TaxTMI 
TaxTMI 
2025 (12) TMI 1547
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.... GVAT Act, in respect of sales of Extra Neutral Alcohol (ENA)/Rectified Spirit (RS)/ High Bouquet Spirit (HBS) effected by the Petitioner, during FY 2019-20, is ultra vires the GVAT Act, and in violation of Articles 14, 265 and 300A of the Constitution of India; and (ii) the Impugned Order dated 29.01.2025 is arbitrary, inequitable, and contrary to Articles 14, 265 and 300A of the Constitution of India; (B) issue a writ of certiorari or a writ in the nature of certiorari to call for and examine the records of the proceedings before Respondents No. 1 and 2, and quash and set aside the Impugned Order dated 29.01.2025. (D) issue a writ of prohibition or a writ in the nature of prohibition, prohibiting the Respondents or any of their Officers from- (i) imposing or collecting any interest on the payment of VAT made by the Petitioner, on sales of Extra Neutral Alcohol (ENA)/ Rectified Spirit (RS)/ High Bouquet Spirit (HBS) effected by it on or after 01.07.2017; and (ii) acting on or in consequence of the Impugned Order dated 29.01.2025." 2. The aforesaid reliefs in the Petition is sought in the background facts, which are presented to us th....
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...., Out of which Turnover of Rs. 1,08,75,468.00 towards IMFL is held taxable @ 22% on which tax payable works out amounting to Rs.23,92,603.00 and turnover of Rs. 13,08,02,188.00 is held taxable @12.5% towards HBS on which tax payable works out amounting to Rs. 1,63,50,274.00. Interest of Rs. 53,58,986/- is levied under section 25(4) of the GVAT Act, 2005 for late payment of tax. Accordingly, total of tax and interest works out amounting to Rs.2,41,01,863.00. The dealer has furnished tax paid challans amounting to Rs. 1,87,42,877.00. After adjusting tax paid by the dealer against tax liability balance amount of tax of Rs. 53,58,986.00 are to be recovered by issue of demand notice. Issued demand notice for Rs. 53,58,986.00." Pursuant thereto, a Demand Notice was issued to the Petitioner, directing it to pay the amount on or before 15/05/2023, failing which, it was directed that the same will be recovered as arrears of land revenue. 3. Being aggrieved by the said order, the Petitioner filed an Appeal before the Additional Deputy Commissioner of Commercial Taxes, disputing the interest liability of Rs. 53,58,986/- on account of delayed payment of tax from April 2....
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....ightly levied interest at 18%, amounting to Rs. 53,58,986/-, in accordance with the provisions of Section 25(4) of the Goa VAT Act, 2005, and Rule 24 of the Goa VAT Rules, 2005. Therefore, intervention by this Authority is unwarranted. Consequently, the Appellant/Dealer's contention that the interest levy of Rs. 53,58,986/- is not applicable due to ambiguity and lack of clarity regarding the taxation of HBS/ENA is not considered. The decision relied by the Appellant are not applicable in the present case. It is settled law that a judicial precedent cannot be interpreted as a statute and can be applied only if it relates to similar facts and circumstances or where the provisions of law sought to be interpreted are pari materia. In view of the above facts, discussion and for the above recorded reasons, I pass the following; ORDER The Appeal is hereby Dismissed. The Impugned VAT Assessment Order No. 30210202998/6620 dated 15/03/2023 issued by the Commercial Tax Officer, Ponda Ward, Ponda-Goa is upheld. The Appropriate Assessing Authority shall adjust the payment of the 10% pre-deposit made towards the disputed amount and initiate recovery p....
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....id not possess legislative competence to tax the sale of ENA under VAT law after introduction of GST w.e.f. 01/07/2017. A challenge to this decision, according to Mr. Shah, is pending before the Apex Court alongwith other connected SLPs. As per Mr. Shah, the clarity emerged on the issue only when Section 9(1) of the CGST Act was amended to expressly exclude supplies of undenatured ENA and Rectified Spirit from the scope and ambit of the GST was inserted vide Section 114 of the Finance Act, 2024 which came into effect prospectively w.e.f. 01/11/2024. 6. In short, relying upon the aforesaid chronology of events, it is the submission of Mr. Shah that issue of taxability of HBS/RS/ENA used in manufacture of alcoholic beverages under VAT law was subject matter of ambiguity with introduction of GST regime in 2017 and this conundrum was only resolved on 01/11/2024, with amendment to the CGST/GST Act. In the wake of the aforesaid, the Petitioner filed quarterly returns under GVAT Act solely on sale of Indian Made Foreign Liquor (IMFL) and not on sale of HBS/RS/ENA and for the year 2019-20, according to Mr. Shah, the Petitioner filed audit report in form of XV, disclosing the sale of ....
