section 21 of the Act of 1972 which was nothing but a tax for the purpose of the Act of 1972. This power to tax has to be found in List II of the Schedule 7 of the Constitution. Section 21 of the Act of 1972 shows that the incidence of the levy is upon agricultural produce bought or sold in the market area. This power to levy is traceable to Entry 52 of List II which permitted tax on entry of goods into a local area for consumption, use or sale. Apart from Entry 52 of List II, the power can also be traced to Entry 54 of List II as it stood prior to the Amending Act of 2016 whereby the State had the power to levy tax on sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I. 17. In the backdrop of the above, let this Court take up for consideration the dispute involved. Two questions arise for consideration before this Court. First, (i) whether the respondent Board had the authority and jurisdiction by virtue of Section 21 of the Act of 1972 to levy cess after the Constitution (101st Amendment) Act 2016 and the CGST Act, 2017 and AGST Act, 2017 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Government and the State Government respectively by virtue of Article 246A of the Constitution. It is for that reason the Notification bearing No.12/17-Central Tax (Rate) dated 28.06.2017 and the Notification bearing No.FTC.56/2017/25 dated 29.06.2017 were issued by the Central Government and the State Government respectively to exempt such levy of cess at Serial No.54 of Heading 9986 in both the Notifications. In view of the above analysis, this Court is of the firm opinion that the Respondent Board or the Market Committees could not have levied cess after the coming into effect of the CGST Act, 2017 and AGST Act, 2017. 21. This aspect of the matter can also be looked into from another angle by taking into account the fundamentals of the powers to tax and levy. There are three stages in the imposition of tax. First stage is the declaration of liability, i.e. the part of the statute which determines which person in respect of what property is liable. The second stage is assessment. The assessment particularizes the exact amount which a person liable has to pay. The third stage is the method of recovery if the person taxed does not voluntarily pay. The core of a taxing statute is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales." (emphasis supplied) 37. Thus the Court was of the opinion that when certain goods were subjected to the singlestage tax condition, and the stage identified for the levy was exempted, subsequent sales could not be taxed by the authorities despite the exemption. 38. This position has been reaffirmed in Associated Cement. In Associated Cement the Court was faced with an argument very similar to the one made before us today. The case involved an exemption notification issued by the State Government which reduced the liability to tax under the Bihar Finances Act, 1981 to the extent of tax paid under an earlier Ordinance in respect of entry of goods. The appellant claimed that it was entitled to adjust the entry tax paid under the Entry Tax Act while computing the tax payable under the Bihar Finances Act. The respondent however argued that such adjustment could not be made since the same was exempted, which meant that there was no liability to tax. The Court rejected the argument of the respondent, holding as follows: "17. Crucial question, therefore, is whether the appellant h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der Section 21 of the Act of 1972 after coming into effect of the CGST Act, 2017 and the AGST Act, 2017. To decide the second aspect of the matter, it would be relevant to take into account the pleadings of the parties before this Court. From a perusal of the writ petitions, it reveal that the petitioners are in the business of re-sale and for that purpose bring materials from outside the State of Assam. It is the categorical case of the petitioners that at the time of when they bring the said goods to the State of Assam, the respondent Board had levied cess inspite of coming into effect CGST Act, 2017 as well as the AGST Act, 2017. There is no averment made in the writ petitions that the cess so collected from the petitioners by the respondent Board or by the Market Committees were not passed on to the customers of the petitioners. 24. This Court vide an order dated 25.07.2023 sought for instructions from the respondent Board as to whether any proper account were maintained in respect to the petitioners in the instant batch of writ petitions and how much amount of cess was collected from the petitioners in the meantime pursuant to the filing of the writ petitions. Subsequent ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs.40,50,00,000.00 In the year 2023-24 Rs.7,62,50,000.00 Total Rs.116,54,97,471.00 26. It was also mentioned that on 08.02.2022, an amount of Rs. 1032.37 lakhs in the form of grant-in-aid for payment of salaries etc. in respect of the staff of the Respondent Board under establishment, expenditure for the year was received by the Agriculture Department in the State Bank of India in the name of the Chief Executive Officer of the Respondent Board. It was only upon receipt of the said amount, the salaries of the employees could be released. For the year 2023-24, a sum of Rs. 7,62,50,000/- was received in the month of September, 2023 which was used for payment of salaries of the employees. It has also been stated that inspite of that, 10 months' salary, i.e. from November, 2022 to August, 2023 is still due to employees of the Market Committees and for 7 months for the employees working in the Headquarter of the Respondent Board due to non-availability of fund and non-receipt of the financial grant-in-aid from the Government of Assam. Further to that, it was also mentioned that the Respondent Board as on 22.09.2023 has a bank balance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State i.e. by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched." 35. In Sahakari Khand Udyog Mandal Ltd. v. CCE & Customs this Court has held: "45. From the above discussion, it is clear that the doctrine of 'unjust enrichment' is based on equity and has been accepted and appli....