2008 (7) TMI 871 - HC - VAT and Sales Tax

Net tax payable on revision - Held that - Since the Government has no power to declare that the judgment of the Supreme Court in Mohd. Ekram Khan 72, 394 is in accordance with law and must therefore be upheld.

Summary

Issues Involved:
1. Validity of the respondent's endorsement dated May 28, 2008, directing the petitioner to pay tax.
2. Applicability and implementation of G.O.Ms. No. 144 dated February 11, 2008.
3. Retrospective application of the Supreme Court judgment in Mohd. Ekram Khan & Sons [2004] 136 STC 515.
4. Authority and scope of executive instructions under Article 162 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the Respondent's Endorsement Dated May 28, 2008:
The petitioner challenged the endorsement dated May 28, 2008, which directed them to pay tax of Rs. 72,394, as arbitrary and unjust. This endorsement was pursuant to the revisional authority's order dated November 24, 2006. The court examined whether this endorsement was contrary to G.O.Ms. No. 144 dated February 11, 2008, which directed prospective application of tax on spare parts supplied during the warranty period.

2. Applicability and Implementation of G.O.Ms. No. 144 Dated February 11, 2008:
The petitioner sought a direction to implement G.O.Ms. No. 144, which instructed the Commissioner of Commercial Taxes to levy tax prospectively from July 21, 2004. The court noted that G.O.Ms. No. 144 was issued under the executive power of the Government under Article 162 of the Constitution of India, as there was no specific provision in the Andhra Pradesh General Sales Tax Act, 1957 or its Rules. The court clarified that executive instructions can only supplement and not supplant the law and cannot override statutory provisions.

3. Retrospective Application of the Supreme Court Judgment in Mohd. Ekram Khan & Sons [2004] 136 STC 515:
The court emphasized that the Supreme Court's judgment in Mohd. Ekram Khan & Sons, which held that amounts received for supply of spare parts under warranty agreements were liable to tax, is applicable from the inception unless stated otherwise by the Supreme Court. The court held that the Government's attempt to apply the judgment prospectively from July 21, 2004, was invalid as it could not override the Supreme Court's decision, which did not specify prospective application.

4. Authority and Scope of Executive Instructions Under Article 162 of the Constitution of India:
The court discussed the scope of executive power under Article 162, noting that while the State can issue administrative instructions, these do not have the force of law and cannot override judicial decisions. The court cited precedents to underline that executive instructions cannot invalidate or modify judicial orders. The court concluded that the Government's executive order in G.O.Ms. No. 144, attempting to limit the applicability of the Supreme Court's judgment to a prospective date, was beyond its authority and thus void.

Conclusion:
The court dismissed the writ petition, upholding the respondent's endorsement directing the petitioner to pay the tax. It ruled that the Government's order in G.O.Ms. No. 144, which sought to apply the Supreme Court's judgment prospectively, was void and unenforceable. The court reiterated that the Supreme Court's judgment has retrospective effect unless explicitly stated otherwise by the Supreme Court itself.