TaxTMI 
TaxTMI 
2025 (10) TMI 327
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.... Maria Correia, Ms Sapna Mordekar, Mr Shivdatt Munj, Mr Vishwadh Sardessai, Ms Maria Correia, and Ms Susan Linhares, Govt. Advocates in the respective petitions. JUDGMENT (PER BHARATI DANGRE, J.) 1. The group of writ petitions before us raise a challenge to Rule 4(2) of the Goa Cess on Products and Substances Causing Pollution (Green Cess) (Functions and Duties of the Competent Authority, Assessment, Levy and Collection of Cess) Rules 2014, framed in exercise of power conferred by the Goa Cess on Products and Substances causing pollution (Green Cess) Act, 2013, as unconstitutional, ultra vires the provisions of Green Cess Act of 2013. Pursuant to the declaration of the said provision to be ultra vires of the provisions of the Green Cess Act of 2013, the writ petitions also seek issuance of writ in the nature of prohibition or any other appropriate writ, restraining the respondents and their subordinates from proceeding with the show cause notices issued on 13.02.2025 and 23.05.2025 including passing of any order/directions pursuant thereto and for quashing and setting aside the show cause notices. 2. In the nine petitions filed by JSW Infrastructure Ltd.,(JSWIL), the....
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....nce, the show cause notice dated 13.02.2025 read thus :- "Since the Dealer failed to produce books of accounts for verification, and there were no documents available on record to calculate the quantity of products and substances causing pollution imported by the Dealer, the same was taken as NIL and the assessment was completed. And whereas, now it is revealed that the Dealer has indeed imported huge quantities of products and substances liable for green cess into the State of Goa during the period and was thus liable to make timely payment of green cess. Hence, it is now clear that the entire turnover of your business assessable to the Green Cess for the assessment period from 01.04.2021 to 31.03.2022 has escaped while doing assessment and has not been assessed to green cess. I, therefore, propose to re-assess you for the aforesaid period under Section 31 of the Goa Value Added Tax Act, 2005 read with Section 4 of the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 (Goa Act 15 of 2013) and Rules as mentioned above". The notice therefore required the noticee to appear in person or through any authorised representa....
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....ted 23.05.2025 are identically worded in each petition addressed to the petitioners and relate to different Financial Years, right from the FY 2014-15 to the FY 2022 -23. But the basis for the levy and imposition of the Cess in each notice remains the same i.e. the provisions of the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 and Rules made thereunder. 5. Before we appreciate the submissions advanced on behalf of the parties, it is necessary to make reference to the statutory scheme comprised in the Green Cess Act of 2013 and Rules made thereunder. The Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013, applicable in the State of Goa, provide for levy and collection of Cess on the products and substances including hazardous substances, which upon their handling or consumption or utilization or combustion or movement or transportation causes pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources of the State of Goa, under the concept of 'polluter pays principle", and also to provide for measures to reduce the carbon footprint left due to such activities and for matters co....
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....he competent authority and the assessment, levy and collection of cess. - (1) The competent authority shall levy and collect cess under section 4 from every person who brings or causes to be brought within the State any products and/or substances at the entry point of the State: Provided that the Government may, extend such levy at any other point or points in addition to the entry point, by Notification published in the Official Gazette. (2) The person who is liable to pay the cess shall pay the same immediately and not later than thirty days, from acquisition of the products and/or substances and file the monthly returns to the competent authority who shall issue a Certificate in Form-I hereto to such person granting him permission to sell or transport or move the products and/or substances. (3) The person liable to pay cess shall apply on plain paper to, and obtain a registration from the competent authority, within a period of thirty days from the date of coming into force of these Rules or from the date of accrual of his liability to pay such cess as the case may be. (4) The person registered under sub-rule (3) shall pay the cess payable und....
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....operating multipurpose bulk cargo berths at Mormugao Port and is not an importer and therefore, liability to pay Green Cess cannot be imposed on it. Apart from this, it is the contention of the learned Senior Counsel that the petitioner was assessed 'NIL' for Financial Year 2014-2015 to Financial Year 2023-2024 before the initiation of reassessment proceedings for prior years. Mr Kadam would submit that the petitioner commenced operations in Goa in the year 2004 and is involved in handling of different varieties of dry bulk cargo at the Port, where the goods arrive in vessel loads at the berth which is operated by the petitioner and discharged using mobile cranes and grabs into mechanical hoppers that are conveyed by the conveyor belts to stock yard and are stacked by stacker-reclaimer. According to him, the petitioner has deployed highly mechanized and modern environmental friendly material handling systems, which involve latest dust entrapment systems, efficient material handling systems like Grap Ship Unloader (GSU), Stacker-cum-Reclaimer (ScR), Closed/Pipe Conveyor, In-motion Wagon Loading System etc., along site of construction covered sheds is in process. 8. Bei....
