TaxTMI 
TaxTMI 
2024 (7) TMI 462
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....ties, the matter is taken up for hearing. 4. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order dated 18.01.2016 passed by the Gujarat Value Added Tax Tribunal (for short 'the Tribunal') in Revision Application No. 39 of 2004. The petitioner has further prayed for holding that the respondents are not entitled to collect any turnover tax (for short TOT) from the petitioners as per Assessment Orders dated 12.02.2001 and to give remission in the amount of TOT payable by the Oil Marketing Companies on the sale effected by the petitioner. The petitioner has also prayed for quashing and setting aside the revisional order dated 26.12.2003 passed by the Special Commissioner of Sales Tax, Gujarat State-respondent No. 2 and order dated 12.02.2001 passed by the Assistant Commissioner of Sales Tax assessing the liability of TOT amounting to Rs. 3,65,65,350/- by declaring that the petitioner is liable to pay TOT by virtue of statutory exemption as per entry No. 173 under Section 49 (2) of the Gujarat Sales Tax Act, 1969 (for short 'the Act'). It is also prayed to hold and declare that the Oil Marketing Companies....
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....T. As per clause (f) of Sub-section 2 of Section 10A of the Act, sales of goods which are wholly exempted from tax as per Section 49 (2) of the Act were not included in the total turnover of sales for assessing TOT. Therefore, exemptions granted under the Section 49 (2) of the Act were also considered for the purpose of TOT. 5.8. The Government thereafter, issued notification dated 01.04.1993 withdrawing the exemption by way of omission of Section 10A (2) (f) of the Act stating that turnover of sales which were exempted under Section 49 (2) of the Act were now to be calculated and included in total turn over of sales for the purpose of assessment of TOT. Therefore, the sale between ONGC and OMCs which was exempted vide entry No. 173 under Section 49 (2) of the Act was to be considered by including the same in total turnover of sales for the purpose of assessing the TOT and said notification was made effective from 01.04.1993. 5.9. The Assistant Commissioner of Sales Tax (Petroleum-I)(Division-I), Ahmedabad (hereinafter referred to as "assessing authority") by assessing order dated 12.02.2001 passed under Section 41 (3) of the Act assessed the liability of TOT amounting to Rs.....
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....rnover of sales for assessing the turnover of sales for the purpose of assessing total turnover. 5.11. The petitioner-ONGC was made liable to pay TOT for financial year 1993-94 and recovery proceedings were also ordered to be initiated. 5.12. Feeling aggrieved and dis-satisfied by the order dated 24.12.2003 passed by the respondent No. 2, the petitioner preferred revision application No. 39 of 2004 before the Tribunal on the following grounds: "(a) Firstly, TOT was levied / introduced primarily as a single point tax which is to be payable at the last point re-sale between OMCs to end user. (b) Secondly, by virtue of section 7 of GST Act, for the goods as specified in Schedule - II Part A, there cannot be double taxation on the same quantum of turnover of sale of goods. Thus in case of resale of goods, the dealer is liable to get deduction of purchase price from total turnover of sales. (c) Thirdly, as per section 11 of GST Act, the assessing authority has also assessed TOT on re-sale of goods by OMCs which has resulted into a double taxation. The authority have interpreted the provisions of section 10A in isolation only by not reading with Sec.2 (32....
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.... products and TOT is single point tax and therefore, as the sale made by the petitioner ONGC to OMCs is exempted by entry No. 173 under Section 49 (2) of the Act on sale of the petroleum products, the TOT cannot be levied on such sales. 6.3. It was therefore submitted that the ONGC sales petroleum products to OMCs who resale these products to the retailer/end user and therefore, the first point sale is between ONGC and OMCs and last point sale is between OMC and retailer or end user and the respondent-authority has already collected sales tax and TOT on the total turnover on last point sale from OMCs which also includes the first point sale. It was therefore submitted that for purpose of eradicating double tax, the first point sale has been exempted from any tax under the Gujarat Sales Tax by entry No. 173 under Section 49 (2) of the Act. Learned Senior Advocate Mr. S.N. Soparkar submitted that the first point sale between ONGC and OMCs therefore has been exempted from all taxes under the Act and the said sales are also deemed to be exempted from TOT. It was therefore submitted that denying such exemption for the purpose of assessing TOT would result in double taxation which is ....
