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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 ..... A to the petition), by which the petitioner is directed to pay value added tax at the rate of 12.5% with 2.5% additional tax under Entry No.87 of Schedule II to the Gujarat Valued Added Tax Act (hereinafter referred to as "VAT Act") on the sale of "Noodles" by the petitioner. 2.1 That the petitioner has also prayed for appropriate writ, direction and/or order to quash and set aside the impugned notice for the amount assessed dated 12.10.2012 (Annexure "AA" to the petition), which is a consequential demand notice pursuant to the impugned order at Annexure A dated 12.10.2012 passed by the respondent No.1. 2.2 The petitioner has also prayed for an appropriate writ, direction and/or order directing the respondent No.1 to follow and adhere to the judgment dated 9.9.1986 passed in Appeal No.11 of 1984 passed by the learned Gujarat Sales Tax Tribunal (as it was in existence on that day). SCA Nos.5750 of 2014 & 6193 of 2014:- 3. In both these petitions, the prayers are made by the common petitioner Nestle India Limited challenging similar orders challenged in Special Civil Application No.15842 of 2012, but with respect to different period/different assessment years/financial years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggrieved by and dissatisfied with the aforesaid determination order, the petitioner preferred appeal before the learned Sales Tax Tribunal being Appeal No.11 of 1984. It was the case on behalf of the petitioner that product "Maggi Two Minutes Noodles" is covered under Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act and as such, tax free. It was the case on behalf of the petitioner that the product viz. "Maggi Two Minutes Noodles" is quite akin to "Sev" and therefore, covered by the term "Sev" mentioned in Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act and as such, tax free. That by detailed judgment and order dated 9.9.1986, the learned Sales Tax Tribunal allowed the said appeal, set aside the determination order passed by the learned Deputy Commissioner passed under section 62 of the Sales Tax Act and held that the petitioner's product viz., "Maggi Two Minutes Noodles" shall be covered by Sub Entry (d) of Entry 1 of Schedule I to the Act, which is as such tax free. The learned Tribunal further passed an order that any amount of tax paid by the original appellant - petitioner, if any, to the Government according to the determination order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as "Farsan & Eatables" to deny exemption on the ground that it is sold under a brand name. That the petitioner gave a detailed reply dated 10.10.2012 submitting that the product "Maggi Noodles" is already held to be "Sev" and subsequently, all the Assessing Officers have accepted the same and granted exemption considering the relevant Entry under the Sales Tax Act i.e. Sub Entry (d) of Entry 1 of Schedule I for the period prior to 1.4.1992 and after 1.4.1992, under Sub Entry (3) of Entry 10 of schedule I to the Sales Tax Act. 3.10 That by impugned order dated 12.10.2012 at Annexure A, the respondent No.1 has accepted the petitioner's contention that it is not liable to be taxed at 4% on "Farsan & Eatables". However, it is held that the petitioner is liable to be taxed on their product "Maggi Noodles" at 12% with 2.5% additional tax under Entry 87 of Schedule II to the VAT Act i.e. Residuary Entry. Thereafter, the petitioner has been served with the demand notice (Annexure AA), by which for the period from 1.4.2008 to 31.3.2009, the petitioner is assessed and directed to pay Rs. 11,70,43,085/-, which includes the tax amount, interest and penalty. 3.11 That feeling aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alling under Entry 10(3) of Schedule I of Sales Tax Act. It is submitted that under the VAT act, the product/goods "Sev made out of wheat flour or maida" is falling under Entry 9(3) of Schedule I to VAT Act. It is submitted that there is no change in the wording of above entries under the Gujarat Sales Tax Act and thereafter, under the VAT Act. It is submitted that therefore, when under the Gujarat Sales Tax Act and as per the decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984, product "Maggi Two Minutes Noodles" was considered and held to be "Sev" falling under Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act, the very product "Sev made out of wheat flour or maida" would fall under Entry 9(3) of Schedule I to the VAT Act and therefore, liable to be exempted from the VAT. 5.4 It is further submitted that in fact, upto the year 31.3.2006, all the authorities/Assessing Authorities in respect of Noodles sold by the petitioner had accepted that Noodles would fall under category "Sev made out of wheat flour or maida" and therefore, not liable to be taxed under the Sales