Case Law Details
Akums Drugs & Pharmaceuticals Ltd Vs Commissioner of Commercial Taxes (Uttarakhand High Court)
Whether the order of the Sales Tax Tribunal, Uttarakhand in holding that the revisionist is not entitled to reduce the levy of Central Sales Tax @ 1% for the financial year 2010-11 onwards) after the Capital Investment of Plant and Machinery, having exceeded R. 25 Crores in it’s Unit-1, as on 18.03.2010, is erroneous in the facts of this case?
As per the Industrial Policy Vision Note in the year 2001 envisaged by the Government Order, the total capital investment in Plant and Machinery by assessee has to be determined by a Committee constituted by the State Government in that behalf. Admittedly, in this case there is no decision of the Committee and the Assessing Officer has himself assessed the capital investment. The learned counsel appearing of the revisionist has taken us to the order passed by the Assessing Officer and the Tribunals. A careful reading of all the orders reveal that the total capital investment has never been assessed by any Committee as envisaged under Condition No.1 of the Notification referred to above. Thus, it is clear that the law governing the field provided for the assessment of the capital investment by a Committee whereas the same has never been done in this case.
It is trite that if the law provides that a particular procedure has to be followed while deciding an issue or a lis before the authorities then the procedure should be followed according to the law established and not otherwise.
Thus, it is clear that in this case while imposing the Tax at the rate of 2% the Assessing Officer has not considered the assessment determined by any Committee, further he has relied on his own assessment. In that view of the matter, the order passed by the Assessing Authority, confirmed by the Appellate Authority and the Commercial Tax Appellate Tribunal is not sustainable. In that view of the matter, the Central Tax Revision is allowed. The orders passed by the learned Commercial Tax Tribunal dated 16.06.20 17, in Second Appeal No. 08 of 2017 (2011-2012)….Central); order dated 27.11.2016 passed by the Joint Commissioner (Appeal)-II, Commercial Tax, Haridwar; and the order dated 27.03.2015, passed by the Assessing Authority are hereby set aside. The matter is remanded back to the Assessing Officer with a direction to the Commissioner of Commercial Tax Uttarakhand, Dehradun to move the Government for formation of the Committee as envisaged in the Notifications referred to above and refer the matter for determination of the exact and total capital investment by the revisionist for the period under consideration and, thereafter, issue a fresh assessment order in favour of the respondent.
FULL TEXT OF THE JUDGMENT/ORDER OF UTTARAKHAND HIGH COURT
1. By filing this Revision, the revisionist-assessee for payment of Commercial Tax has prayed to set aside the order passed by the Commissioner, Commercial Tax Tribunal on 16.06.20 17, where by his appeal was dismissed upholding the judgment/orders by the First Appellate Court on 27.12.2016 and by the Tax Assessing Order dated 27.03.2015.
2. The question of law for determination in this case, is: “Whether the order of the Sales Tax Tribunal, Uttarakhand in holding that the revisionist is not entitled to reduce the levy of Central Sales Tax @ 1% for the financial year 2010-11 onwards) after the Capital Investment of Plant and Machinery, having exceeded R. 25 Crores in it’s Unit-1, as on 18.03.2010, is erroneous in the facts of this case?”
3. Facts of the case are not much in dispute at this The State of Uttarakhand had issued an Industrial Policy Vision Note in the year 2001, whereby in order to create a conducive environment of rapid and ecological sustainable industrial development in the State, the Government of Uttarakhand invited setting of Small and Medium industries on selective basis. The policy also envisages providing a concessional rate to such industries of 1% CST as against 4% (later on revised to 2%) to the manufacturers registered in the State under the CST Act. In pursuance to the aforesaid policy, the Government of Uttarakhand issued Notification No. 6222 on 25.07.2001, in exercise of powers conferred under sub-section (5) of Section 8 of Central Sales Tax Act, 1956, which, inter alia, directed that w.e.f. 25.07.200 1, the tax payable under Section 8(5) of the CST Act shall be calculated at the rate of 1 % in case of a Manufacturing Industrial Unit which was having its main place of business in Uttarakhand with respect to sales made by it for the claim of 1% of CST, in case of such manufacturing industrial unit which was having its main place of business in Uttarakhand with respect to the sales made by it from such place of business. The conditions imposed for the claim of said 1% CST as per the above Notification is hereunder:
“The sales made by the Manufacturing Industrial Unit should have total capital investment in plant and Machinery which is less than Rs. 5 corer and that as to what would constitute the total Capital Investment in the Plant and Machinery of the Unit shall be determined by a Committee constituted by the State Government in this behalf.”
4. It is also born out from the record that the impugned Notification does not mention or place any limit on the time period upto which the above said confessional rate of 1% CST would be applicable to the eligible manufacturing units.
5. The Government of Uttarakhand later on reconsidered the matter regarding the limit of the capital investment on the Plant and Machinery making it eligible for reduced rate of 1% of CST fixed and revised its policy decision vide Notification No. 822 issued on 03.07.2004, by virtue of which, the investment limit was raised to less than 25 crores. However, the said Notification did not specify any date for applicability of the amended Notification No. 822, which leaves the question to be decided whether it shall be effective from the date of the initial Notification No. 6222 dated 25.07.200 1.
