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TMI Blog2015 (7) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... tly for number of years, unless there are change circumstances in the subsequent assessment years. Even in case, where the officer and/or authority is of the opinion that the earlier decision though not challenged and/or even implemented for years is not a good decision and/or not in the interest of the revenue, the revenue is not remediless. However, as observed hereinabove, the Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances and the decision of the higher forum (in the present case, learned Tribunal), has been acted upon and implemented for the years. The impugned order passed by the Assessing Officer cannot be sustained, as the same is beyond the scope and ambit of the show cause notice dated 30.8.2012. It is required to be noted that by show cause notice dated 30.8.2012, the petitioner was called upon to show cause why “Maggi Noodles” shall not be treated as “Farsan and Eatables” (except sold in sealed container under a brand) falling under Entry 22 and liable to be taxed at 4%. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of Special Civil Application No.15842 of 2012 are considered and the said Special Civil Application No.15842 of 2012 is considered as lead matter. 3.1 The petitioner - Nestle India Limited (formerly known as M/s Food Specialties Limited) is registered under the VAT Act as well as under the Central Sales Tax Act. The petitioner is carrying manufacture and sale of various food products including "Noodles" under various internationally acclaimed brands, such as MAGGI, NESCAFE and NESTLE. 3.2 It is the case on behalf of the petitioner that under section 5(1) of the VAT Act, the goods which are specified in Schedule I are exempt from tax. The case of the petitioner for its product "Noodles" is covered by Entry 9(3) of Schedule I to the VAT Act. The goods specified in Entry 48(iii)(c) of Schedule II would be liable to tax at 4% and the goods not specified in any of the Schedules would be liable to tax at 12.5% under the Residuary Entry being Entry No.87 of Schedule II to the VAT Act. 3.3 During the course of the assessment proceedings for the AY 2008-2009, a notice dated 30.8.2012 was issued by the Deputy Commissioner (Assessment), Ahmedabad to the petitioner to show cause why the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funded to it. 3.6 That upto the year 31.3.2006, the adjudicating authority/Assessing Officers in respect of Noodles sold by the petitioner accepted that the Noodles would fall under the category "Sev" made by wheat flour or maida and was not liable to tax under the Sales Tax Act. It is required to be noted that the relevant Entry came to be changed after 1.4.1992 under the Sales Tax Act. What was under Entry 1(d) of Schedule I prior to 1.4.1992, the said Entry was renumbered as Entry 10(3) w.e.f. 1.4.1992. However, there was no change in the wording of the above Entry under Sales Tax Act prior to 1.4.1992 and after 1.4.1992. 3.7 It appears that for the State of Gujarat, VAT Act came into force from 1.4.2006. However, under the VAT Act, relevant exemption for "Sev" being Entry 9(3) of Schedule I to the VAT Act remains the same as that of original Entry 10(3) of Schedule I to the Sales Tax Act i.e. "Sev made out of wheat flour or maida" and it has not undergone any change whatsoever. 3.8 That on or about 19.6.2010, the Assistant Commissioner of Commercial Tax, Unit No.21, Ahmedabad issued a notice upon the petitioner proposing to impose tax on sales of "Maggi Noodles" at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the respondent herein dated 12.10.2012 (Annexure A to the petition), by which it is held that on the product "Maggi Noodles", the appellant is liable to pay VAT at the rate of 12.5% with 2.5% additional tax under Entry 87 of Schedule II to the VAT Act and the consequential notice for the amount assessed dated 12.10.2012 (Annexure AA), the petitioner has preferred the present Special Civil Application No.15842 of 2012 for the aforesaid reliefs. 4. Similar orders are passed with respect to different parties/assessment years, which are the subject matter of Special Civil Application Nos.5750 of 2014 and 6193 of 2014. 5.0 Shri SN Soparkar, learned Counsel appears with Shri Amar Bhatt, learned advocate appearing on behalf of the petitioner. 