Tax Act. It is submitted that thereafter, all of a sudden, it is not open for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further submitted that even, otherwise in view of the binding decision of the Sales Tax Tribunal in Appeal No.11 of 1984, by which, it was held that the product "Maggi Two Minutes Noodles" is "Sev" falling under Sub Entry (d) of Entry 1 of Schedule I to Sales Tax Act and is exempted from tax and when the same has been accepted by the department for approximately 20 years and thereafter, all of a sudden, it is not open for the respondent to treat the said product "Maggi Two Minutes Noodles" falling within Entry 87 of Schedule II to VAT Act. 5.7 It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that the impugned order suffers from non-application of mind, inasmuch as the petitioner along with its reply annexed copy of order dated 26.7.2010 passed by the Assistant Commissioner, Unit No.21, Ahmedabad in response to the notice dated 19.6.2010 seeking to levy the tax under the Residuary Entry and by which the Assistant Commissioner accepted the case of the petitioner that Noodles being "Sev" would be entitled to exemption under Entry 9(3) of Schedule I to the VAT Act. It is submitted that while passing the impugned order, the aforesaid as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner has also heavily relied upon the decision of the Hon'ble Supreme Court in the case of BSNL V. Union of India reported in (2006) 3 SCC 1, more particularly, para 20 of the said decision and has submitted that as held by the Hon'ble Supreme Court in the said decision, if an Entry had been interpreted consistently in a particular manner for several assessment years, ordinarily, it would not be permissible for the revenue to depart there from unless there is any material change. 5.13 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also relied upon decision in case of Ponds India Limited (merged with H.L. Limited) V. Commissioner of Trade Tax, Lucknow reported in (2008) 8 SCC 369 in support of his above submissions. 5.14 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also relied upon the decision of the Division Bench of this Court in case of E I Dupont India Private Limited and another V. Union of India and others dated 25.10.2013 in Special Civil Application No.14917 of 2013 and other allied petitions in support of his submission that the respondent No.1 being the subordinate to the learned Tribunal, was bound t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be a sufficient ground to bypass the statutory remedy. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Tithagpur Paper Mills Ltd. V. State of Orissa reported in AIR 1983 SC 603 (para 12). 6.3 Now, so far as the contention on behalf of the petitioner that in view of the earlier decision of the Tribunal dated 9.9.1986 in Appeal No.11 of 1984, the impugned order of assessment cannot be sustained on the principles of res judicata/consistent and binding precedent of judicial order of the Tribunal is concerned, it is vehemently submitted by Shri Gandhi, learned AGP that in fiscal law, the principle of res judicata shall not be applicable. It is submitted that the res judicata is not applicable to tax laws, as every year is a separate unit. In support of his above submissions, he has relied upon the following decisions of the Hon'ble Supreme Court as well as various High Courts. 1. 41 ITR 685(SC), Raja Bahadur Vishaswara V. CIT (Appeals) 2. 350 ITR 24 (DEL), Krishak Bharti Cooperative Ltd. V. DCIT 3. 115 ITR 401 (CAL), Kamladevi Jhawar 4. 211 ITR 635 (KER), CIT V. Kalpetta Estates Ltd. 5. 49 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been placed by the petitioner is concerned, it is vehemently submitted that as such, the order of the learned Tribunal cannot come in the way of the Assessing Officer to pass appropriate order in the subsequent year, as the order of the Tribunal is per incuria as it did not consider the object of the exemption as per the speech of the Hon'ble Finance Minister. In support of his above submission, he has heavily relied upon the decision of the Bombay High Court in the case of H.A. Shah & Co. V. CIT reported in 30 ITR 618. 6.8 It is submitted that the contention on behalf of the petitioner that in case, the Assessing Officer follows the earlier orders passed by the learned Tribunal and passes an order in favour of the assessee, in that case, the revenue will be able to challenge the order before the learned Tribunal is concerned, it is submitted that the aforesaid is actually premature as there is possibility that the Tribunal may take a view in favour of the revenue. It is submitted that the Tribunal may even take a different view than its earlier view, because there is change of facts as the ingredients in making of Noodles have changed. 