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TMI Blog2017 (11) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dealer under the Bihar Finance Act, 1981 and is thus liable to pay tax under the VAT Act - under Section 3(2) itself, the tax leviable by way of Entry Tax can only be paid by every dealer liable to pay tax under the VAT Act, this condition has been duty fulfilled. Second condition need to be fulfilled is, The set off can only be granted if the assessee is an importer of scheduled goods, who is liable to pay tax under the VAT Act - Held that: - the Appellant is an importer of scheduled goods, viz., petroleum products. Words and expressions that are not defined under the Entry Tax Act shall have the meaning assigned to them under the VAT Act - when a sale is effected by the Appellant to BPCL and HPCL, there is no levy of any VAT that is contemplated at this point. The VAT gets levied only at the next point in the chain of sales, which is the sale from BPCL and HPCL to their retailers and/or consumers. Thus, it is clear that the second condition is not fulfilled as the importer of the scheduled goods i.e. the Appellant is not at all liable to pay tax under the VAT Act. Third condition which is needed to be fulfilled is, The assessee must incur tax liability at the rates speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... others are made outside the local area of Patna. We give the Appellants 12 weeks time to approach the Appellate Tribunal with all details as aforesaid and request the Appellate Tribunal to render findings - petition allowed by way of remand. - CIVIL APPEAL NO.3018 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.15875 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.15893 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.15896 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.15899 OF 2017 - - - Dated:- 14-11-2017 - Mr. R.F. Nariman And Mr. Sanjay Kishan Kaul JJ. SPECIAL LEAVE PETITION (CIVIL) NO.15900 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.15926 OF 2017, SPECIAL LEAVE PETITION (CIVIL) NO.16192 OF 2017 JUDGMENT R.F. Nariman, J. 1. The present appeal and special leave petitions arise out of demands made from the Appellant for payment of Entry Tax under the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (hereinafter referred to as the Entry Tax Act). 2. The Appellant has its marketing division in the State of Bihar with branches, inter alia, at Barauni and Patna. It is from these branches that sales of petroleum products are effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Advance Rulings Authority, and rejected the case of the Appellant under Section 3(2) second proviso of the Entry Tax Act, stating that the set off would not be allowable under the aforesaid proviso. 4. In the seven Special Leave Petitions before us by, a common judgment dated 19th April, 2017, a Division Bench of the Patna High Court framed five questions as follows: i) Whether the second proviso to Section 3(2) of the Entry Tax Act is ultra vires to the Constitution? (ii) Whether interest can be levied in the matter of late payment of entry tax under the Entry Tax Act, by virtue of the provisions of the Bihar Finance Act, and, with the aid of Section 8 of the Entry Tax Act? (iii) Whether entry tax is liable to be paid when the goods only enter the local area and after such entry is subjected to sell only without there being any use of consumption of the goods in the local area? (iv) Whether based on audit objection as contemplated under the provisions of Section 33 of the VAT Act, assessment can be re-opened with the aid of Section 8 of the Entry Tax Act? (v) Whether the assessment undertaken under Section 33 of the VAT Act is permissible after a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l area of Patna, which would, therefore, not attract Entry Tax at all. This has not been segregated, and if segregated, the demand for the assessment years in question would fall by at least ₹ 1,000 crores. The Appellants were given no opportunity to demonstrate this in detail, despite the fact that they were able to give certificates by HPCL and BPCL for all the assessment years in question that those companies had, in fact, effected sales worth over a thousand crores outside the area of Patna. 7. According to Shri Datar, if this Court were to decide against the appellant on the construction of Section 3(2) second proviso, then, in any case, he would be liable to succeed, as the said proviso should be read down to make it constitutionally valid, as otherwise it would fall foul of Article 14 of the Constitution of India. According to the learned counsel, the same goods cannot bear different rates of tax which are ultimately passed on to the consumers and this ex facie discrimination would, therefore, make the proviso bad in law requiring this Court to read it down, so that, at least so far the Appellant is concerned, a set off would be granted. Also, according to him, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Definitions . (1) In this Act unless the context otherwise requires, (c) Entry of goods , with all its grammatical variations and cognate expressions, means, entry of goods: (i) into a local area from any place outside such area, (ii) into a local area from any place outside the State, (iii) into a local area from any place outside the territory of India, for consumption, use or sale therein. Provided that in case of such goods which are liable to tax under Section 12(1) of the Bihar Finance Act, 1981, entry of goods shall mean entry of goods into local area from any place outside the State for consumption, use or sale therein. Explanation Entry of goods into a local area for consumption, use or sale therein from any place outside the territory of India shall also be deemed to be an entry of goods for the purposes of this Act. 3. Charge of Tax (I) There shall be levied and collected a tax on entry of scheduled goods into a local area for consumption, use or sale therein for the purpose of development of trade, commerce and industry in the State, at such rate, not exceeding twenty percent, of the import value of such goods, as may be specified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded Tax Act, 2005, as provided in this section or any notification there under, issued shall not be made. (1) The amendment made in section 3 of the said Act shall be deemed to be, and to always