2022 (3) TMI 632 - HC - VAT and Sales Tax

Seeking revision of an appellate order - revision rejected on the ground that it was barred by limitation - whether Section 70 of Meghalaya Value Added Tax Act, 2003 permits this Court to entertain a petition for revision beyond the 60 days period indicated in such provision? - Benefit of exemption from VAT - The petitioner manufactures a product that is generically known as rusk. Rusk is a form of toasted bread that, unlike untoasted bread which is soft, is crunchy and it is consumed more as a biscuit than as bread or even toasted bread. HELD THAT - In the present case, Section 70 of the said Act prescribes a period of 60 days after being notified of the decision subjected to revision for the petition for revision to be carried to the High Court. Section 70 of the said Act does not expressly provide for any power to condone any delay, nor does it expressly prohibit a petition for revision to be entertained beyond the period of 60 days upon sufficient cause for the delay being shown. There is, therefore, no express exclusion in the said Act, within the meaning of the expression expressly excluded contained in the final limb of Section 29(2) of the Act of 1963. However, the expression expressly excluded has to be reasonably understood in the sense that if, by necessary implication, there is exclusion of any of the provisions contained in Sections 4 to 24 (inclusive) of the Act of 1963 in the special or local law, such implied exclusion would also fall within the fold of the expression expressly excluded. For such purpose, the principle embodied in the Latin maxim expressio unios est exclusio alterius may be referred to since it is a cardinal rule that when one or a few matters out of several possible are exclusively referred to, the obvious necessary implication is that the others have been excluded. There is no express exclusion within the meaning of the relevant expression in Section 29(2) of the Act of 1963 which operates on or in respect of Section 70 of the said Act pertaining to petitions for revision carried to this Court. Though it is wholly unnecessary to surmise why there is no express inclusion or express exclusion of the power to condone the delay in Section 70 of the said Act, it may be conjectured that considering the status of the High Court, the legislature deemed it fit to leave the matter open to discretion for the principles of justice, equity and good conscience to be applied by the highest judicial forum in the State - Upon a reading of the relevant provisions of the statute pertaining to VAT in the State, notwithstanding such enactment being a complete code pertaining to all VAT matters, Section 70 of the said Act cannot be said to have expressly excluded the authority of the High Court to condone any delay in the institution of a petition for revision thereunder. In this case, the petitioner invoked the authority of the Board of Revenue under a statute that was applicable to undivided Assam and prior to the State of Meghalaya being carved out. There is no doubt that with a bit more diligence and appropriate industry the revision ought to have been carried to this Court within the stipulated time. But it does not follow that the petitioner herein proceeded mala fide before the Board of Revenue or did not attempt to diligently pursue its challenge to the order impugned in the present proceedings - It was a mistake on the part of the petitioner to approach the Board of Revenue, but it does not appear that the petitioner did not seek to pursue the challenge to the order impugned herein with any degree of diligence. What is apparent in this case is that the petitioner may be using the same raw material as in the manufacture of bread, whereupon the petitioner manufactures a form of bread and refines the same to rusk. The process has been explicitly described at page 9 of the petition as quoted above. Thus, it is plain to see that the petitioner manufactures bread and subjects such bread to a further process, which activity falls within the meaning of manufacture as used in the said Act for an altogether different product to be produced - it cannot be said that the petitioner s product rusk is bread or the VAT exemption available to bread in the State must be extended to rusk. Application disposed off.

Summary

Issues Involved:
1. Whether Section 70 of the Meghalaya Value Added Tax Act, 2003 permits the High Court to entertain a petition for revision beyond the 60 days period.
2. Whether sufficient cause was shown for not bringing the revision within the statutory time-limit.
3. Whether the product "rusk" should be treated as "bread" and thus exempt from VAT.

Issue-wise Detailed Analysis:

1. Authority to Entertain Petition Beyond 60 Days:
The matter primarily revolved around whether the High Court could condone the delay in filing a revision petition beyond the 60-day period stipulated in Section 70 of the Meghalaya Value Added Tax Act, 2003. The State argued that the Act is a complete code and does not permit any reference to other statutes for condoning delays. They contended that since comparable provisions within the same chapter allowed for condonation of delay and Section 70 did not, it implied that the High Court lacked the authority to condone such delays.

The Court examined the provisions of Sections 65 to 70 and Section 110 of the Act. It noted that while some sections explicitly provided for condonation of delay, Section 70 did not. However, the Court held that the absence of an express prohibition against condoning delays in Section 70 did not imply an exclusion of such power. The Court referenced Section 29(2) of the Limitation Act, 1963, which allows for the application of Sections 4 to 24 of the Limitation Act unless expressly excluded by the special or local law. Since Section 70 did not expressly exclude the application of the Limitation Act, the Court concluded that it had the authority to condone the delay.

2. Sufficient Cause for Delay:
The Court then assessed whether the petitioner had shown sufficient cause for the delay in filing the revision petition. It emphasized that adjudication processes must be fair and reasonable, adhering to principles of natural justice. The petitioner had initially approached the Board of Revenue, which was a mistake, but the Court found no evidence of deliberate mischief or lack of diligence. The Court acknowledged that the petitioner had pursued the matter diligently before the lower revisional and appellate fora and concluded that there was sufficient cause for the delay.

3. Classification of "Rusk" as "Bread":
On the merits of the case, the Court examined whether "rusk" should be treated as "bread" for VAT exemption purposes. The petitioner argued that rusk is merely a form of toasted bread and should be exempt from VAT like bread. The Court reviewed the manufacturing process described by the petitioner, which involved slicing and toasting bread to make rusk. The Court referred to several judgments, including those distinguishing between ordinary and surgical cotton and between cast iron and cast iron castings.

The Court concluded that the process of converting bread into rusk constituted a manufacturing activity, resulting in a different product. It noted that some value is added to bread to make it into rusk, which would attract VAT. Applying the common parlance test, the Court observed that bread and rusk are distinct products, and a person asking for one would not expect to receive the other. Therefore, the Court held that rusk is not bread and is not entitled to the VAT exemption applicable to bread.

Conclusion:
The Court dismissed the revision petition, upholding the appellate Tribunal's judgment and order dated January 23, 2015. It also emphasized the need for adjudicating authorities to consider and address precedents cited before them and to avoid inappropriate expressions when referring to Supreme Court judgments. The petition failed, and the Tribunal's decision remained undisturbed, with no order as to costs.