Advocate Rajnish R. Singla
Circulars Issued under Uttarakhand VAT Act, 2005 – A Reality
In order to discuss vat collection in Uttarakhand, first we will have a look on Rule- 4 of The Uttarakhand Vat Act, 2005.
Rule- 4 Commercial Tax Authorities and their powers:
(1)The Commissioner shall have jurisdiction over whole of the State and shall exercise all the powers conferred, and perform all the duties imposed upon him by or under the Act or these rules;
(2) Consistent with the provisions of the Act and these rules, the Commissioner shall have superintendence over all officers and persons employed in the execution of the Act and these rules, and the Commissioner may from time to time issue such orders, instructions and directions as he may deem fit for the proper administration of the Act and for regulating the procedure to be followed in carrying out the provisions of the Act and these rules:
Provided that no such instructions or directions shall be given so as to interfere with the discretion of the Joint Commissioner (Appeals) in the exercise of his appellate functions.
(3)The Commissioner shall have all the powers exercisable by his subordinate authorities other than the appellate authorities under section 51.
(4) Subject to such restrictions and conditions as may be specified by the Government from time to time, the Commissioner may, by order in writing, delegate any of his powers and functions under the Act and the Rules made there under, to any officer subordinate to him.
(5)The Government shall appoint as many Additional Commissioners, Joint Commissioners, Deputy Commissioners, Assistant Commissioners, Commercial Tax Officers Grade-2 and such other officers as it thinks fit for the purpose of performing the functions respectively assigned to them by or under these rules.
Such officers shall perform the said functions in whole of the State or within such local limits as the Government or any authority or officer empowered by it in this behalf, may assign to them.
(6) Subject to the general control of the Commissioner, the Additional or Joint Commissioner shall exercise all the powers vested in the Commissioner.
(7)Subject to the general control of the Commissioner, the Joint Commissioner and Deputy Commissioners shall also exercise the powers conferred , and perform the duties imposed by or under the Act or these rules or as may, consistent with the Act or these rules, be conferred on or assigned to them.
(8)All officers and persons employed for the execution of the Act shall observe and follow the orders, instructions and directions of the officers superior to them;
(9) (a)The Commissioner of Commercial Tax on his own motion or on an application made to him on this behalf, may transfer any case or class of cases at any stage from one Assessing Authority in a circle to another Assessing Authority or to any officer subordinate to him;
(b)The Additional Commissioner or Joint Commissioner (Executive) on his own motion or on an application made to him on this behalf, may, subject to the general control of the Commissioner of Commercial Tax, also transfer any case or class of cases at any stage from one Assessing Authority to another Assessing Authority within his Zone or, as the case may be, within his region; (c)(i)The Commissioner may, before the commencement of the hearing of an appeal, either on his own motion or on the application of the appellant, transfer any case or class of cases from one Additional Commissioner (Appeals) to another Additional Commissioner (Appeals) or from one Joint Commissioner (Appeals)to another Joint Commissioner (Appeals) or to an Additional Commissioner (Appeals);
(ii)The President of the Tribunal may at any stage after the Commencement of the hearing of an appeal, on an application made by the appellant or the Commissioner, transfer any case or class of cases from one
Additional Commissioner (Appeals) to another Additional Commissioner (Appeals)or from one Joint Commissioner (Appeals)to another Joint Commissioner (Appeals) or to an Additional Commissioner (Appeals).
Explanation(1): Unless otherwise directed, the officer, to whom a case is transferred under clause (a)or clause (b) of sub-rule(9), shall have all such powers as the officer from whom the case was transferred, and he may deal with the case either de novo or from the stage at which the case was so transferred. Explanation (2): For the proposes of this rule, hearing shall be deemed to have commenced on the issue of notice referred to in sub- rule (2) of rule 37. (d)The Commissioner of Commercial Tax may transfer any case or cases at any stage of proceeding from the officer authorized under section 52 to any other such officer.
It is clear, from the Rule -4 of the Uttarakhand VAT Rules, 2005 that commissioner is administrative head of the commercial tax department of the Uttarakhand State and may issue instructions, directions, orders, to his subordinate officers.
“The Authorities are bound to act according to the existing framework of law and no direction can be issued to act against the law.” Varun Beverages Ltd. vs. State of Haryana (2010) 9 VSTI B-653 (P & H).