have been, for all purposes, as validity and effectively in force at all material times (w.e.f. 25.2.1993) (2) Any assessment, collection, adjustment, reduction or computation made or any other action taken or anything done or purported to have been taken or done under the Bihar Finance Act, 1981 and the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 and notifications issued and rules made there under shall be deemed to be and to have always been, for all purposes, as validly and effectively, assessed, collected, adjusted, reduced, computed or taken or done as if the said Act as amended by this Ordinance had been in force at all material times and accordingly, notwithstanding anything contained in any judgment, decree, or order of any court, or tribunal or other authority: (a) no suit or other proceedings shall be maintained of continued in court or tribunal or other authority for the refund of any amount received or realized by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and files a true and complete declaration in the Form and manner prescribed: Provided that no tax shall be levied and collected in respect of any motor vehicle which was registered in any other State or Union Territory under the Motor Vehicles Act, 1988 for a period of fifteen months or more before the date on which it is registered in the State under that Act. THE BIHAR TAX ON ENTRY OF GOODS INTO LOCAL AREA RULES, 1993 8. Manner for claiming reduction in the liability to pay sales tax .-(1) A claim for reduction in the liability to pay sales tax shall be made by registered dealer who is entitled to claim such reduction under sub-section (1) of section 4 or in accordance with the notification issued under sub-section (1) of Section 3 of the Act. (2) The claim shall be valid only when the amount of entry tax has been paid on the concerned goods. (3) The burden of proving the claim for reduction of sales tax shall be on the dealer. (4) Such claim shall be made by furnishing a statement in triplicate in Form ET-X which shall be filed along with the quarterly return. (5) On receipt of the claim in Form ET-X, the authority prescribed for assessment of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale tax payable after reduction of liability Remarks 6 7 8 9 10 11 I hereby declare and certify that the above particulars are collect and complete to the best of my knowledge and belief. I further certify that the amount of entry tax shown in this statement has been paid by me. Signature of the dealer or his declared manager. CERTIFICATE (To be signed by the assessing officer) Certified that the particulars furnished in this statement have been scrutinised by me and found to be correct. The amount of entry tax on the goods concerned, to the extent of which the liability of sales tax under the Bihar Finance Act, 1981 has been claimed to be reduced has been duly paid by the dealer. Signature designation of the authority. 10. So far as the Bihar VAT Act is concerned, it is necessary to refer to the following provisions: 3. Charge of tax. (1) Every dealer who is registered under the Bihar Finance Act, 1981 (Bihar A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a dealer, subsequent sales of the same goods in the State of Bihar shall not be levied to tax, if the dealer making subsequent sale produces before the prescribed authority the original copy of the cash memo, or invoice or bill issued to him and files a true and complete declaration in the form and in the manner prescribed. (c) Where by a notification published under clause (a), the State Government specifies, in respect of any goods specified in Schedule IV, that the tax shall be levied at more than one point or on all points of sale, the amount of tax paid at each preceding stage of sale shall be adjusted against the amount of tax payable at each subsequent stage of sale in the manner prescribed. (d) The declaration referred to in clause (b) shall be issued by the selling dealer to the purchasing dealer not later than the 30th day of September of the year following the year to which such sales relate. (3) If upon information, the prescribed authority has reasons to believe that the selling dealer has, without reasonable cause, failed to issue to the purchasing dealer the declaration referred to in subsection (2), he shall, after giving the selling dealer a reasonable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f biri. Bihar Value Added Tax Rules, 2005 18. Taxable turnover - For purposes of section 35 the taxable turnover of the dealer shall be that part of his gross turnover which remains after deducting therefrom: (6) Sale price at the subsequent stages of sale of such goods: (a) specified in Schedule IV of the Act as being subject to tax at the first point of their sale in Bihar, or (b) on the sale whereof tax at the maximum retail price has been paid at the first point of its sale in Bihar, if necessary evidence as required by sub-section (2) of section 13 is annexed with the return required filed by the dealer under sub-section (1) of section 24. 19. Returns. [(2) Every registered dealer, other than a dealer paying tax under sub-section (1) or sub-section (1A) or sub-section (4) of Section 15, shall furnish to the authority specified in Rule 62:- (a) A quarterly return in Form RT-I in duplicate; (b) An annual return in Form RT-III in duplicate. Provided that every registered developer, who has opted to pay compounding tax under the provisions of Section-15C of Bihar Value Added Tax Act, 2005 in lieu of tax payable under the Act shall fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 1 Motor spirit (Petrol) (A) At the point of sale by importer if the goods are imported from outside Bihar or at the point of sale by manufacturer if the goods are manufactured in Bihar or, (b) at the point of sale by oil companies to the retailer or direct to the consumers, if goods are sold by these companies. 