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.... of Section 10A of the Act was added which specifically states that the TOT would be levied on turnover of sales by dealer who is liable to pay tax under Section 3 and Section 3A of the Act and turnover is required to exceed Rs. 50,00,000/-. It was therefore submitted that as per Section 3(5)(a) of the Act, if sale of petroleum products from ONGC to OMCs are exempted from tax under the Act then such sales are also implicitly exempted from TOT. 6.9. In support of his submissions, learned Senior Advocate Mr. S.N. Soparkar referred to and relied upon the following decisions: (1) Commissioner of Customs (Import Mumbai) versus Dilip Kumar and Company and others reported in 2018 (9) SCC page 1 wherein it is held as under: "24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision making. Insofar as taxation statutes are concerned, Article 265 of the Constitution prohibits the State from extracting tax from the citizens without authority of....
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....ed at more than on stage it is imperative that the sales tax law of the State should specify either expressly or be, necessary implication the single point at which the tax may be levied. Alternatively, it may empower a statutory authority to prescribe such single point for the purpose. Where such point is not prescribed, either by the statute or by the statutory delegate, no compliance is possible with Section 15. The single point at which the tax may be imposed must be a definite ascertainable point so that both the dealer and the sales tax authorities may know clearly the point at which the tax is to be levied. 6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists....
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....vy of duty ; the object of the exemption notification is to forgo due duty and to confer certain benefits upon the manufacturer or the buyer or the consumer through the manufacturer, as the case may be. Of course, that was a decision under the Central Excise Act and the Rules framed thereunder, but, in our opinion, the principle laid down therein is of general application to exemptions under all taxing enactments." (5) Inmauri Gopalam and Mandala Nagendrudu and Others versus The State of Andhra Pradesh and another reported in 1963 14 SCC 742 SC wherein it is held as under: "No doubt, statutes have to be construed as a whole so as to avoid any inconsistency or repugnancy among its several provisions, but if there is nothing to modify, nothing to alter, or nothing to qualify the language of a statute, the words and sentences have to be construed in their ordinary and natural meaning [vide 36 Hals (3rd Edn.) s. 585]. What we are now concerned with is a fiscal provision and it has often been said that there is no equity in a taxing statute and either the subject is within it or not, on the words of the enactment or the rules validly made thereunder. In a taxing statute ther....
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....ector of Central Excise reported in 1990 (2) SCC 358 wherein it is held as under: "On an analysis and comparison of the notifications No. 201/79, No. 102/81 and the circulars, it is clear that the clarification in the form of trade notice issued in respect of rule 56-A was as much applicable to that rule as to notification No. 201/79. [272D] (2) It is true that when in a fiscal provision, is benefit of exemption is to be considered, this' should be strictly considered. But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation. After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade. [272E-F] (3) The quantity of ethylene glycol required to produce a certain quantum of polyester fiber is determined by the chemical reaction. It is not possible to use a lesser quantum of the ethylene glycol to prevent methanol from arising for producing a certain quantity of polyester fiber. It is not as if the appellants have used excess ethylene glycol wontedly to....
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.... of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type. However, when a distinct commercial commodity emerges, it becomes a separate object of taxation so long as it retains its identity: see State of Tamil Nadu v. Pyare Lal Malhotra. In the process of interpretation of the abovesaid three entries and of Judging their interaction and, if need be, of their harmonisation, this fundamental principle must always be borne in mind." (8) Government of Kerala and Another versus Mother Supreior Adoration Convent reported in (2021) 5 SCC 602 wherein it is held as under : "17. In Union of India Versus Wood Papers Ltd. The rule as to exemption notifications in tax statutes was felicitously laid down as follows: (SCC p. 20. c para 4) "4. Entitlement of exemption depends on construction of the expression "any factory commencing production" used in the Table extracted above. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume va....
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....nder: "10. The Commissioner, Trade Tax, Uttar Pradesh vide Circular No. 723 dated 3-5-2005 had inter alia specified that the adjustment under sub-section (3) of Section 3-H shall be accepted in the same manner, as the adjustment of normal amount of trade tax in eligibility certificate under Section 4-A. The interpretative consequence of the circular was read by the assessing authorities to mean that the adjustment in State Development Tax was to be made on proportional basis, rather than including it in the monetary limit specified in Column 5 of Annexure 1 and the limit in the eligibility certificate. 13. It is a general rule of interpretation of taxing statutes that there is no room for any intendment and they are to be read in the light of what is clearly expressed and enforced literatim of ad verbum. There are no equitable considerations or implications or assumptions or presumptions as to import provisions to supply any assumed deficiency in taxing statutes." 6.10. Referring to the above decisions, it was submitted that the respondent No. 2 and the Tribunal have failed to consider that once the sale between the ONGC and OMCs is exempted under Section 49 (2....