5.1 It is vehemently submitted by Shri Soparkar, learned Counsel that the impugned order passed by the respondent No.1 holding that product "Maggi Noodles" is liable to be taxed under Entry 87 of Schedule II to VAT Act at 12% with additional tax at 2.5% is absolutely illegal, most arbitrary and without jurisdiction and void ab initio and unreasonable 5.2 It is vehemently submitted by Shri Soparkar that their product "Maggi Two Minutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les under Entry 87 of Schedule II to the VAT Act liable to be taxed at 12.5% plus 5% additional tax. It is submitted that therefore, the impugned decision of the respondent No.1 dated 12.10.2012 to treat and consider the product Noodles within Entry No.87 of Schedule I to VAT Act is not only absolutely illegal, without jurisdiction, but is contrary to the binding decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984. It is submitted that the respondent No.1 as such being subordinate to the Sales Tax Tribunal is bound to follow the decision of the Tribunal. It is submitted that therefore, it was impermissible for the respondent to take a contrary view than that of the Tribunal in Appeal No.11 of 1984 not to treat the product "Maggi Two Minutes Noodles" as "Sev" and hold that the product "Maggi Two Minutes Noodles" would fall under Entry 87 of Schedule II to the VAT Act. It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that even, otherwise the impugned order passed by the respondent dated 12.10.2012 holding that the product "Maggi Two Minutes Noodles" would fall under Entry 87 and liable to be taxed at 12.5% with 2.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent at all. 5.8 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has vehemently submitted that while passing the impugned order, respondent No.1 has failed to appreciate that once the goods are covered by exemption, they cannot be taxed even if there is any other specific Entry in any other Schedule for taxable goods. In support of his above submissions, he has relied upon the decision of Hon'ble Supreme Court in case of Fenoplast Vs. State of A.P. And others reported in (1998) 8 SCC 185 as well as in the case of Kothari Products Ltd. Vs. Govt. of A.P. reported in (2000) 9 SCC 263. 5.9 It is submitted that without prejudice to the above, even the resort to the Residuary Entry has to be made only as a last resort. It is submitted that it is settled principles of law that in case of conflict between the specific Entry and the Residuary Entry, the specific Entry has to be preferred. In support of his above submission, Shri Soparkar, learned Counsel appearing on behalf of the petitioner has heavily relied upon the decision of the Hon'ble Supreme Court in case of Mayuri Yeast India Private Ltd. Vs. State of Uttar Pradesh and another reported in (2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984, by which, in the case of the very petitioner and with respect to the very product, "Maggi Two Minutes Noodles" was held to be "Sev" under Sub Entry (d) of Entry 1 to Schedule I to the Sales Tax Act and was exempted from payment of tax. Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also heavily relied upon the decision of the Hon'ble Supreme Court in the case of Union of India and others Vs. Kamlakshi Finance Corporation Ltd. reported in AIR 1992 SC 711 in support of his submissions that the respondent authority, as such, is/was bound to follow the binding decision of the Tribunal even while maintaining the judicial discipline. Making the above submissions and relying upon the above decision, it is requested to allow the present Special Civil Application and grant the relief, as prayed for. 6.0 Present petition is opposed by learned AGP Shri Jaimin Gandhi appearing on behalf of the respondent - State. 6.1 It is vehemently submitted that against the impugned assessment order, alternative statutory remedy by way of appeal before the first appellate authority and thereafter, if aggrieved, a fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 6. 257 ITR 242(DEL), CIT V. Sohanlal 7. 119 Taxmann 1 (MP), Lachhiram Puranmal 8. 161 ITR 234(BOM), Baijnath Brijmohan and Sons Pvt. Ltd. V. CIT 9. (1992) 60 Taxmann 248, Radhasoami Satsang Vs. CIT 6.4 It is vehemently submitted that as observed by the Hon'ble Supreme Court in the case of Radhasoami Satsang (supra), there cannot be a wide application of the rule of consistency. It is submitted that in the aforesaid decision of the Hon'ble Supreme Court, it acknowledged that there is no res judicata as regards assessment years and assessments for one year may not bind the officer for the next year. It is further submitted that erroneous or mistaken views cannot fetter the authorities into repeating them by application of rule, such as estoppel, for the reason that being an equitable principle, it is to be yield to the mandate of law. It is submitted that blind adherence to the rule of consistency would lead to enormous results, for the reason that it would endanger the unequal application of laws and direct various authorities to adopt varied interpretations to suit individual assessee. 