6.9 It is further submitted by Shri G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as rightly held by the respondent authority, product "Noodles" manufactured and sold by the petitioner shall not fall within Entry 22 of Schedule II, as "Farsan" are ready to eat items and Noodles is not ready to eat items and therefore, it is not "Farsan". It is submitted that therefore, the respondent authority has rightly held that "Maggi Noodles" shall fall within Entry 87 and is liable to be taxed at 12.5% plus 2.5 % additional duty. It is further submitted that even the Noodles shall not fall within Entry 48(iii)(c), as the Noodles cannot be said to be "Farsan" that is to say eatables. It is submitted that therefore, and in view of the aforesaid facts and circumstances, the Noodles is rightly held to be falling within Entry 87. 6.12 It is further submitted that while passing the impugned order, the Assessing officer has passed the detailed and reasoned order while holding that the Noodles shall not fall within the definition of "Sev" i.e. falling under Entry 9(3) of Schedule I. It is submitted that therefore, the impugned order passed by the respondent - assessing authority is absolutely just and proper and is not required to be interfered with by this Court in exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cription of Goods Gujarat Sales Tax Act (Prior to 1/4/92) 1(d) I Sev made out of Wheat Flour or Maida Gujarat Sales Tax Act (with effect from 1/4/92) 10(3) I Sev made out of Wheat Flour or Maida Value Added Tax Act, 2003 9(3) I Sev made out of Wheat Flour or Maida 8.3 Some other entries, which are required to be referred to while considering the issues in the present Special Civil Applications under the VAT Act are as under: "SCHEDULE - I [See: sub-section(1) of section 5] GOODS, THE SALES OR PURCHASE OF WHICH ARE EXEMPT FROM TAX Sr. No. Description of goods Conditions and exceptions subject to which exemption is granted. 1 2 3 22 Farsan and eatables (other than sweetmeats) as the State Government may by notification in the Official Gazette, specify for the purpose of this Entry. Note:-(1) refer-Noti.No.(GHN- 15)VAT-2006/CH-I(22)(1) TH dtd 29.3.2006 (2) Sales or purchases of mamra and pauva (II/87) are exempt from whole of tax by Entry 19 of Noti.(No.GHN-44-u/s5(2)(3) w.e.f. 29.4.2006 Except when sold in sealed containers under a brand. [Explanation:- The word "brand" means any goods sole under a trade mark registered under the trade marks act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It is required to be noted that the said judgment and order passed by the Sales Tax Tribunal had attained finality, inasmuch as, not only the revenue had not challenged the same before the higher authority/forum, all throughout the "Maggi Noodles" has been considered as "Sev" and on sale of the same, the petitioner has been granted the exemption from payment of sales tax. At this stage, it is required to be noted that "Sev made out of wheat flour or maida" was falling under exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act prior to 1.4.1992 and thereafter, number of Entry was changed and the "Sev made out of wheat flour or maida" was falling under exemption Entry 10(3) of Schedule I to the Gujarat Sales Tax Act w.e.f. 1.4.1992, however, without any change in the wording. 8.7 Even after the Value Added Tax Act, 2003 came into force, "Sev made out of wheat flour or maida" is falling under Entry 9(3) of Schedule I to the Value Added Tax Act,2003 and the "Sev made out of wheat flour or maida" is exempted from payment of sales tax/VAT. It is required to be noted that upto the year 31.3.2006, in all the assessments in respect of the "Noodles" sold by the petitioner, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.11 of 1984, now it is not open for the Assessing Officer to take a contrary view and treat the "Maggi Noodles" falling under Entry 87, as the decision of the Tribunal holding that "Maggi Noodles" is a "Sev" and therefore would fall under exemption Entry No.1(d) of Schedule I to the Gujarat Sales Tax Act had attained finality and not only attained finality, but even the department had granted exemption to the petitioner for all these years upto 2007-2008 and there is no change in the wording of the erstwhile Entry 1(d) of Schedule I to the Sales Tax Act prior to 1.4.1992 under Entry 10(d) of Schedule I to the Gujarat Sales Tax Act after 1.4.1992 and even under Entry 9(3) of the Gujarat VAT Act. 8.9 It is also the case on behalf of the petitioner that even otherwise, the impugned order cannot be sustained, inasmuch as show cause notice dated 30.8.2012 was issued by the Deputy Commissioner (Assessment) calling upon the petitioner to show cause why the product "Maggi Noodles" may not be treated as "Farsan and Eatables" (except sold in sealed container under a brand) falling under Entry 22 and why the tax at the rate of 4% is not leviable? However, the impugned order