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2016 (8) TMI 1077 - HC - VAT and Sales TaxClassification - Product prawn feed - Whether Product prawn feed would be covered under Entry 14 of the First Schedule pertaining to cattle feed - Held that - In the present case all that the legislature has done is to provide for a specific exemption for all aquatic products with effect from 31.03.2012. This exemption entry in no manner, amended any provisions of the First Schedule to the VAT Act, which continued to carry Entry 14 pertaining to the cattle feed, and thus whether before or after 31.03.2012, all cattle feed continued to fall within the list of goods, the sale or purchase of which are exempt from tax. The exemption entry pertaining to aquatic feed did not change this position. This change therefore, had no material effect on the order of determination passed by the Deputy Commissioner. We may recall, under such order, the Deputy Commissioner had held that the prawn feed would fall within the meaning of cattle feed for the purpose of entry 11 to the Schedule-I to the Sales Tax Act. The Assessing Officer, thus, proceeded entirely on the wrong premises and assumed jurisdiction not vested in it. It was bound by the order of determination passed by the Deputy Commissioner unless, by virtue of exemption notification, entire basis of such determination was rendered invalid. The legislature providing for exemption of such product from payment of tax does not necessarily and by itself imply that the product was otherwise exigible to tax. Question of relegating the petitioner to the alternative remedy therefore would not arise, when we find that the Assessing Officer has gone against an order of determination which was binding on him and when we find that his reasons for discarding such order of determination are wholly invalid. In other words, in our opinion, there was no material change in the relevant taxing entries insofar as the product in question is concerned. The Assessing Officer therefore, could not have ignored the order of determination. His order therefore was wholly without jurisdiction.
Issues Involved:
1. Validity and binding nature of the determination order under the Sales Tax Act. 2. Applicability of the determination order under the VAT Act. 3. Retrospective application of the determination order under section 80 of the VAT Act. 4. Classification and taxability of prawn feed before and after the introduction of the exemption notification dated 31.03.2012. Issue-wise Detailed Analysis: 1. Validity and Binding Nature of the Determination Order under the Sales Tax Act: The petitioner, a company engaged in trading prawn feed, challenged an order dated 30.03.2016 by the Assistant Commissioner of Commercial Tax. The petitioner had previously obtained a determination order dated 18.01.2001 from the Deputy Sales Tax Commissioner under section 62 of the Gujarat Sales Tax Act, 1969, which classified prawn feed as cattle feed under Entry 14 of the First Schedule, thus exempting it from tax. This order was never challenged by the Sales Tax authorities and thus achieved finality. The court reiterated that such determination orders are binding on the Department unless challenged through appropriate appellate or revisionary channels. 2. Applicability of the Determination Order under the VAT Act: With the substitution of the Sales Tax Act by the Gujarat Value Added Tax Act, 2003 (VAT Act) effective from 01.04.2006, the same exemption entry for cattle feed was included in the VAT Act under Entry 11 of Schedule-I. The authorities continued to grant the exemption based on the 2001 determination order. The court noted that the VAT Act contained similar provisions under section 80 for determining disputed questions, and the determination order under the Sales Tax Act continued to hold the field under the VAT Act. The court emphasized that the Assistant Commissioner could not take a different view from that expressed in the determination order without any material change in the law or circumstances. 3. Retrospective Application of the Determination Order under Section 80 of the VAT Act: Section 80 of the VAT Act, similar to section 62 of the Sales Tax Act, allowed for determination of disputed questions. Subsection (2A) of section 80 introduced a new provision permitting the Commissioner to revise orders within two years but limited the effect of such orders prospectively. The court held that the determination order under section 62 of the Sales Tax Act continued to bind the authorities under the VAT Act, and any revision could not have retrospective effect unless explicitly provided by the legislature. 4. Classification and Taxability of Prawn Feed Before and After the Introduction of the Exemption Notification Dated 31.03.2012: The court examined the impact of the exemption notification effective from 31.03.2012, which exempted aquatic feed from tax. The Assistant Commissioner had held that prior to this date, aquatic feed was taxable under the residuary clause. The court disagreed, stating that the exemption notification did not imply that the product was taxable before the exemption. The court emphasized that the classification of prawn feed as cattle feed under the determination order remained valid, and the introduction of the exemption did not alter this classification. The court concluded that the Assistant Commissioner’s order was without jurisdiction and set it aside. Conclusion: The court allowed the petition, setting aside the impugned order dated 30.03.2016, and held that the determination order dated 18.01.2001 continued to bind the authorities under the VAT Act. The Assistant Commissioner’s attempt to reclassify prawn feed and levy tax retrospectively was deemed invalid and without jurisdiction.
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