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....Again the time to file the Revised Return for the year 2018-10 expired on 30/04/2020, when the Petitioner filed Quarterly Return for 2019-20, where he assessed his liability at Rs. 23,92,503/- and paid the amount. Even in this Return, according to Mr. Pangam, the Petitioner claimed that no VAT was payable on HBS/ENA and declared liability as 'zero'. The time to file Revised Return for year 2019-20 expired on 30/04/2021. It is the submission of Mr. Pangam that the Assessing Authority under the GVAT Act passed Assessment Order for the year 2017-18 under Section 29 of the Act and recorded the contention on behalf of the Petitioner that the sale of HBS was not liable to VAT, after the implementation of GST w.e.f. 01/07/2017 and, particularly, when item No. 11 was omitted from Schedule 'C' of VAT Act. However, this submission of the Petitioner was found to be erroneous, as the Petitioner has made local sales of HBS after the implementation of GST on 01/07/2017 on which it charged and collected VAT at the rate of 20% and the purchaser-M/s Mandovi Distilleries and Breweries availed Input Tax Credit (ITC) on the VAT paid to the Petitioner. On account of this order passed on 29/07/2021, ....
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....d for consumption by humans. With reference to the issue formulated as to whether the expression 'intoxicating liquors' in Entry 8 of List II of Seventh Schedule to the Constitution includes alcohol other than quotable alcohol, Mr. Pangam has invited our attention to the conclusions drawn to the following effect:- "a. Entry 8 of List II of the Seventh Schedule to the Constitution is both an industry-based entry and a product-based entry. The words that follow the expression "that is to say" in the Entry are not exhaustive of its contents. It includes the regulation of everything from the raw materials to the consumption of 'intoxicating liquor'; b. Parliament cannot occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I. The State Legislature's competence under Entry 24 of List II is denuded only to the extent of the field covered by the law of Parliament under Entry 52 of List I; c. Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I; d....
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....on sales of goods in the State of Goa. The Act defines "goods" to mean all kinds of movable property (other than newspapers), including livestock, all materials, commodities, grass or things attached to or forming part of the earth, which are agreed to be severed before sale and property in goods involved in execution of works contract etc., but did not include actionable claims, stocks, shares and securities. Section 3 of the said Act prescribes for the Incidence of Tax on every dealer, whose turnover of all sales made during the preceding year exceeded the relevant limits specified in sub-section (4), who shall be liable to pay tax under the Act on the turnover of sales, made on or after the appointed date. Section 5 of the Act prescribe for levy of Value Added Tax on the Goods specified in the Schedule at the rates shown against the entry, so specified, with the power being conferred on the Government to reduce or enhance any rate of tax by notification in the official gazette. Chapter V of the Act is a provision regarding Returns and payment of tax and make it imperative for every registered dealer to file a Return as prescribed by such date and such authority as presc....
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....interest, or both. Provided further that, subject to the rules made in this behalf, the Commissioner may at the request of the dealer or person and after obtaining prior approval of the Government, remit the part of the penalty and/or interest, not exceeding fifty percent thereof, payable by such dealer or person." By virtue of sub-section (5), any tax, penalty, interest, fine or sum forfeited, which remains unpaid after the service of notice under sub-section (4), or any instalment not duly paid, is liable to be recoverable as an arrear of land revenue. 10. Under the statutory scheme of Goa Value Added Tax, levy of VAT on goods specified in the Schedule is set out in Section 5, by providing that there shall be levy of Value Added Tax (output tax) on the turnover of sale of goods at rates specified in the Schedule i.e. Schedule-A to Schedule C, at the rate specified in each of the entry in the Schedule, whereas goods specified in Schedule D are exempted from tax. As per clause (c) in case of any other goods, the levy is at the rate of 12 ½ paisa in a rupee. Schedule-C, included entry No. 11 as 'Rectified Spirit and High Bouquet Spirit, a HBS and the rate of ta....
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....and the levy would be as per Section 5(1)(e) of the GVAT Act. It is clear that since the goods were not covered under the GST Act, unless and until it was so notified by the GST Council, it cannot happen that they will not be subjected to either VAT or GST. It is pointed out to us by the learned Advocate General that all the while the petitioner collected VAT, but he did not pay the same to Government, but retained it. It can be seen that even though entry No. 11 was deleted from Schedule 'C', unless and until it was subjected to GST, it still fell within the regime of GVAT Act and was liable to VAT at 12.5% as per Section 5(1)(e) after 01/07/2017, when the goods and services tax came into force. 13. It is pertinent to note that the petitioner had approached the High Court, raising a challenge to the insistence of the Respondent, furnishing of an undertaking concerning payment of all taxes, interest and penalty, in case the GST Council ultimately decided the Extra Neutral Alcohol (ENA) is a commodity covered under the Goods and Services Act (GST) law, as a pre-condition for issuance of 'C' and 'F' forms, under the provisions of Central Sales Tax Act, 1956 and Rules made there....