2 High Speed Diesel Oil and Light Oil Do 12. Since the set off in question depends upon the interpretation of Section 3(2) of the Entry Tax Act, it is necessary to state, at the outset, that the following conditions need to be satisfied for claim of set off under the said provision: (i) First and foremost, under Section 3(2) itself, the tax leviable by way of Entry Tax can only be paid by every dealer liable to pay tax under the VAT Act; (ii) The set off can only be granted if the assessee is an importer of scheduled goods, who is liable to pay tax under the VAT Act; (iii) The assessee must incur tax liability at the rates specified under Section 14 of the VAT Act; (iv) This must only be by virtue of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale by oil companies to the retailer or direct to the consumer. On a reading of the aforesaid notification, it is clear that when a sale is effected by the Appellant to BPCL and HPCL, there is no levy of any VAT that is contemplated at this point. The VAT gets levied only at the next point in the chain of sales, which is the sale from BPCL and HPCL to their retailers and/or consumers. Thus, it is clear that the second condition is not fulfilled as the importer of the scheduled goods i.e. the Appellant is not at all liable to pay tax under the VAT Act. 16. So far as the Condition (iii) is concerned, there being no levy on the Appellant, the Appellant does not incur any tax liability at the rates specified under Section 14 of the VAT Act. 17. So far as Condition (iv) is concerned, in any case, this must be by virtue of sale of the very imported scheduled goods, which means that the sale must be by the Appellant itself and not by the other OMCs. This becomes clear from the second part of this provision which reads: . or sale of goods manufactured by consuming such imported scheduled goods 18. Further, Condition (v) must be that his i.e. the Appellant s tax li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already seen that the Appellant is a registered dealer under Section 3(1) of the VAT Act and would be a dealer liable to pay tax under the aforesaid Act within the meaning of the enacting part of Section 3(2) of the Entry Tax Act. However, it is clear that as importer of scheduled goods, the Appellant must be liable to pay tax under the VAT Act. As has already been found, the Appellant as an importer of scheduled goods is not liable to pay tax as the levy of tax is itself postponed when the Appellant sells the oil to another OMC, and VAT is leviable only on the transaction between the said OMC and its retailer or other customers. In the ACC (supra) case, the levy on cement was always there, being a scheduled item, an exception to which by way of exemption was allowed only on additional production of cement. It is also important to note that the expression by virtue of sale of imported scheduled goods or sale of goods manufactured by consuming such imported scheduled goods . was added later by way of amendment and was not contained in Section 3(2) second proviso which was construed in the ACC (supra) case. This condition has clearly not been met in the present case as h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Bihar Chamber of Commerce Ors. , (1996) 9 SCC 136, for the proposition that the Objects and Reasons appended to the Bill of the Entry Tax Act showed that it was with a view to make the provision of the Bihar Finance Act more workable. From this it can scarcely be held that this being the object, the second proviso must be completely altered in order that it subserves such object. We have already held that a literal reading of the second proviso, which gives a concession by way of set off, cannot possibly be held to be altered qua every material condition, so that the Appellant be entitled to claim a set off. Consequently, this judgment and other judgments cited by the Appellant, such as Commissioner of Income Tax, Bangalore v. J.H. Gotla , Yadagiri , (1985) 4 SCC 343, to buttress the plea of purposive interpretation cannot be held to apply in the facts and circumstances of this case. 23. Shri Datar s next plea was that a literal reading of the second proviso would lead to a situation where the same goods would suffer different rates of tax and this would be discriminatory. We are afraid that this plea also does not avail the Appellant for the simple reason that there a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid grounds, no question of reading down the provisions would then arise. 28. However, when it comes to the levy of interest, the impugned judgment dated 19th April, 2017, held that there can be no levy of interest as there is no substantive statutory provision for the same. The assessee succeeded on this point and the State has not filed any appeal against the same. Therefore, the finding qua interest, having become final, cannot be interfered with by us. 29. However, Shri S. Ganesh, learned Senior Advocate appearing for the Revenue, has argued before us that, as a matter of restitution, interest must be granted in favour of the Revenue for the period for which stay orders have been obtained in writ petitions filed in 2014 and 2015. This Court has held that, if a party ultimately succeeds, it must be put back in the same position as if no such stay orders have been passed, and for this purpose he referred to and relied upon State of Rajasthan Anr. v. J.K. Synthetics Limited Anr. , (2011) 12 SCC 518 at paras 18 and 23 and Nava Bharat Ferro Alloys Limited v. Transmission Corporation of Andhra Pradesh Limited Anr. , (2011) 1 SCC 216 at paras 16 to 27. 30. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d outlets outside the area of Patna, we feel that Shri Datar is right in asking that we give an opportunity to the Appellant to produce all relevant documentary material, which would show that a large amount of the demand for these years (of ₹ 1,683.03 crores), would be liable to be done away with as Entry Tax would not be leviable on these transactions at all as the consumption, use or sale of petroleum products has taken place outside the local area of Patna. Indeed, all these sales must have suffered Entry Tax in the local area outside Patna, where such retail sales were made, provided, of course, that they were made within the State of Bihar. We are, therefore, of the view that the Appellant will approach the Appellate Tribunal with all relevant materials in this behalf, and the Appellate Tribunal will render a finding as to how much of the demand of Entry Tax for the assessment years in question would have to be struck down, in that sales made by HPCL and BPCL to their retail consumers and to others are made outside the local area of Patna. We give the Appellants 12 weeks time to approach the Appellate Tribunal with all details as aforesaid and request the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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