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....ng from one percent to one and half percent on the different turn over limits of a sale effected by a dealer of goods specified in Schedule-II and III of the Act when the turnover exceed Rs. 99,99,999/- and such dealer would not be entitled to collect this tax from the buyers. It was therefore submitted that the TOT or single point tax to be paid by the dealer, if its turnover exceeds Rs. 99,99,999/- on the products specified in Schedule II and III. It was further pointed out that by Gujarat Sales Tax Amendment (amendment) Act, 1993, Section 10A was amended and clause (a) was inserted to the effect that for the words "taxable turnover of sales effected by him of all taxable goods", the word "taxable turnover of tax effected by him of all taxable goods and also the goods wholly and partially exempt from the payment of tax under Sub-section (2) of Section 49 was substituted. It was submitted that for purpose of levy of TOT as per Section 10A of the Act, all the turnover would include all the exemption under Section 49 (2) of the Act. It was therefore submitted that the contention raised on behalf of the petitioner that the exemption granted under Section 49 (2) of the Act would opera....
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....ction 3A prescribes the rate of tax, it is beyond doubt that the intention is to withdraw the exemption and make the sale liable to tax at the rate prescribed in the notification. As the power both for the grant of exemption and the variation of the rate of tax vests in the State Government and it is not the requirement of the statute that a notification of recall of exemption is a condition precedent to imposing tax at any prescribed rate by a valid notification under section 3A, we see no force in the contention of the assessee which has been upheld by the High Court. In fact, the second notification can easily be treated as a combined notification-both for withdrawal of exemption and also for providing higher tax. When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the 2nd notification. We would like to point out that the exemption was in regard to a class of goods and while the exemption continues a specific item has now been notified under section 3A of the Act." (2) Sales Tax Officer, Sector IX, Kanpur versus Dealing Daily Products and Another reported in 1994 (suppl)(2) SCC 639 w....
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....f the satisfaction of the Government that a change in the policy was necessary in the "public interest". The courts, do not interfere with the fiscal policy where the Government acts in "public interest" and neither any fraud or lack of bonafides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption Notification under Section 25(1) of the Act." 7.4. It was therefore submitted that it is a matter of policy to the Government to levy the TOT even on the goods which are exempted under Section 49 (2) of the Act and such policy is now part of the statutory provisions and in view of the above decisions, the respondent No. 2 and Tribunal have rightly held that the petitioner-ONGC is liable to pay the TOT on the sales made by it to the OMCs as the turnover of the ONGC is to be enhanced with the turnover of sales between ONGC and OMCs in view of the amendment of Section 10A of the Act by the Gujarat Sales Tax Amendment Act, 1993 with effect from 01.04.1993 in view of the deletion of Section 10A (2) (f) in substitution ....
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....or more but less than five crores of rupees. One and one-fourth per cent of the total turnover. 3. Where the total turnover is five crores of rupees or more. One and one-half per cent of the total turnover. (2) For the purpose of calculating the amount of tax payable under Sub-section (1), the following shall be deducted from the total turnover of sales, namely;- (a) resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 16; (b) resales of goods purchased by the dealer from a Registered dealers otherwise than on a certificate furnished under section 12 or 13; (c) resales of goods purchased by the dealer from a dealer liable to pay tax under Section 4 if a certificate as provided in the proviso to sub-section (1) of Section 4 is furnished; (d) sales of goods or resales of goods to which clause (b) or clause (e) does not apply, to a licensed dealer, a recognized dealer or a commission agent holding a permit, who purchases on behalf of a principal, upon such dealer or commission agent, as the case may be, furnishing certificate provided in section 13, by virtue of which the sales of goods s....
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....oods and also the goods wholly or partially exempt from payment of tax under sub-section (2) of section 49 shall be substituted; (b) in the Table,- (i) in the item at serial No. 4, after the words "exceeds rupees four crores", the words "but does not exceed rupees eight crores" shall be added; (ii) after the item at serial No. 4, the following shall be added, namely ー "5. Where taxable turnover exceeds rupees eight crores Rupees ten lakhs plus two percent. On the taxable turnover in excess of rupees eight crores." (2) in sub-section (2), clauses (d) and (f) shall be deleted. "STATEMENT OF OBJECTS AND REASONS This Bill seeks to amend the Gujarat Sales Tax Act, 1969 with a view to giving effect to the proposals contained in the Budget speech of the Finance Minister in the Legislative Assembly on the 17th February, 1993. "Clause 2.-This clause seeks to amend section 10A. With a view to mobilizing additional resources, it is proposed to introduce a new slab of turnover tax at the rate of 2 per cent. on the turnover exceeding Rs. eight crores. Sales on resales of goods against certificate as provided in secti....
