2023 (9) TMI 172 - HC - VAT and Sales Tax

Classification of goods - Interpretation of statute - kattha and cutch - forest produce or mot - Whether for the purpose of Road Tax, both can be treated as one product or different products? - HELD THAT - When the State Government in its letter dt. 20.07.2001 had itself taken a decision that both are different products and both cannot be taxed at same rate because their price in the market varies from Rs. 250-400/- per kg for Kattha and Rs. 5-25/- per kg for Cutch , the said view of the Government was binding on the Excise and Taxation Commissioner because the said letter dt. 20.07.2001 was addressed by the Government to the Excise and Taxation Commissioner, Himachal Pradesh only. It is not open to Excise and Taxation Commissioner to take a different stand as he is supposed to have done in the alleged letter dt. 20.01.2003, as stated by the Assistant Excise and Taxation Commissioner, Himachal Pradesh in his letter dt. 30.01.2003 - In fact, the request of the petitioner for supply of the proceedings dt. 20.01.2003 of the Excise and Taxation Commissioner under the Right to Information Act, 2005, has been returned on 18.07.2017 saying that said letter is not even available in the office of Deputy Excise and Taxation Commissioner, H.P. The order passed by the Deputy Excise and Taxation Commissioner-cum-Appellate Authority, Palampur, on 28.09.2011 cannot be sustained because he had simply refused to grant the refund on the view that the Excise and Taxation Commissioner, H.P. had rejected the refund on 20.01.2003. But there is no such letter made available to petitioner under the Right to Information Act, 2005 - the order dt. 28.9.2011 of the Deputy Excise and Taxation Commissioner-cum-Appellate Authority, Palampur, on 28.09.2011 set aside. The petitioner is entitled for refund of Rs. 40,48,125/- illegally collected by the respondents as Road Tax on Cutch during the period 13.11.2000 to 28.12.2001 - Petition disposed off.

Summary

Issues involved:
The issue involves the legality of the denial of refund by the respondents for the amount collected as road tax on 'Cutch' during a specific period, based on the interpretation of the tax laws and notifications in force during that time.

Summary of Judgement:

Issue 1: Taxation on 'Cutch' prior to 17.01.2002
The petitioner, a registered dealer for 'Kattha' and 'Cutch', contested the tax levied on 'Cutch' at the same rate as 'Kattha' before the amendment on 17.01.2002. The petitioner argued that 'Cutch' was not a taxable item before the amendment and should not have been subjected to tax. The Government's distinction between 'Kattha' and 'Cutch' based on their prices and uses supported the petitioner's claim. The judgment held that the tax on 'Cutch' at the same rate as 'Kattha' was incorrect and illegal. The order for refunding the tax collected on 'Cutch' during the specified period was granted.

Issue 2: Interpretation of Government's Decision
The Advocate General argued that 'Cutch' was taxable before the amendment as it falls under the broader term of 'Kattha'. Referring to a Supreme Court judgment, the Advocate General contended that 'Cutch' and 'Kattha' are considered forest produce. However, the judgment emphasized that the Government's decision, which recognized 'Cutch' as a distinct product from 'Kattha', was binding. The Excise and Taxation Commissioner's contradictory stance was deemed invalid, and the Government's directive prevailed in determining the taxability of 'Cutch'.

Conclusion:
The judgment set aside the previous orders and directed the respondents to refund the tax collected on 'Cutch' during the specified period to the petitioner. Interest at a specified rate was also ordered to be paid on the refunded amount. The decision was based on the Government's differentiation between 'Kattha' and 'Cutch', highlighting the incorrectness of taxing 'Cutch' at the same rate as 'Kattha' before the relevant amendment.