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TMI Blog2018 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... unconventionally delved into the records, preceded the enactment, but did not get any explanation there for purpose of the above differential which we have now declared as discriminatory. The benefit of Input Tax shall be available to the petitioner-company for carrying out sale in the course of interstate trade or commerce - But that benefit shall not be extended to the petitioner-company in respect of the returns or the assessment orders unrelated to the assessment order dated 16.06.2015 or prior to but such benefit shall continue in respect of the return or the assessment order posterior to 16.06.2015. On comparison between the sale in the course of interstate trade or commerce and the transaction of stock-transfer, inference that has been in the premise of the said impression, has not persuaded us to utilize the same in this case. Petition allowed. - W.P.(C) No. 234 of 2015 - - - Dated:- 28-7-2017 - Mr. S. Talapatra, J. For the petitioner : Mr. K. Gulati, Senior Advocate, Mr. S. Chetia, Advocate, Mr. R. Datta, Advocate For the respondents : Mr. B.C. Das, Advocate General, Mr. B.P. Todi, Senior Advocate, Mr. A. Todi, Advocate Mr. D.C. Nath, Advocate J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, there had been no question of excess Input Tax Credit or its adjustment with the CST under Section 11 of the TVAT Act. The petitioner-company being aggrieved by the said order dated 17.06.2009 had preferred a revision petition under Section 70 of TVAT Act before the Commissioner of Taxes, the respondent No. 2 herein, which was registered as Rev. Case No. 04/Ch-III/09 on 06.07.2009. In that petition, the petitioner-company had asserted that they were entitled to the benefit of Input Tax Credit on their purchases of raw materials against sales made by it of the finished goods outside the State of Tripura. The said plea however, was not accepted by the revisional authority and hence, by the order dated 20.03.2013, Annexure-II to the writ petition, the Commissioner of Taxes held that the petitioner-company was not entitled to get adjustment of Input Tax Credit on the sale of manufactured products outside the State of Tripura. However, the respondent No. 2, having considered the submission advanced by the petitioner-company, did not allow the Input Tax Credit under Section 10 of the TVAT Act to be set off from the payable CST. The respondent No. 2 declined its interfere with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Tripura was to give benefit of input tax credit only in respect of sales intended or made within the State of Tripura. There is no doubt in our mind that the Act specifically excludes from its ambit, the inter-State sales and the benefit of tax paid on inter-State sales cannot be availed of by the petitioner to claim input tax credit. There is no ambiguity in the language and, therefore, reliance placed by Sri Dubey on the judgments of the Apex Court in Commissioner of Income Tax, Bombay etc. vs. M/s. Podar Cement Pvt. Ltd. etc., [(1997) 5 SCC 482] and Commissioner of Income Tax, Karnataka, Bangalore vs. M/s. Shaan Finance (P) Ltd., Bangalore, [(1998) 3 SCC 605] is totally misplaced. [Emphasis added] 2. The petitioner-company has averred that in the revision petition No. 44 of 2013 they had jurisdictional basis challenged the validity of any provisions of the TVAT Act and hence, there had been no occasion for this to examine the validity of any provision including the Sections 10(3)(a) and 10(3)(b) of the TVAT Act. The judgment dated 26.03.2015 had been passed on consideration and interpretation of the provisions as existed. According to the petitioner-company, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) (b) Assam Value Added Tax Act, 2003 provides Input Tax Credit for sale in course of Interstate Trade or Commerce 4 Bihar As per Sec 6(1) (a) of Bihar VAT Act, 2005, intersate sales are not liable to any sales Tax and as per Section 16(1) (b) such sales will also be entitled for Input Tax Credit. 5 Chattishgarh Section 13(1) (a) of the Chattisgarh Value Added Sales Tax Act, 2003 provides for rebate on Input Tax case of interstate sale or commerce 6 Goa Sec 9(1) of the Goa Value Added Tax Act, 2005 provides Input Tax Credit for interstate sale. 7 Gujarat Section 11(a) (3)(ii) of Gujarat Value Added Tax Act, 2003 provides tax credit in case of sale in the course of inter-State trade and commerce 8 Harayana Harayana Value Added Tax Act, 2003. Sec (3) (2) provides nil duty for interstate sale. Sec 30 provides refund of input tax for interstate sale. 9 HP Adopted Model ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tamilnadu Adopted Model Act with slight modification. Sec 19(2)(v) of Tamilnadu Value Added Tax Act, 2006 Act provides Input Tax Credit for Sale in course of Interstate Trade and Commerce 23 Uttarakhand Adopted Model Act with slight modification. Sec 6(3)(b) provides Input Tax Credit for Sale in course of Interstate Trade and Commerce 24 UP Adopted Model Act with slight modification. Sec 13(1) provides Input Tax Credit for Sale in course of Interstate Trade and Commerce in Sr. No. 1 of attached Table of this section. 