K. Devamani Vs. Union of India (Madras High Court)
In the present case, the petitioner has filed this petition to seek quashing of notification vide number G.O.Ms.No.24 dated 27.05.2020 issued by the Secretary to Government (Finance), Government of Puducherry invoking Section 31 of the Puducherry Value Added Tax Act, 2007 increasing the rate of tax payable in respect of Petrol and Diesel and fixing the same at 28% and 21.8% respectively.
The grievance of the petitioner is that the amendment made under G.O.Ms.No.24 dated 27.05.2020 constitutes an excess of power insofar as the provision invoked, Section 31, only provides for the reduction of the tax rate by notification and not an increase, which is what has been done in the present case. They have increased the tax rate of petrol and diesel from 22.5% and 18.5% to 28% and 21.8% respectively and this increase, according to the petitioner, could only be made by amendment of the schedule under Section 75. However, since the procedure set out under Section 75 required presentation of the Bill seeking amendment, deliberation and passing thereof by the Legislative Assembly of Puducherry, a cumbersome and time consuming procedure in the best of times, the Union Territory has proceeded to adopt the easier but erroneous procedure set out under Section 31.
High Court states that, the rates of tax on petrol and diesel have been altered across the board and ostensibly, ‘in public interest’. The notification does not refer to or address a specific class of assesses/transactions and no conditions are imposed upon satisfaction of which the amended rate would apply. A general and omnibus alteration to the rate of tax of this nature would have to be effected only by way of amendment to the Schedule itself under Section 75 and not by issuance of a Notification under Section 31 of the PVAT Act. Though the 2017 amendment to the rate of petrol and diesel from 21.5% and 17.15% to 22.15% and 18.15% respectively was also only by way of Notification under Section 31 and was in force till the present impugned amendment, this does not per se invalidate a subsequent illegitimate and unauthorised levy. A Constitutional Bench of the Hon’ble Supreme Court held that acquiescence in an illegal tax, for however long a period, is not a ground for denying an assessee relief, where it is established that the levy was invalid or illegitimate in the first place. Though the validity or otherwise of a levy has to be tested on the basis of the relevant provision in the local laws only, HC find, on an examination of the relevant provisions in the Value Added Tax statutes of New Delhi, Gujarat, Assam, Rajasthan, Maharashtra and Punjab that, the procedure for amendment of schedule is more or less in pari materia with Section 75 of the PVAT Act. Except for some differences in detail, the amendment of schedules in the VAT enactments extracted above, uniformly require that the notification for amendment once made, be placed before the House within the timeframes stipulated therein for deliberation and ratification. It was thus incumbent upon the respondents to have followed the proper procedure for amendment of schedules set out under Section 75 of the PVAT Act and the invocation of Section 31 in the above circumstances is contrary to law. In the light of the discussion as above, this Writ Petition is allowed and the impugned Notification quashed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
The petitioner is a resident of Karaikal, Puducherry and seeks a Writ of Certiorari calling for and quashing G.O.Ms.No.24 dated 27.05.2020 issued by the Secretary to Government (Finance), Government of Puducherry/R2 invoking Section 31 of the Puducherry Value Added Tax Act, 2007 (in short ‘PVAT Act’) increasing the rate of tax payable in respect of Petrol and Diesel and fixing the same at 28% and 21.8% respectively.
2. Pleadings counsel for the petitioner and Mr.J.Kumaran, learned Additional Government Pleader for the respondents have been heard in detail.
3. Petrol and Diesel were covered initially under Entry No.2/PartA/5th Schedule under the head ‘List of goods taxable at the rate of 20% at the point of first sale’. With effect from 01.04.2017, these commodities were brought under Entries 2 and 3 of the 6th schedule under the head ‘List of goods taxable at the rate of 35% at the point of first sale’. In line with the provisions of Section 75(1) of the PVAT Act that grants power to the Government to alter the rate of tax by amendment to the schedules, Notification dated 31.03.2017 was issued under G.O.Ms.No.20/A1/CD/2017 dated 31.03.2017 and the schedule rate of tax for Petrol and Diesel was raised to 35% at the point of first sale from 01.04.2017. A Bill was introduced and passed in the Legislative Assembly to give effect to the amendments made to the Schedule.
4. On 10.04.2020, vide G.O.Ms.No.17 dated 07.04.2020, the rates of tax upon Petrol and Diesel were reduced to 22.15% and 18.5% respectively. This amendment was made invoking Section 31 of the PVAT Act which confer powers on the Government to, by Notification, reduce the rate of tax on commodities covered by the PVAT Act. Thereafter, the Government decided, at a meeting held on 18.05.2020, to increase the rate of tax as follows in the regions of Puducherry, Karaikal, Mahe and Yanam
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