6.5 It is further submitted by Shri Gandhi, learned AGP that merely because ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts also, the petitioner has no case and Noodles will not fall under Entry 9(3) of Schedule I. It is submitted that even on production of "Maggi Noodles", the petitioner shall not be entitled to exemption from payment of tax. It is submitted that as per the speech of the Hon'ble Finance Minister at the relevant time, providing the exemption to "Sev", the purpose of exemption to "Sev" was to provide employment to women in Gujarat. It is submitted that here the manufacturing of Noodles neither takes place in Gujarat nor it provides employment to women. It is submitted that the aforesaid relevant aspect either was not brought to the notice of the learned Tribunal at the time of deciding Appeal No.11 of 1984 nor the same has been considered by the learned Tribunal while deciding Appeal No.11 of 1984. Relying upon the decision of the Andhra Pradesh High Court in the case of CIT V. Ampro Food Products reported in 215 ITR 904 as well as the decision of the Bombay High Court in the case of B.R. Sounds - N - Music V. O.P. Bharadwaj reported in 173 ITR 904, it is vehemently submitted that speech of the Hon'ble Finance Minister is relevant for interpreting the ambiguity , if any, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of India. Making above submissions and relying upon the above decisions, it is requested to dismiss the present petition. 7.0 Heard learned advocates appearing on behalf of the respective parties at length. 8.0 Now, so far as the first contention on behalf of the respondent State and the submissions of Shri Gandhi, learned AGP not to entertain the present petition against the impugned order of assessment passed by the learned Assessing Officer and to relegate the petitioner to prefer the statutory appeal before the first appellate authority and/or the learned Tribunal is concerned, at the outset, it is required to be noted that while admitting the present Special Civil Application, which came to be admitted after hearing the learned AGP, the Division Bench, as such, overruled the said objection and has admitted the present Special Civil Application by observing that several issues purely on legal consideration arise and therefore, the petitioner may not prefer appellate remedy. Under the circumstances, when after considering the objection with respect to maintainability of the present petition in view of the statutory remedy available available, when the Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n those specified in [schedule I or Schedule III] & in the preceding entries of this Schedule. Note: As per proviso of Sec 7(1A)(i) two and half paise in the rupee levied an additional tax on the turn over of sales of goods w.e.f. 1-4-08. 8.4 From the above entries, it appears that under the Gujarat Sales Tax Act, prior to 1.4.1992 and thereafter, upto the Gujarat Value Added Tax Act, 2003 came into force from 1.4.2006 "Sev made out of wheat flour or maida" was exempt from payment of sales tax as if fall within exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act (prior to 1.4.1992) and under exemption Entry 10(3) under the Gujarat Sales Tax Act w.e.f. 1.4.1992 till the Value Added Tax Act came into force. Under exemption Entry 9(3), under the VAT Act, "Sev made out of wheat flour or maida" is also exempted. Not only that, even as per Entry 22 "Farsan and eatables (other than sweetmeats) as the State Government may by notification in the official gazette specify for the purpose of said Entry except when sold in sealed container under a brand, is exempted from payment of sales tax. However, as per Entry 87, which can be said to be a Residuary Entry of goods other than t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under category "Sev made out of wheat flour or maida" and was not liable to tax under the Gujarat Sales Tax Act. However, subsequently, during the course of assessment proceedings for the AY 2008- 09, the petitioner was served with the notice dated 30.8.2012 issued by the Deputy Commissioner (Assessment), Ahmedabad, by which the petitioner was called upon to show cause as to why the petitioner should not be subjected to tax on the sale of "Maggi Noodles" equating it to "Farsan" sold as branded product. At this stage, it is required to be noted that as such, in the year 2010, the Assistant Commissioner of Commercial Tax, Unit No.21, Ahmedabad issued notice upon the petitioner proposing to impose tax on sales of "Maggi Noodles" at the rate of 2.5% by treating the same as covered by Residuary Entry 87 of Schedule II to the VAT Act for AY 2006-07, to which the petitioner gave a reply and submitted that the "Noodles" would be covered by Entry 9(3) of Schedule I to the VAT Act and would be exempted from tax and as such, the Assessing Officer accepted the same and held that the "Noodles" being "Sev" would be entitled to exempt under Entry 9(3) of Schedule I to the VAT Act. Not only tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Residuary Entry i.e. Entry 87. It is submitted that therefore, the impugned order has gone beyond the scope and ambit of the show cause notice. 