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.... Assessing Authority had concluded that there is no sale, no turnover and therefore, no Cess was liable to be paid but all of a sudden the respondents adopted U-turn approach and held the petitioner liable for being assessed under the Act of 2013, when it issued show cause notices to the petitioner by reopening the assessment, for past years which are already put to rest. 10. Upon receipt of the show cause notices, according to Mr Kadam, a detailed response was addressed to the State Tax Officer, where it is clarified that the petitioner is not the owner nor the importer of the cargo and therefore, notices issued are without jurisdiction as from the plain reading of the provisions of Act 2013 along with Rules of 2014, it was evidently clear that the SWPL do not fall within the purview of the Act and Rules of 2014 and this issue of jurisdiction goes to the root of the matter and therefore, the proceedings cannot move ahead. Another objection raised is in respect of the assessment being reopened after the expiry of the period of five years as, going by provisions of the GVAT Act 2005, in terms of Section 29(3), it bar the assessment of period exceeding five years and therefore,....
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....ho brings or causes to be brought within the State any product and/or substance at the entry point of the State' and hence according to him, if the petitioner cannot be brought within the fold of Rule 3, which prescribe the manner in which the Cess shall be levied and collected, as imposed under Section 4, then by no stretch of imagination, can the Assessing Authority bring the JSWIL within its sweep and therefore, the show cause notices are wholly without jurisdiction and premised on an incorrect presumption that the petitioner is subject of the levy of Green Cess, despite it merely being a service provider. Another point which the learned Senior Counsel would emphasis upon is the lack of jurisdictional pre-condition for invocation of Section 31 of the GVAT Act, which permit the exercise of the power, only if the Commissioner has "reason to believe" that the whole or any part of the turnover of the Dealer in respect of any period escaped the assessment to tax or he has been under assessed or turnover is assessed at a lower rate, than within the prescribed timeline the Commissioner is empowered to assess or reassess the tax payable by the Dealer. Therefore, according to h....
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....utive, the framing of Rules on levy, assessment and collection of Cess and Rule 3 of the Green Cess Rules, set out the process and manner of assessment and Rule 3(7) postulates the situation that no return is filed and then the best judgment on assessment is permitted. Further relying upon Rule 4(1) and Rule 4(2), he would submit that though no time limit is provided in completion of assessment, in the wake of the Rule 4(2), the time limit for assessment specified in Section 29(3) of the GVAT Act will apply and this has prescribed a period of five years from the end of the year in respect of which or part of the assessment is to be made. It is his specific contention that no substantive power of reassessment akin to Section 31 of the GVAT Act is reserved in favour of the competent authority under the Green Cess Act or the Rules and the same cannot be imported as it sought to be done by the impugned show cause notices, which are therefore without any force of law. Mr Gulati has also urged before us that in the Assessment Order passed on 09.05.2025 under the Act of 2013 by the Commercial Tax Office, where the books of accounts were produced and financial statements, cargo handling....
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....ubstances including hazardous substances, which upon their handling or consumption or utilization or combustion or movement or transportation cause pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources of the State of Goa, under the concept of "polluter pays principle", and also to provide for measures to reduce the carbon footprint left due to such activities and for matters connected therewith or incidental thereto. 71. The levy under the impugned Act is on the handling or consumption or utilization or combustion or movement or transportation of products and/or substances, the handling etc. of each causes pollution within the State of Goa. The Act invokes the "polluter pays principle" as a justification for the levy though it is not often that legislation provides for justification for the levy in the text of the legislation itself." Apart from the above, he would also invite our attention to the relevant observations in Paragraph 164 of the judgment with reference to Rule 3 of the Rules framed under the impugned Act, when it is held that the Rules framed only prescribe the point at which the Cess become payable and the mea....