25 West Bengal WB VAT Act, 2003 Sec 22(4)(b) provides Input Tax Credit for Sale in course of Interstate Trade and Commerce 26 Chandigarh Punjab VAT Act extended to Chandigarh 27 Lakshdweep Kerala VAT Act extended for Lakshdweep 28 Delhi Delhi VAT Act Sec 7 provides that interstate sale is not liable to tax. Sec 9 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of closure of business before the period specified above, no further input tax credit shall be allowed and input tax credit carried forward, if any, shall be forfeited. (b) In respect of exporting dealers, input tax credit may be spread over a period less than 3 years as may be prescribed. (c) Input tax credit is to be given only after commencement of sale of taxable goods 'and purchase of taxable goods as mentioned in schedule VIII.' (d) In respect of inputs used in taxable goods sent on stock/consignment transfer, tax paid in excess of 4% or the prevailing rate of C.S.T. on such inputs is to be credited. (e) Tax paid in excess of 4% on petroleum products used as fuel (other than petrol, Aviation Turbine Fuel and diesel and other fuels when used as fuel in production of taxable goods or captive power is to be entitled for input credit. However, no input tax credit will be given if petroleum product is used as fuel in motor vehicle. (f) Input tax credit shall be allowed during the return period. Refund of excess tax credit shall be allowed only after the end of the financial year. (2) Partial input tax credit is to be made where inputs are us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler- (i) in respect of any taxable goods under this Act purchased by him from another registered dealer for resale but give; away by way of free sample or gift; (ii) who has been permitted by the Commissioner for composition of tax at a percentage of the turnover of sales in lieu of VAT as provided under section 15; (iii) in respect of capital goods of traders in the initial year i.e. the input tax credit on capital goods would be confined to manufacturers; (iv) in respect of goods brought from outside the State against the tax paid in other States; (v) in respect of stock of goods remaining unsold at the time of closure of business; (vi) in respect of goods purchased on payment of tax, if such goods are not sold because of any theft, destruction or damage for any reason; (vii) where the tax invoice is- (a) not available with the dealer, or (b) there is evidence that the same has not been issued by the selling dealer from whom the goods are purported to have been purchased; (viii) in respect of goods purchased from a dealer whose certificate of registration has been suspended; (ix) in respect of goods used for transfer of stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no input credit shall be claimed in respect of raw materials used in manufacture or processing of goods where the finished products are dispatched other than by way of sales. However, proviso to the said clause (xi), Input Tax Credit may be allowed in respect of transaction falling under item/clause (ix)* under sub-Section 6 of Section 10 of the TVAT Act, on the tax paid in excess of 4% on the raw materials used directly in the manufacture of the finished products. 7. According to the petitioner-company, a reading of sub-section 10(1) and Clause (ix) of Section 10(6) of TVAT Act provides that the purpose of the said provisions are that the State should at least get tax on the goods purchased in the State of Tripura at the applicable rate of CST even if the said goods are sent on stock/consignment transfer after purchasing the same in the State of Tripura. That is the reason why it has been provided that in case of inputs used in taxable goods sent on stock/consignment transfer the tax paid in excess of 4% or the existing rate of CST, such input is to be credited. The rate of tax under TVAT Act on rubber including latex is 5%. In case such goods after purchase in the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f stock/consignment transfer, the provision to that extent is restriction on the free movement of goods in the interstate trade and commerce. Such restriction as imposed by Section 10(3)(a) and Section 10(3)(b) of the TVAT Act directly impedes the free movement of goods from one state to another in course of the inter-state trade and commerce. Such restriction, according to the petitioner-company, is contrary to Article 301 of the Constitution of India and such restriction is designed to ensure that goods are not sent to outside the State by way of interstate sale. It is the duty of the legislature to indicate the