6. The revisionist set on its unit no.1 and thereafter started production sometime in the year 2004 and made its first sale on 19.12.2004, that is much after the Notification No. 822 issued on 03.07.2004. Initially the planted machinery outlay of the unit was 2.84 crore rupees, which was much below to the initial threshold of rupees 5 crore. Revisionist thereafter gradually invested in the Plant and Machinery on account of modernising of its manner and changes made in Part-II Schedule-M of Drugs and Cosmetics Rules, 1945, from 01.7.2005, which prescribes the good manufacturing price made in compliance of Schedule ‘N’ as made in the Drugs and Cosmetics Rules, 1945. The petitioner’s case is that he was allowed the benefit of concessional tax of CST at the rate of 1% up to 18.03.2010 in its Sales Tax assessment order. However, vide the assessment order dated 10.06.2016, the Assessing Officer held that revisionist is not entitled to reduce the Central Tax at the rate of 1 % in terms of Notification No. 822 dated 03.07.2004 issued by the State of Uttarakhand on the ground that the capital investment in the Plant and Machinery of the unit no.1, has exceeded Rs. 25 crores as on 18.02.2010. The Assessing Officer in pursuance also rejected the reliance placed by the revisionist in the judgment of the Hon’ble Supreme Court in the case of Commissioner of Sales Tax vs. M/s Industrial Coal Enterprises (Civil) Appeal No. 7451 of 1993, dated 24.02.1999 on the ground that the facts of the case, the present revisionist are different from the facts in reported cases. An appeal was preferred by the present revisionist to the Joint Commissioner, Sales Tax, who vide judgement dated 22.10.2016, dismissed the Appeal on the ground that the capital investment in the Plant and Machinery of the unit no.1 exceeds Rs. 25 crores as on 18.03.2010 and, therefore, the Notification No. 822 dated 03.07.2004 issued by the Government of Uttarakhand on the Central Tax be applicable at the Rate of 2 % of the said unit of the revisionist.
7. The Revisionist filed the 2nd Appeal before the Sales Tax Tribunal, Uttarakhand. This Tribunal vide order dated 16.06.2007, dismissed the Second Appeal upholding the order passed by the Assessment Officer and the Appellate Authority.
8. For the purpose of this case, the relevant condition that is required by the State of Uttarakhand to be complied is the condition no.1 in the Notification dated 25th July, 2001 bearing no. 622 of 2001, reads as follows:
“(1) the sales are made by manufacturing industrial unit whose total capital investment in Plant and Machinery is less than Rupees Five Crores, which shall be determined by a Committee constituted by the State Government in this behalf.”
The notification dated 03.07.2004, bearing no. 822 of 2004 is also as similar to notification dated 25th July, 2001, which reads as follows:
“ (1) The sales are made by manufacture whose total capital investment in Plant and Machinery is less than Rupees Twenty Five Crores, which shall be determined by a Committee constituted by the State Government in this behalf.
9. Thus, it is clear that as per the scheme envisaged by the Government Order, the total capital investment in Plant and Machinery by assessee has to be determined by a Committee constituted by the State Government in that behalf. Admittedly, in this case there is no decision of the Committee and the Assessing Officer has himself assessed the capital investment. The learned counsel appearing of the revisionist has taken us to the order passed by the Assessing Officer and the Tribunals. A careful reading of all the orders reveal that the total capital investment has never been assessed by any Committee as envisaged under Condition No.1 of the Notification referred to above. Thus, it is clear that the law governing the field provided for the assessment of the capital investment by a Committee whereas the same has never been done in this case.
10. It is trite that if the law provides that a particular procedure has to be followed while deciding an issue or a lis before the authorities then the procedure should be followed according to the law established and not otherwise.
11. In this connection, we rely upon the following precedent:
In the case of Hussein Ghadially vs. State of Gujarat, (2014) 8SCC 425, the Hon’ble Apex Court in para 19 has held that:
“19. Thirdly, because if the Statute provides for a thing to be done in a particular manner, then it must be done in that manner alone. All other modes or methods of doing that thing must be deemed to have been prohibited. That proposition of law first was stated in Taylor v. Taylor (1876) 1 Ch. D426 and adopted later by the Judicial Committee in Nazir Ahmed v. King Emperor AIR 1936 PC 253 and by this Court in a series of judgments including those in Rao Shiv Bahadur Singh & Anr. v. State of Vindhya Pradesh AIR 1954 SC 322, State of Uttar Pradesh v. Singhara Singh and Ors. AIR 1964 SC 358, Chandra Kishore Jha v. Mahavir Prasad & Ors. 1999 (8) SC 266, Dhananjaya Reddy v. State of Karnataka 2001 (4) SCC 9 and Gujarat Urja Vikas Nigam Ltd. V. Essar Power Ltd. 2008 (4) SCC 755. The principle stated in the above decisions applies to the cases at hand not because there is any specific procedure that is prescribed by the Statute for grant of approval but because if the approval could be granted by anyone in the police hierarchy the provision specifying the authority for grant of such approval might as well not have been enacted.”
12. Thus, it is clear that in this case while imposing the Tax at the rate of 2% the Assessing Officer has not considered the assessment determined by any Committee, further he has relied on his own assessment. In that view of the matter, the order passed by the Assessing Authority, confirmed by the Appellate Authority and the Commercial Tax Appellate Tribunal is not sustainable. In that view of the matter, the Central Tax Revision is allowed. The orders passed by the learned Commercial Tax Tribunal dated 16.06.2017, in Second Appeal No. 08 of 2017 (2011-2012)….Central); order dated 27.11.2016 passed by the Joint Commissioner (Appeal)-II, Commercial Tax, Haridwar; and the order dated 27.03.2015, passed by the Assessing Authority are hereby set aside. The matter is remanded back to the Assessing Officer with a direction to the Commissioner of Commercial Tax Uttarakhand, Dehradun to move the Government for formation of the Committee as envisaged in the Notifications referred to above and refer the matter for determination of the exact and total capital investment by the revisionist for the period under consideration and, thereafter, issue a fresh assessment order in favour of the respondent.
With such observations, the Commercial Tax Revision is allowed in part.