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....ss under the Act of 2013 is based on the principle of "Polluter must pay" and the Cess is levied and collected for causing pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental recourses of the State of Goa, upon handling or consumption or utilization or combustion or movement or transportation of any products or substances which causes the pollution. The term 'product', is defined under Section 2(e) as those products which upon their handling or consumption or utilization or combustion or movement or transportation etc. cause emission of carbon dioxide and other greenhouse gases or discharge other types of effluents and this includes the products like asphalts, automotive gasoline, fuel, oils, kerosene, lubricants, napthas, waxes, other hydrocarbon components including mixtures and products obtained from crude oil, natural gas processing and such other products which the Government may, by Notification in the Official Gazette specify. A similar meaning is assigned to the term "products" as upon their handling, consumption, utilization, etc., it causes pollution and includes carbon products, coke, coal, chemicals and chemical product....
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....y the Cess. However, Rule 3 of the Rules of 2014, offers clarity, when it provide that levy and collection of Cess under Section 4 of the Act shall be from every person who brings or causes to be brought within the State any products and/or substances at the entry point of the State. Thus, it is evidently clear that the incidence of the Green Cess i.e. as to what is the activity on which Cess is levied, is provided in the charging Section but from whom it shall be collected is provided in the Rules, framed by the State Government. The charging Section 4 do provide for the levy of Cess, whereas Rule 3 provides that the Cess shall be levied and collected from the person who brought within the State any product and/or substance which is responsible for causing pollution, on account of its handling, utilization, consumption etc. At this juncture, we only note that Section 4, which refer to the activity on which levy is imposed i.e. what activity will bear the burden i.e. one which pollutes the environment. Rule 3, however, provide for its collection and together they form a scheme. We shall be dealing with the submission advanced by Mr Kadam that the Rules framed are in excess....
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....tate at the entry point. Hence the person statutorily liable to pay the Green Cess is "every person" who brings or causes to bring within the State specified products/substances which are the cause for pollution. 20. What is specifically urged before us by the respective Senior Counsels representing the SWPL and JSWIL is, that they are the service provider or a sub-contractor operating the berth licenced to SWPL, and they do not bring or cause to be brought within the State, any of the specified products at the entry point of the State, which is an expressed pre-requisite, for levy of Green Cess as per Rule 3(1) of the Rules of 2014. It is urged that a service provider who offers service at Mormugao Port is not the person who either brings the product or causes the product to be brought and therefore, cannot be fastened with liability to pay Green Cess. 21. Rule 3 of the Green Cess Rules is a complete Code with regard to the manner in which the assessment shall be carried by the competent authority and a careful reading thereof along with sub clauses, make it clear about the manner in which the Cess shall be levied and collected. It is apposite to reproduce the mechanism stip....
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.... of 2014 cast burden of paying the Cess upon the person, who cause the entry or movement of the polluting product/substance into the State of Goa, specifically intended to target manufacturer, importer, dealer and user of such products. The petitioners as service provider, have no proprietary or possessory interest in the cargo handling nor do they have ownership title and any economic interest in the goods. The petitioners neither brings nor causes to be brought, the covered products and/or substances within the meaning of Rule 3(1) of the Green Cess Rules 2014 and if they do not fall within this category, they cannot be fastened with liability to pay the Green Cess under the Act of 2013. Further the petitioners are not Dealers and they did not even import any product/substance, which can be subjected to levy of Green Cess under the Act, they cannot be held liable for its recovery. 23. Rule 3(1) of 2014 Rules clearly contemplate "either bringing of the goods or causing it to be brought" and distinction between the two is succinct and settled and we deem it appropriate to refer to the judgment of Queens Bench in the case of Shave Vs Rosner 1954 (2) ALL ER 280 as it aptly depi....
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....f the owner is sued, the garage proprietor would have an action brought against him and part of the damage for not doing the work properly would be the damages the owner is caused to pay to the person injured. But, from the point of view of the criminal law, I do not think the regulation is wide enough to catch this case." The word 'causes' was therefore interpreted to be something involving control or dominance or compulsion. 24. Another Queens Bench judgment in the case of Price Vs Cromack 1975 (1) WLR 988, which also drives home the pertinent distinction between the words 'permitting' and 'causing' in the following words of Lord Widgery C.J, "It is important to note that the distinction between 'causing' and 'knowingly permitting' was very much in their Lordship's minds. It seems to me that the overwhelming opinion of their Lordships in that case was, that whatever else 'causing' might or might not involve, it did involve some active operation as opposed to mere tacit standing by and looking on. That is made good first of all by Lord Wilberforce, who said "The subsection evidently contemplates things-causing, which must i....