reasonableness of such classification made under a statute. The legislature must indicate why a particular person or a group of person is treated differently. The reasons for such classification must have a nexus with the object sought to be achieved. Such reasons are to be indicated in the legislation itself. The legislature can delegate the power to the executive giving guidelines. According to the petitioner-company, the legislature must indicate why such distinction is made. In the present case, the dealer sending the goods on stock transfer or on consignment transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,26,77,653/- 3 2010-2011 Rs.1,61,41,180/- 4 2011-2012 Rs.1,61,08,331/- 5 2012-2013 Rs.1,27,81,949/- 6 2013-2014 Rs.73,52,929/- Total Demand for the above assessment years Rs. 6,52,04,502/- 10. The Assessing Authority while passing the assessment order dated 16.06.2015 has denied the input tax credit as per Section 10 of the TVAT Act. The respondents in their reply have admitted this fragment of fact contending that the assessment orders are in conformity with the provisions of TVAT Act. It has been further asserted that in view of the extant provisions of law as stated, the petitioner-company is not entitled to Input Tax Credit. That is the reason their challenge before the revisional authorities under Sections 70 72 of the TVAT Act had fallen through. In Para-9 of the reply, the respondents have stated the basis of their decision which according to this court is the sum and substance of the reply of the respondents. For that reason, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner cannot be permitted to raise again the issue which already settled. The judgment passed by the High Court in case of M/s. Abhisar Buildwell Pvt. Ltd. on 09.04.2015 attained finally since SLP filed as against the said judgment was dismissed on 28.08.2015. The deponent craves leave of the Hon'ble High Court to produce copy of the Special Leave Petition (C) filed before the Hon'ble Supreme Court of India as well as orders passed therein and orders passed by the Hon'ble High Court of Tripura against which SLP was filed at the time of hearing of the present petition. 11. The respondents have further asserted that under no circumstances, the respondents put any restriction on the free movement of goods in the interstate trade and commerce and hence, there cannot be any question of violating Article 301 of the Constitution of India in any manner. According to the respondents, availability and non-availability of benefit of Input Tax Credit is not an imposition of tax and neither is regulatory or directory. Section 10(3)(a) and Section 10(3)(b) of the TVAT Act do not impede flow of inter-state trade and commerce. The nonavailability of benefit of Input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti, learned senior counsel with Mr. S. Chetia, learned counsel and Mr. R. Dutta, learned counsel appearing for the petitioner-company. We have also heard Mr. B.P. Todi, learned senior counsel with Mr. A. Todi, learned counsel and Mr. D.C. Nath, learned counsel appearing for the respondents. We have been benefited by the illuminating submissions of Mr. B.C. Das, learned Advocate General whom we asked to address as the vires of the statute is under challenge. 14. Mr. Gulati, learned senior counsel appearing for the petitioner-company has at the beginning clearly stated that by the impugned order the assessing authority has refused to allow the Input Tax Credit to the petitioner-company for the input tax paid by it on purchase of raw materials to manufacture ISNR which was the subject-matter of the interstate sale carried out by the petitioner-company. Such denial is based on the provisions of Section 10(3)(a) and Section 10(3)(b) of the TVAT Act. The petitioner-company was not allowed an adjustment of their Input Tax Credit with the payable CST which they were required to deposit for the month of February, 2009. Being aggrieved by the order of the assessing authority, the appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of a particular provision of the statute can only be challenged before the High Court on invoking the jurisdiction under Article 226 of the Constitution of India or before the apex court under Article 32 of the Constitution of India. While this court was exercising its jurisdiction under Section 72 of the TVAT Act it was not exercising its jurisdiction for judicial review. Vires of Section 10(3)(a) and Section 10(3)(b) of TVAT Act was neither raised nor considered in those proceedings. It is well settled that a judgment is only an authority for what it decided but not what logically would have followed therefrom. To buttress such contention, Mr. Gulati, learned senior counsel has referred a decision of the apex court in Union of India and others vs. Dhanwanti Devi, reported in (1996) 6 SCC 44, where it has been held as under: 9. Before adverting to and