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...., such an executive action does not attract the doctrine of ultra vires or unreasonableness." 15. The Office Memorandum, issuing a clarification regarding taxability of Undenatured, Ethyl alcohol of any alcoholic strength (including neutral and extra-neutral alcohol) when used in production of alcoholic liquors for human consumption was the subject matter of the proceedings. The Memorandum was issued pending the decision of the GST Council and it clarified thus :- "Office Memorandum Subject : Clarification regarding taxability of Undenatured ethyl alcohol of any alcoholic strength (including neutral and extra neutral alcohol) when used in the production of alcoholic liquors for human consumption" In view of various representations received by the Government and this office on the subject of issuing "C" forms for interstate purchase of Extra Neutral Alcohol (ENA) when used in manufacturing of Alcoholic Liquor for Human Consumption (Hereinafter referred to as 'said commodity') clarification was sought from Government on the matter. In view of this, Government has clarified that pending the GST Council decision the said commodity is to be cons....
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....d also the decision in State of U.P Vs. Modi Distilleries, to submit that ENA per-se cannot be regarded as Alcohol for human consumption and unless the petitioners established that they were legitimately excluded from GST Regime and covered under the CST or VAT regime, the petitioners could not even insist on issuance of C or F form. However, it was clearly expressed by the Division Bench that it is not open for the State Government to raise the above plea, as the State representative is also party to the deliberations of the GST Council, which has decided to continue with the status quo about the said commodity i.e. it shall not be covered under the GST Regime and State of Goa has accepted the aforesaid arrangement and also issued O.M on 21/4/2021 itself. 17. Recording that this issue is pending before consideration of GST Council and the State of Goa has excluded ENA from GST regime, and have agreed to apply CST or VAT regime to ENA, the question was determined by the Court, whether the State is entitled to impose a condition which is not covered by the statute or the rules and it was answered in the negative, by declaring that the impugned direction and the impugned undert....
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....aid to the petitioner. The petitioner accordingly, admitted the liability and paid VAT and did not challenge the said order. The petitioner paid an amount of Rs. 1,63,50,274/- towards VAT liability in the year 2019-2020 for the sale of HBS but this was paid on 30/9/2021. 20. On 17/4/2022, the petitioner filed revised returns for financial year 2019-2020, which was much beyond the prescribed period under Section 24, and the purported return had no legal efficacy, as it was filed after the time to file revised return, had already expired. On this return, an order of assessment was passed under Section 29 of the GVAT Act on 15/3/2023 and this was for the assessment from 1/4/2019 to 31/3/2020, on the turnover of Rs.11,09,539,183/-. The sale price of the goods which were sold in the inter State trade or commerce and those in the course of import of goods into, or export of goods out of the territory of India, were assessed at Rs. 890,864,324/- and Rs. 769,97,203/- respectively. Based on the aforesaid figures, the amount of Output Tax payable at two rates i.e. 12.5 % and 22% was computed as Rs. 187,42,877/- along with penalty of Rs. 53,58,986/-. The total of output tax penalt....
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.... Shah that there was uncertainty prevailing as regards whether the goods were liable for levy of VAT or GST, and therefore, there was a delay in payment, has failed to appeal us. One thing is clear that for the goods which were dealt with, by the petitioner as a dealer, they are either liable for levy, either for GST or VAT, and in the present case, the payment of VAT is made in 2022, though it was due in 2019. As far as the previous period of assessment i.e. 1/4/2017 from 31/3/2018, when the dealer was assessed u/s.29, based on the quarterly returns, which were filed within the prescribed time limit, though audit report was not filed, the Assessing Authority on verification of books of accounts, such as profit and loss account, balance sheet, audit report etc. arrived at gross turnover of sales, which was found to be below the turnover shown in the quarterly returns. The difference in the sale was noted to be on account of the fact that the amount was disclosed in export as well as in sales and the same was verified along with invoices and the duplicate entries were segregated. Recording that there was total export of Rs. 82,91,33,990/- which was allowed for deduction from gros....
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....even after the VAT regime coming into force, he is liable to make payment of VAT and therefore, he approached this Court raising a challenge to the condition in the Office Memorandum, that an undertaking shall be given by the dealer before issuance of Form 'C' that he will pay GST, if at all it is held that the goods are subject to payment of GST. We do not see that the petitioner had any doubt about the fact that the goods are being charged under the VAT Act, and as per Section 25, a registered dealer furnishing returns under sub-section (2) of Section 24 shall pay the amount of taxes due from him after adjusting the amount of tax covered by the certificate of Tax Deduction at Source, if for the period covered by a return, which is required to file under the Rules, along with the amount of penalty, interest and any other sum payable. 23. Sub-section (4) of Section 25 contemplate a contingency of imposition of interest @ 18% p.a, if there is a failure to file return and taxes due, or even if the tax is due as per the returns or revised returns, but not paid. The learned Advocate General has also placed reliance upon sub-rule (4) of Rule 24 of the Goa VAT Act, 2005 which reads....