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....d one-half percent on the taxable turnover in excess of rupees four crores.] Where taxable turnover exceeds Rs. Eight Crores Rupees ten lakhs plus two percent on the taxable turnover in excess of rupees eight crores.] (2) For the purpose of calculating the amount of tax payable under sub-section (1), the following shall be deducted from the total turnover of sales, namely :- (a) resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 16; (b) resales of goods purchased by the dealer from a Registered dealer otherwise than on a certificate furnished under section 12 or 13; (c) resales of goods purchased by the dealer from a dealer liable to pay tax under section 4, if a certificate as provided in the proviso to Sub-section (1) of section 4 is furnished; (d) XXX] (e) sales of declared goods; (f) XXX] [(3) **] (4) The turnover tax shall be paid by the dealer before furnishing the declaration or return for the period in which the [turnover of all sales, the turnover of all specified sales or, as the case may be, the aggregate of turnover of all specified sales ....
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....h Gujarat Sales Tax Amendment Act, 1988 provides for levy of TOT, however, in view of the contention of the petitioner that the provisions of Section 49 (2) would override the provisions of Section 10A as once the exemption is granted from the provisions of the levy tax under the Act, the TOT cannot be accepted even on the assumption that the turnover tax is a single point levy, however, single point levy of tax is provided in Section 9 of the Act for the declared goods and there is no provision for single point of levy of sales tax, general sales tax and TOT except for the declared goods. 15. On perusal of Section 10A, it appears that the turn over tax is leviable on the taxable turnover of taxable goods beyond a prescribed threshold and any dealer whose taxable turnover crosses the threshold at whatever stage was liable to pay TOT. As per Section 10A (2) (f) for the purpose of calculating amount of tax payable under Sub-section (1) of Section 10A i.e. TOT, the sales of goods wholly exempted payment of tax under Section 49 was to be deducted and not to be considered as a part of the taxable turnover for levy of the TOT but after the amendment with effect from 01.04.1993, clause....
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....p before the Honourable Supreme Court. The Government of Uttar Pradesh had earlier exempted milk products by a notification under Section 4 of the UP Act and subsequently issued another notification under Section 3A prescribing the rate on sales of ice cream - a milk product. The Honourable Supreme Court after following its earlier decision has held that the exemption granted by earlier notification stood withdrawn by the subsequent one. It was further held that there was no need to issue a specific notification to withdraw the earlier notification. There is no dispute about the fact that the exemption from the payment of the turnover tax on sales exempted under Section 49 (2) was available till 31.03.1993. However, by virtue of an amendment in Section 10A of the Act, the intention of the legislature was clear to withdraw the concession and impose turnover tax on sales exempted under Section 49. As such, the amendment in Section 10A was carried out by the legislature itself and clause (f) of sub-section (2) of Section 10A was deleted with effect from 01.04.1993. By virtue of legislative amendment under Section 10A effective from 01.04.1993, the previous notification dated 05.08.198....
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....e Act has specifically provided for levy of TOT on the goods on the turnover which is exempt under Section 49 of the Act and accordingly, Section 10A(1) was substituted by words "Where the turnover of all sales by any dealer liable to pay tax under Section 3, has first exceeded Rs. 50 lakh (in the year commencing on the 1st April, 1990 and every year thereafter)" there shall be levied a TOT, on the total taxable (taxable TOT effected by him of all taxable goods at the rates specified in the table below). By explanation it is clarified that the explanation "taxable turnover means turnover of all taxable goods as derived after deduction made under Sub-section (2) and the expression "taxable goods" means the goods which or which would have been taxable under this Act but for exemption granted under this Act but for exemption granted under Sub-section (2) of Section 49. Therefore, it is very Cleary that the provision of Section 10A would be applicable on the goods which are taxable but for exemption granted under Sub- section (2) of Section 49. Therefore, the turnover of sales made by ONGC to OMCs which are otherwise exempted under Section 49 (2) of the Act would be considered as a tax....