8.10 On the other hand, it is the case on behalf of the revenue that as such, on the goods manufactured and sold "Maggi Noodles" which is under brand and the object and purpose for which the "Sev" was exempted from payment of tax under the Sales Tax Act even subsequently Gujarat VAT Act, the petitioner is not entitled to the exemption from payment of tax on manufacture and sale of "Maggi Noodles". It is also the case on behalf of the revenue that while considering the fiscal statute, the principle of res judicata would not be applicable and each assessment year is a different unit and therefore, having of the opinion/view that the petitioner is not entitled to exemption from payment of tax on "Maggi Noodles", the impugned order passed by the Deputy Commissioner (Assessment) is absolutely just and proper and as such in consonance with the object and purpose of the exemption granted for "Sev". 8.11 As observed hereinabove in view of the decision of the Tribunal, "Maggi Noodles" has been treated as "Sev" falling within exemption Entry 1(d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction." 8.12.2 In the recent decision in the case of Excel Industries Limited (supra), when it was found from the record that in several assessment years, the revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further, but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. It is observed and held by the Hon'ble Supreme Court that the revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers' money in pursuing litigation for the sake of it. In the aforesaid decision, the Hon'ble Supreme Court has referred to para 16 and 17 of the decision of the Hon'ble Supreme Court in the case of Parashuram Pottery Works Ltd. v. Income Tax Officer reported in 1977(1) SCC 408. "16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. 7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 8.12.4 In the case of Claris Lifesciences Ltd. and another Vs. Union of India, the Division Bench of this Court in Special Civil Application No.3022 of 2013, when despite the binding decision of the Tribunal, the adjudicating authority issued show cause notice, relying upon the decision of the Hon'ble Supreme Court in the Kamlakshi Finance Corporation Ltd. (supra), the Division Bench of this Court, to which one of us was party, in para 26 has observed as under: "26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands allowed. Both the show cause notices dated 21.8.2012 and 22.1.2013 are quashed and struck down." It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts. Being a part of the justice delivery system. All efforts should be made by the authorities/quasi judicial authorities and judicial authorities to see that there is no multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure." 8.13 Now, so far as the decisions, upon which the learned AGP has relied, which are referred to herein above in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision and/or not in the interest of the revenue, the revenue is not remediless. However, as observed hereinabove, the Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances and the decision of the higher forum (in the present case, learned Tribunal), has been acted upon and implemented for the years. 8.13.1 Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Deepak Agro Foods Vs. State of Rajasthan and others reported in (2008) 7 SCC 748, on facts, the said decision shall not be applicable to the facts of the case on hand. In the said decision, the Hon'ble Supreme Court was as such considering the binding effect of a null and void order. In the said decision, the Hon'ble Supreme Court was considering the difference of null and void and irregular, wrong or illegal order. In the said decision, the Hon'ble Supreme Court has observed and held that the order passed without jurisdiction renders the order ab initio because absence of jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, by impugned order, the adjudicating authority has passed the impugned order holding that product "Maggi Noodles" would fall within Entry 87 (Residuary Entry) and liable to be taxed at 12.5% plus additional duty. Under the circumstances also, the impugned order cannot be sustained. 8.15 Now, so far as the contention on behalf of the State that at the time when the Sales Tax Tribunal passed order dated 9.9.1986 in Appeal No.11 of 1984, the learned Tribunal did not consider the object and purpose of granting the exemption for the product "Sev" falling under exemption Entry 1(d) of the Gujarat Sales Tax Act. It is submitted that as per the speech made by the Hon'ble Finance Minister on the floor of the house while declaring the exemption for the product "Sev", the object and purpose was to give benefit to the women and to encourage "Home Made Sev" and for upliftment of the women. It is the case on behalf of the State that it was never the intention to give exemption to such multinational companies and/or branded companies, who manufacture tne "Maggi Noodles" by machines. It is submitted that therefore, the exemption availed by the petitioner on manufacture and sale of "Magg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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