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....Port, Goa and does not import or utilize any products or substances on which the purported green cess is liable to be paid. Since the company is handling the imports, a show cause notice under Section 31 of the Goa VAT Act, 2005 read with Section 4 and Rule 3 of the Goa Green Cess Act, 2013 is issued to quantify and determine the liability for the imports of products/substances liable to green cess". The notice dated 23.05.2025 requiring the noticee/petitioners to appear in person or through an authorized representative, direct production of books of accounts, registers, invoices which were required to be maintained in terms of Green Cess Act, 2013 and the Rules made thereunder along with any other relevant evidence on which the noticee wish to rely and also to show cause notice as to why a penalty under the provisions of the Act of 2013 and Rules made thereunder read with Sections 54, 55, 57, 58 and 59 of the Goa Value Added Tax, 2005 shall not be levied for the distinct period. The impugned show cause notices, therefore, seek to initiate reassessment proceedings and has invoked Section 54 to Section 59 of the GVAT Act, 2005. 27. For exercising the power of re-assessment as ....
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....s a case of escape assessment and not otherwise and when a statute provide for "reasons to believe", either reasons must appear on the face of the notice or they must be available in the material, which has been placed before the Authority. In no uncertain words, the principle of law is reiterated with reference to the earlier decision in CST Vs Bhagwan Industries (P) Ltd (1973) 3 SCC 265. in the following words: "19. Under Section 21(1) of the Act, the re-assessment proceedings can only be initiated if the assessing Authority has "reason to believe" that there is a case of escaped assessment and not otherwise. It is now trite law that whenever a statute provides for "reason to believe", either the reasons should appear on the face of the notice or they must be available on the materials which have been placed before him. (See: Aslam Mohd. Merchant v. Competent Authority, (2008) 14 SCC 186). 20. In context of Section 21 of the Act, the position of law was explained succinctly by this Court in CST v. Bhagwan Industries (P) Ltd., (1973) 3 SCC 265 as follows: "11. The controversy between the parties has centered on the point as to whether assessing Authority....
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....iry which may be considered necessary." (emphasis supplied) 29. In Commissioner of Income Tax, Delhi Vs Kelvinator of India Limited (2010) 187 Taxman 312 (SC), while testing the exercise of the power under Section 147 of the Income Tax Act, the Apex Court observed thus :- "4. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, pro....
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....ll defined. It is consistently held that reopening by the Assessing Officer must be based on the existence of "tangible material" and there can be no review of assessment in the guise of its reopening and any such attempt without existence of any tangible material would amount to abuse of power. In the absence of any such material, the jurisdiction to initiate assessment do not vest in the officer and assessment cannot be reopened on a mere change of opinion by the Assessing Officer. 31. It is worth pertinent to note that for the previous years, the petitioners have been assessed to the Green Cess as NIL and even the Assessment Order for the year 2023-24, which was passed, after issuing notice to the Dealer and calling him to produce books of account for determination of Green Cess liability and upon the books of accounts being produced, they were verified along with the consolidated financial accounts and the agreement of service of cargo handling, tax invoices etc., and a conclusion is reached; that the revenue is generated from the operation of the cargo handling services and there are no imports affected by the Dealer as they deal only in services. Therefore, upon verificati....
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....stulate the belief and existence of reasons for that belief and the expression do not cover the subjective satisfaction of the particular Officer but it must be a belief of an honest and reasonable person based upon reasonable ground and tangible material and not merely a pretence. 33. This Court in the State of Maharashtra Vs Ketan Enterprises and Another (2010) SCC On Line Bom 2201, dealing with Section 35 of the Bombay Sales Tax Act, 1959, which involves a similar phraseology "reasons to believe", that the dealer has concealed sales or purchase of any material particulars relating to or has knowingly furnished incorrect return, observed thus :- "24. The above sub-section specifically makes out that there is a distinction of substance between the concept of assessment and reassessment, it is not a one and the same thing. Once the assessment is complete, that cannot be reopened merely for asking. The authority is manifestly circumscribed by certain conditions. The power to reassess can be exercised only if those conditions exist and not otherwise. On an analysis of the relevant provisions, the material conditions prescribed for the exercise of the power to commence pro....