considering whither solatium and interest would be payable under the Act, at the outset, we will dispose of the objection raised by Shri Vaidyanathan that Hari Kishan Khosla's case 1993 Supp (2) SCC 149 is not a binding precedent nor does it operate as ratio decidendi to be followed as a precedent and per se per incuriam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion it is always necessary to see what were the facts in the case in which the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and therefore, Judges are to employ an intelligent technique in the use of precedents. It would, therefore, be necessary to see whether Hari Kishan Khosla's case: 1993 Supp (2) SCC 149 would form a binding precedent. Therein, admittedly the question that had arisen and was decided by the Bench of three Judges was whether solatium and interest are payable to an owner whose land was acquired under the provisions of the Central Act? On consideration of the facts, the relevant provisions in the Central Act and the previous precedents bearing on the topic, the Court had held that solatium and interest are not a part of compensation. It is a facet of the principle in the statute. The Central Act omitted to provide for payment of solatium and interest since preceding the acquisition the property was under requisition during which period compensation was paid to the owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o raise the issue of vires of Section 10 of the TVAT Act cannot be held barred inasmuch as in Nand Kishore vs. State of Punjab, reported in (1995) 6 SCC 614, the apex court was considering a similar question as to whether the plea of constructive res judicata as raised by the State of Punjab would apply in the fact situation of that case. The said objection was upheld by the Punjab and Haryana High Court but on appeal, the apex court set aside that judgment holding that the petitioner, Nand Kishore, was not bared to challenge. Rule 5.32(b) of the Punjab Civil Service Rule was challenge in the context of the order of compulsory retirement, in exercise of that rule. The apex court in Nand Kishore (supra) had occasion to observe as under: 18. Bearing the above principles in mind what at best was said by the State of Punjab was that failure to raise the constitutionality of Rule 5.32 in the writ petition preferred by the appellant would imply, on the principle of 'might and ought', that the opportunity of controverting the matter had been lost and that it should on the principles of constructive res judicata be taken that the matter had been actually raised and adversely d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire a permanent government servant after ten years of qualifying service, the court's act of striking that Rule as unconstitutional is the law which appeared on the scene, not only to break the presumption of constitutionality but to declare it void. In a sense the offending provision was never there and in the other it was henceforth not there. In either event, it would be within the ambit of the emphasised words in Mathura Prasad case: (1970) 1 SCC 613. [Emphasis added] 18. In this regard, another decision of the apex court in MRF Limited vs. Manohar Parrikar and others, reported in (2010) 11 SCC 374 has been pressed for the petitioner. There the apex court restated the same view. In MRF Limited (supra) an objection was raised that the notification which was questioned have been under challenge could have not been allowed to be so challenged on the ground of constructive res judicata as the similar issue was raised in the previous round of litigation and therefore, the challenge to the aforesaid two notifications might and ought to have been raised in the previous round. As there was no specific challenge in the previous round of litigation to the vires of the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions proceeded solely against the order dated 31.03.1998, and subsequent Notification issued by the State Government on 24.07.1998. It is observed by the High Court, that, the State Government opposed those writ petitions without examining the legality of the Notifications dated 15.05.1996 and 01.08.1996 and it had contended that the benefit of rebate was withdrawn as the State Government was facing financial crunch and that the said benefit had been introduced as a policy of the State Government and when it was realized by the State that it was facing financial difficulties in extending the benefit of rebate it decided to withdraw the same which has been upheld by the High Court in the earlier batch of writ proceedings. 