“It may be remembered that executive instructions can only supplement a statute. These cannot in any way curtail the statute or whittle away its effect.” State of M.P. v. G.S. Dal and Flour Mills, 1991 UPTC 99 (SC)
“The impugned order dated 11.10.1999 states that the security should be in the form of bank guarantee or immovable property. Learned counsel for the petitioner submitted that the discretion of the Assessing Authority cannot be curtailed by the impugned circular. We are in agreement with this submission because it is the judicial discretion of the Assessing Authority as to what kind of security satisfies him. A circular of the Commissioner cannot curtail the judicial discretion of the Assessing Authority. Therefore, the impugned circular is quashed.” L.M.L. Limited v. Commissioner of Trade Tax, 2003 NTN (Vol.23) 877: 2003 UPTC 802.
“The benefit of circulars is admissible to the assessee even though the circulars might have departed from the strict tenor of the statutory provision and mitigated the rigour of the law. However, a circular cannot impose on the taxpayer a burden higher than what the Act itself, on a true interpretation, envisages.” UCO Bank vs. CIT (1999) 237 ITR 889 (SC)
“While acting in quasi judicial capacity, they are bound by the law and not by any administrative instructions, opinions, clarifications and circulars. Law is what is declared by this Court and the High Court to wit, it is for this Court and the High Court to declare what does a particular provision of the statute said, and not for the executive. Of course, the parliament/ Legislature never speak or explain what does a provision enacted by it mean.”Bengal Iron Corporation and Another v. Commercial tax Officer and Others, 1993, UPTC-1312 (SC)
“In Orient Paper Mills Ltd. Vs. Union of India 1978 (2) ELT (J 382) their Lordships of the Supreme Court have held that the assessing authorities under various taxation laws exercise quasi – judicial function. The duty cast on them is to act in a judicial and independent manner. If their judgment is controlled by the directions given by the Collector it cannot be their independent judgment in any sense of the Word”.
“In State of Madhya-Pradesh Vs. G.S. Dall and Flour Mills, (1991)187 ITR 478, their Lordships have held” Executive instruction can supplement a statute or cover are as to which the statute does not extend. They cannot run contrary to statutory provisions or whittle down their effect”.
“In Bengal Iron Corporation Vs. CTO, referring to the provisions of Section 37- B of Central Excises Act, 1944 and Section 42(2) of Andhra General Sale Tax Act their Lordships have held that clarification and circulars issued by the Government represent their understanding of the statutory provisions. The Government is bound by them by, not the Courts and the authorities acting in quasi – judicial capacity where at they are bound by – Law and not by administrative instructions . Nothing would prevent has State from recovering the tax if in truth such tax be leviable according to Law, their being no stopple against the statute.
Their Lordships made it clear that the only instructions that the Board can issue can relate to administrative matter: otherwise they will be ultravires.
“In Genset Engineers Pvt. Ltd. Vs. Union of India 1989 (43) ELT 24 that the general instructions given by the Board bind the officers only when they act in their administrative capacity and do not bind the authorities in discharge of their quasi – judicial functions .”
Now coming to famous legal maxim of natural justice – Nihil quod est inconveniens est licitum; sanything which causes inconvenience cannot be lawful.
“It is trite that what cannot be done directly cannot be done indirectly.” Sangram Singh P Gaekwad V/S Santadevi P Gaekwad (2005) 57 SCL. 476 (SC)
To sum up, the Commissioner of Commercial Tax being so placed in the hierarchy of the department can issue instruction to his subordinates but in the administrative field only. There is nothing wrong if the Commissioner of Commercial Tax issue such circulars which bring to the notice of his subordinates things likes changes in legislation, law declared by the Supreme Court, binding precedents laid down by the High Courts and so on, so as to enlighten them and keep them abreast of the developments in the field of Law so as to avoid committing errors. On ticklish issues generally arising before the subordinates the Commissioner of Commercial Tax may suitably guide or advise them with a view to lending a helping hand. But the Commissioner of Commercial Tax cannot issue such circular or instructions as interfere or intermeddle with the exercise of statutory power or statutory discretion vesting in the subordinates in judicial or quasi- judicial arena. To issue such circulars is crossing the limits and entering the forbidden frontiers.