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....en contesting parties, is a matter which is not capable of even a plausible argument. The Income-Tax Authorities who have power to assess and recover tax are not acting as judges deciding a litigation between the citizen and the States: they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State: The Commissioner of Inland Revenue v. Sneath (17 TC 149, 164); and Shell Company of Australia Ltd. v. Federal Commissioner of Taxation(1931) AC 275. 10. Again the period prescribed by Section 34 for assessment is not a period of limitation. The section in terms imposes a fetter upon the power of the Income-tax Officer to bring to tax escaped income. It prescribes different periods in different classes of cases for enforcement of the right of the State to recover tax ....." 35. Another point which is pressed into servi....
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....Act was vested in the State Government under Section 22. The provisions of the Act are impugned on the ground that it does not lay down any guidelines for the exercise of the powers by the delegated authority as a result, the authority would be in a position to act according to its whims, and that having failed to indicate conditions for the exercise of power, the decision of the competent authority would suffer from arbitrariness. 36. On appreciating the arguments advanced, it was found that Section 6, which confers a power to refuse or grant the permission, was too wide in terms without indicating the nature of such direction or the extent within which the authority should confine itself while exercising the power. So was the provision of exemption contained in Section 22 and despite an argument advanced by the State that with reference to Section 4, the competent authority had to take into consideration the particulars supplied in the application and which would be guiding factor for refusing or allowing the permission, it was held that the impugned sections were invalid as it confer uncanalised, unlimited and arbitrary power as the Act did not lay down any principle or po....
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....nt but not exceeding 2% of the sale value, and it also provides for the act which would result in pollution i.e. handling, utilization, consumption, combustion, transportation or movement of the products and/or substances identified by the statute to cause pollution. Sub-Section (2) of Section 4, however has left the procedure for assessing levy and collection of the Cess to the executive. By invoking this power, the Government of Goa has enacted the Rules 2014, thereby setting out the functions and duties of the competent authority and the assessment of levy and collection of the Cess. Who shall be subjected to such levy and from whom the Cess shall be collected under Section 4 is determined by sub-rule (1) of Rule 3 by stating that it shall be from every person who brings or causes to be brought within the State any products and/or substances at the entry point. The manner in which the authority shall levy and collect the Cess is prescribed in the very said Rule 3, as fixing the responsibility upon the person liable to pay the Cess by filing monthly returns pursuant to obtaining registration from the competent authority from the coming into force of the Rules or from the....
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....nd another (1968) 3 SCR 251, a Constitution Bench was confronted with the provisions of Delhi Municipal Corporation Act, 1957 comprising of power to the Corporation to levy optional taxes subject to Central Government approval and the question for determination was whether it suffered from the vice of excessive delegation of legislative power and therefore ultra vires. The test laid down to determine whether there is excessive delegation was laid in the following words :- "The vice of delegation lies not in its capacity for abuse, but in its delegation beyond permissible limits and contrary to the constitutional scheme. Undoubtedly delegation of the authority to legislate is always subject to the rule that action of the delegate which amounts to unreasonable exercise of the powers will be invalid. But that does not alter the true character of the rule against excessive delegation of legislative authority. It cannot be said that this rule may be departed from on the ground that the delegate is hedged in by controls or restrictions which will prevent it from abusing its authority. Safeguards against abuse do not alter the character of unauthorised delegation of legislative p....
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....n by it without reserving for itself any control over subordinate legislation. This self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to bold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature." 39. It is a trite position in law that when it comes to the power of taxation, it is necessarily a legislative function. Delegation of the fixation of rates of tax to a subordinate authority with proper guidance and subject to safeguards and limitations, is not unknown, but definitely the legislature must provide guidance for such fixation. In a case where the legislature gave power to the State Government to fix sales tax at such rates as the State Government thought fit, in ....
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....which the levy shall be paid and also has set out the maximum rate at which the Cess shall be collected, leaving only the manner of assessment to be worked out by the executive and by specifically providing that in absence of any specific provision, recourse could be taken to the provisions of Act and Rules. The Act of 2013 has provided the incidence of Green Cess under Section 4, but the mechanism by which this Cess shall be assessed and collected is left to the Government, which is conferred with the power of making Rules for carrying out the purpose of the Act. The manner in which the Cess shall be collected is provided in the Rules, along with a detailed mechanism being carved out as to how the liability of Cess imposed under Section 4 of the Green Cess Act shall be met. It is a well-known device for the Legislation to fix the tax incidence/burden of tax as it is a legal authority to levy cess/tax and the machinery for its implementation including its collection to be provided by the Rules and as long as these Rules do not contradict a counter to the statutory provisions, the tax is permitted to be collected in accordance with the provisions in the subordinate legislation, as t....