has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted consistently in a particular manner for several assessment years, ordinarily, it would not be permissible for the revenue to depart there from unless there is any material change. In the aforesaid decision, the Hon'ble Supreme Court considered decision of the Hon'ble Supreme Court in the case of BSNL V. Union of India reported in (2006) 3 SCC 1, more particularly, para 20, which reads as under: "...The Courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the earlier decision is per incuriam. However, these are fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Additional Solicitor General that anxiety on the part of the Assistant Collector that, if he accepts the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified. In para 6 to 8 , the Hon'ble Supreme Court has observed as under: "6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issue which were placed before them,one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view,rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer.He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section.35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher appellate authorities/courts. Time and again the Hon'ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities. In the recent decision in the case of Claris Lifesciences Ltd. (Supra) in para 26 this Court has observed as under: "26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not correct decision and for whatever reason, earlier, the same was not challenged before the higher forum and the same came to be implemented erroneously and/or mechanically and the authority is of the opinion that there is likelihood of huge loss to the revenue, even in such a case, appropriate remedy available to the authority would be to pass an order following the earlier binding decision of the higher forum and thereafter, the revisional authority either may take the order in suo motu revision and thereafter, the matter may be carried to the Tribunal (in the present case, VAT Tribunal) and in that case, the Tribunal being Coordinate Bench may either follow the earlier decision of the Tribunal (Coordinate Bench) or may refer the matter to the Special Bench/Full Bench and if the Tribunal concurs with the earlier decision, in that case, the revenue may still approach the High Court and the High Court may take different view than the earlier view taken by the Tribunal, as in that case, the decision of the Tribunal is not binding to the High Court. Thus, even in case, where the officer and/or authority is of the opinion that the earlier decision though not challenged and/or even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se before the Hon'ble Supreme Court, it was a case of changed circumstances with respect to the subsequent assessment years. 8.13.3 Similarly, other decisions relied upon by Shri Gandhi, learned AGP of various High Courts referred to herein above in support of his submissions that in a fiscal matters, principle of res judicata shall not be applicable, as such there cannot be any dispute with respect to the aforesaid proposition of law. However, considering the facts of the case on hand referred to herein above and observations made by the Hon'ble Supreme Court in the case of Excel Industries Limited (supra), Ponds India Limited (supra) and Kamlakshi Finance Corporation Ltd. (supra), none of the decision shall be applicable to the facts of the case on hand. 8.14 Even, otherwise 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 Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is required to be get settled subsequently by appropriate higher forum. However, at the same time, the adjudicating authority/ Assessing Officer cannot be permitted to ignore and/or cannot be permitted to pass a contrary order than order passed by the higher forum, unless there are chang circumstances found in the subsequent assessment years. 9. In view of the above and for the reasons stated above, the impugned orders dated 12.10.2012, 28.3.2014 and 31.3.2014 passed by the respondent No.1 deserve to be quashed and set aside and accordingly, are quashed and set aside on the aforesaid ground alone. However, with a liberty to the State/revenue to take appropriate remedial measures as observed herein above. It is also made clear that this Court has not expressed anything on merits with respect to the legality and validity of the order passed by the Gujarat Sales Tax Tribunal dated 9.9.1986 passed in Appeal No.11 of 1984 and has not expressed anything on merits whether the product "Maggi Noodles" is exempted from Sales Tax/VAT and/or whether it will fall in Entry 9(3) of Schedule I to the VAT Act or not, as impugned orders are quashed and set aside on the ground stated herein above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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