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2022 (5) TMI 73 - HC - VAT and Sales TaxLevy of tax and interest on sales made by the petitioner - sale in the course of Import - warehoused goods - resale of goods in Daman - first point of sale - constitutional validity of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 - levy of Central Sales Tax is contrary to the constitutional scheme of taxation or not - revenue neutrality - levy of tax is contrary to Article 265 and 300A of the Constitution of India or not? - HELD THAT - A perusal of the record indicates that, the impugned levy under the assessment year 2016-2017 is in respect of point to point sales. The petitioner has been also levied highest rate of tax despite having been paid on the resale by the purchasing dealer (M/s Damania Enterprises) in the destination state Daman inspite of non issuance of C-Form. During the pendency of this writ petition C-Forms have been already furnished to the petitioner. The petitioner is at liberty to submit such C-Forms before the assessing authority in so far as high rate of tax demanded from the petitioner for not having been submitted the C-form earlier. The Hon ble Supreme Court in a case of HOTEL ASHOKA (INDIAN TOURISM DEVELOPMENT CORPN. LTD.) VERSUS ACCT AND ANR. 2012 (2) TMI 62 - SUPREME COURT has held that, no tax on the sale or purchase of goods can be imposed by any State when the transaction of sale or purchase takes place in the course of import of goods into or export of the goods out of the territory of India. If any transaction of sale or purchase takes place when the goods are imported in India or they are exported from India, no State can impose any tax thereon. The Supreme Court considered the situation whether the goods brought from foreign countries by the assessee had been kept in bonded warehouses and they were transferred to duty free shops situated at International Airport of Bengaluru as and when the stock of goods lying at the duty free shops was exhausted. It is held by the Supreme Court that, when the goods are kept in bonded warehouses, it cannot be said that the said goods had crossed the customs frontiers. The goods are not cleared from the customs till they are brought in India by crossing the customs frontiers. When the goods are lying in the bonded warehouses, they are deemed to have been kept outside the customs frontiers of the country. Since the goods in question were sold by the petitioner from its bonded warehouse at Panvel to the bonded warehouse of the said M/s ASK Agencies at Kalamboli, New Mumbai, the sale was required to be treated as, Sale in the course of import and thus the petitioner rightly did not pay any tax on the said transaction being a bond to bond sale. In view of Section 3 and 41 of the MVAT Act read with Notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011, which are applicable to the facts of this case, the tax was required to be paid only in relation to sales of liquor which were purchased from the registered dealer on or after 01st May, 2011. This position is also reflected in the trade circular dated 4T of 2013 dated 26th June, 2013 - since the goods in question were transferred from the petitioner to M/s ASK Agencies suffer a single levy at the point of first sale, the tax in question already having been levied on the goods in question a fresh levy proposed to be made by the assessing officer in the hands of the petitioner is clearly in the teeth of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 and is beyond scope and jurisdiction of the charging section and other provisions of the MVAT Act. A perusal of the Section 3 of the MVACT Act clearly indicates that, the levy under the said provision qua goods is in the hands of the dealer. Under Section 41(5) of the MVAT Act levy is only on the licensor. The levy of tax on the transaction has been already extinguished in view of the payment thereof already made by M/s ASK Agencies - In the facts of this case, the rate of customs duty would be applicable when the goods were cleared from the warehouse under Section 68, on the date on which a bill of entry for home consumption in respect of said goods was presented by the assessee for clearance U/Sec. 68(1)(5) of the Customs Act. The said M/s ASK Agencies had cleared the goods for home consumption. The petitioner in this case has impugned the assessment order on various grounds including on the ground that tax demanded from the petitioner by the assessing officer is in excess of jurisdiction, without authority of law and unsustainable as the transaction is inter state (within Maharashtra) - Though an alternate remedy against the impugned assessment order is available to the petitioner since the impugned order is in excess of jurisdiction, bar to the maintainability would not apply to the facts of this case. The impugned assessment order thereby imposing a levy of fresh tax at this stage on the same transaction which has been already paid by M/s ASK Agencies is contrary to and in the teeth of Articles 265, 286 and 300A of the Constitution of India and thus deserves to be quashed and set aside on this ground also - Petition allowed.
Issues Involved:
1. Levy of tax under Section 3 of the MVAT Act and related notifications. 2. Applicability of principles laid down by the Supreme Court in "Hotel Ashoka" vs. "Nirmalkumar Parsan." 3. Double taxation on the same transaction. 4. Revenue neutrality of the transactions. 5. Levy of Central Sales Tax and its constitutional validity. 6. Violation of Articles 265 and 300A of the Constitution of India. Issue-wise Analysis: 1. Levy of Tax under Section 3 of the MVAT Act: The petitioner challenged the tax levied under Section 3 of the MVAT Act, arguing that the tax was already paid by M/s ASK Agencies at the "first point of sale." The court noted that the transaction was a bond-to-bond sale, and VAT was discharged by M/s ASK Agencies as per the applicable rate, treating it as the "first point of sale." The court found that the tax was rightly not paid by the petitioner based on the Supreme Court's decision in "Hotel Ashoka," which treated such sales as "in the course of import." 2. Applicability of Supreme Court Judgments: The court considered whether the transaction should be governed by the principles laid down in "Hotel Ashoka" or the later decision in "Nirmalkumar Parsan." It was concluded that the transaction, which occurred in 2015-2016, should be governed by the law prevailing at that time, as declared in "Hotel Ashoka." The court held that subsequent judgments could not retroactively alter the tax liability for transactions that occurred under the earlier legal framework. 3. Double Taxation: The court found that levying tax on the petitioner for the same transaction on which tax was already paid by M/s ASK Agencies would amount to double taxation, which is impermissible. The court highlighted that the tax collected from M/s ASK Agencies was for the same transaction, and thus, imposing additional tax on the petitioner would violate the principle against double taxation. 4. Revenue Neutrality: The court noted that if the tax were to be recovered from the petitioner, it would necessitate a corresponding refund to M/s ASK Agencies, making the situation revenue neutral. The court cited Supreme Court judgments that recognized revenue neutrality as a ground for not imposing additional tax, interest, or penalties. 5. Levy of Central Sales Tax: The court found that the assessing officer's reliance on the "Nirmalkumar Parsan" judgment to levy Central Sales Tax was misplaced, as the transaction was intra-state and not inter-state. The court held that the levy of Central Sales Tax was ex-facie illegal and ultra vires the provisions of the Central Sales Tax Act and MVAT Act. 6. Violation of Constitutional Articles: The court concluded that the impugned assessment order violated Articles 265 and 300A of the Constitution of India, as it imposed a fresh levy on a transaction that had already been taxed. The court emphasized that tax must be collected according to law and not arbitrarily. Conclusion: The court allowed the writ petition, quashing the impugned assessment order and ruling in favor of the petitioner. The court held that the tax levied was ultra vires, amounted to double taxation, and violated constitutional provisions. The petitioner was granted relief as per the prayer clauses (a) to (c) in the writ petition.
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