TaxTMI 
TaxTMI 
2023 (12) TMI 727
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.... note of some of the provisions of the Assam 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....
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.... evasion of cess. (1) For prevention of the evasion of cess on Specified Agricultural Produce the Market Committee 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 c....
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....the Act of 1972 would have the power to levy cess. 7. At this stage, this Court finds it relevant to take note of the Constitution (101st 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 k....
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....ing powers on the Union as well as the States including Union Territories with legislature to make laws for levying Goods and Services Tax on every transaction of supply of goods or services or both. It is seen 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 t....
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....ntral cesses and surcharges so far as it relates to supply of goods and services, a notification was published bearing Notification No.12/17-Central Tax (Rate) dated 28.06.2017 by the Government of India, Ministry of Finance, (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 age....
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....he Respondent Board stating inter-alia to withdraw the check gates under the establishment of the Assam State Agricultural Marketing Board w.e.f. from the mid-night of 31.07.2017. Surprisingly, the Additional Secretary in the communication 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....
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.... 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 increment to an existing 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 entri....
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....which is utilised for a specific purpose. For instance, health cess raises revenue which is utilised for health purposes e.g. building hospitals, giving medicines to the poor, etc. Similarly, education cess raises revenue which is used for building schools or other educational purposes." 16. The above proposition of law would show that what 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....
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....duce bought or sold in a market area. Further to that, after the Amending Act, 2016, the said cess so collected/levied under Section 21 of the Act of 1972 was subsumed by the CGST Act, 2017 and the AGST Act, 2017 as these Statues specifically deal with the levy and collection of tax on intra-State supplies of goods or services or both by the Central 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 decl....
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....e unless the goods are taxable at the point of their sale. Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend Section 4(1) which provides for single-point levy. In cases where there are no exemption orders and the State fixed the second or subsequent sale as point 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 a....
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.... the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017. 23. In the backdrop of the above analysis, let this Court take into account the second point for determination as to whether the petitioners herein would be entitled to the refund of the illegally collected cess under 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 Commi....
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....es, the Respondent Board approached before the Government for granting financial aid for payment of salaries. The Government of Assam, Finance Department granted some financial aids for release of salaries to the employees of the Respondent Board the details of which are herein under:- In the year 2020-21 Rs.27,92,47,471.00 In the year 2021-22 Rs.40,50,00,000.00 In the year 2022-23 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....
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....ty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such 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 c....