35. The High Court therefore has concluded that it cannot now be said that State Government cannot take a stand that the notifications impugned were issued without following the mandatory provisions of Rules of Business or that they were not notifications issued by the State Government in the eye of law. The High Court has also observed, that if the State had no occasion to address itself on the legality of these notifications, it is not estopped either from r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Court in the case of Shankar Ramachandra Abhyankar vs. Krishnaji Dattatreya Bapat : AIR 1970 SC 1) has laid down the condition as to when there can be a merger of the orders of the superior court with that of the orders passed by the lower court. This Court stated, that, if any judgment pronounced by the superior court in the exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties, then it would replace the judgment of the lower court. Thus, constituting the judgment of the superior court the only final judgment to be executed in accordance with law by the court below. The merger is essentially of the operative part of the order and the principle of merger of the order of the subordinate court with the order of the superior court cannot be applied when there is no order made by the superior court on merits and the controversy between the parties has not been looked into by the superior court. 39. The issue of merger has no bearing in the facts and circumstances of the present petitions, since, the issue that was decided by the High Court in the earlier batch of writ petitions and the issue that wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent and distinct from the public interest litigation filed by Mr. Manohar Parrikar. In the earlier writ petitions, the challenge was against the notification and the circulars issued by the State Government and in the present writ petitions the High Court was primarily concerned with validity or otherwise of the notifications dated 15.5.1996 and 01.08.1996. Therefore, we are of the view that the reasoning and conclusions reached by the High Court, on the aforesaid issue are in accordance with law and in accordance with the principles laid down by this Court. Therefore, we agree with the conclusion reached by the High Court. [Emphasis added] 19. The issue of vires of Section 10(3)(a) and Section 10(3)(b) of the TVAT Act was never raised in M/S. Abhisar Buildwell Private Limited (supra) but Mr. Gulai, learned senior counsel has fairly placed before this Court that in the special leave petition preferred by M/S. Abhisar Buildwell Private Limited the ground of violation of Article 301 of the Constitution of India was taken since the apex court dismissed the SLP in limine on 28.08.2015 there was no occasion to raise that ground and neither was an issue of vires raised by M/S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was always meant to be Clause XI. This is because this proviso states of Input Tax Credit on raw materials used directly in the manufacture of finished goods. The language of the proviso therefore corresponds to Clause XI which is in respect of raw materials in the manufacture of finished goods. Mr. Gulati, learned senior counsel has refreshed us the statement made by Mr. B.C. Das, learned Advocate General that both in case of exports and stock-transfer outside the state, the benefit of Input Tax Credit are available. Mr. Gulati, learned senior counsel has conceded to such interpretation given by learned Advocate General. Further Mr. Gulati, learned senior counsel has submitted that it is clear that the State Government grants the benefit of Input Tax Credit in two situations viz. (i) where goods are transferred out of state by way of exports and (ii) where their stock is transferred outside the State of Tripura to other states. In both the categories of transactions, the State Government does not earn any revenue by means of tax as it is disabled by virtue of Article 286 of the Constitution of India levying tax on transactions which are not sales such as stock-transfers and in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tripura, the State Government earns revenue by way of CST. It is the only class of transaction which has been picked up for discriminatory treatment and therefore, it violates the Article 14 of the Constitution of India. However, Mr. Gulati, learned senior counsel has clearly acceded to the position of law that under the present constitution scheme, the State Governments have the power to pick of certain persons or certain types of transaction for the purpose of taxation while leaving out certain other types of transaction from the net of taxation. This absolute power available with the State Government is however subject to certain well defined restrictions. Repeatedly, the apex court has held that tax laws are subject to the rigours of Article 14 of the Constitution of India. While the State Government has the power to classify, such classification must bear a nexus with the object sought to be achieved. If no basis is indicated by the State Government for such a classification or the classification is based on no intelligible differentia, the provision would be struck down as arbitrary. Further, assuming that the classification is based on some intelligible differentia, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to encourage industrialization. Mr. Gulati, learned senior counsel has categorically stated that the said reason cannot form the basis for classification. Even a unit which undertakes an interstate sale is a unit set up in Tripura. The purpose of industrialization is also achieved by setting up the unit. There is no reason thereafter to distinguish the same unit for the benefit of Input Tax Credit, merely on the basis of the type of sale it is undertaking. In the case of a stock-transfer, it is provided that the Input Tax Credit beyond the CST rate i.e. 2% would be allowed. This is done as and when a stock-transfer is made and no tax is payable. But in the interstate sale the state at least garners the CST for its own use. It is strange enough that where the state gets money by way of CST from the dealers who undertake interstate sale, the benefit of Input Tax Credit is denied. There cannot be any reason to do so. Mr. Gulati, learned senior counsel having referred to Annexure-4 where a list of the States/UTs has been provided to show that none of those States/UTs denies Input Tax Credit to a dealer who makes intestate sale. According to Mr. Gulati, learned senior counsel, Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Babu's Sakti Oushadhalaya Dacca (P) Ltd. v. Union of India : (1963) 3 SCR 957 : (AIR 1963 SC 622) this Court considered whether the Ayurvedic medicinal preparations known as Mritasanjibani, Mritasanjibani Sudha and Mritasanjibani Sura, prepared in accordance with an acknowledged Ayurvedic formula, could be brought to tax under the relevant State Excise Act when medicinal preparations were liable to excise duty under the Medicinal and Toilet Preparations (Excise Duty) Act, which was a Central Act. The Court held that the three preparations were medicinal preparations, and observed that the mere circumstance that they contained a high percentage of alcohol and could be used as ordinary alcoholic beverages could not justify their being treated differently from other medicinal preparations. The Court said : (SCR pp. 975-76): So if these preparations are medicinal preparations but are also capable of being used as ordinary alcoholic beverages, they will fall under the (Central) Act and will be liable to duty under item No. of the Schedule at the rate of ₹ 17.50 per gallon of the strength of London proof spirit. On a consideration of the material that has been placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade and in-common parlance. The High Court relying on a decision of this court in the case of Ayurveda Pharmacy Anr. v. State of Tamilnadu : (1989) 2 SCC 285 held that the two items of the same category cannot be discriminated. Hence, the High Court held that merely because of composition of NPK, discrimination could not have been made against the respondent. 12. In Ayurveda Pharmacy: (1989) 2 SCC 285 it was held that while it was open to the legislature or the State Government to select different rates of tax for different categories, where the commodities belonged to the same class or category, it was necessary that there must be a rational basis of discrimination between one commodity and another for the purpose of imposing tax. Accordingly, the High Court went on to hold that merely because of different composition of NPK, discrimination could not have been made against NPK 23:23:0 and hence ordered the appellants not to realise tax on the sale of NPK 23:23:0 from the respondent for the period from 10.04.1995 to 31.03.1996. 13. From a perusal of the notifications in question, it is evident that other fertilizers of the NPK category i.e. N.P.K. 12:32:16; N.P.K. 15: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to withdraw the benefit that was given earlier, resulting in higher burden on the assessee without any reason. 15. The learned counsel appearing for the State relying heavily on the case of Kerala Hotel and Restaurant Association Ors. v. State of Kerala Ors.: (1990) 2 SCC 502, contended that the State has widest latitude where measures of economic and fiscal regulation are concerned. There is no dispute on this principle of law as enumerated in the aforesaid decision of this Court. However, this same law must not be repugnant to the Article 14 of the Constitution, i.e., it must not violate the right to equality of the people of India, and if such repugnancy prevails then, it shall stand void up to the level of such repugnancy under Article 13(2) of the Constitution of India. Therefore, every law has to pass through the test of constitutionality, which is nothing but a formal name of the test of rationality. We understand that whenever there is to be made any type of law for the purpose of levying taxes on a particular commodity or exempting some other commodity from taxation, a sought of classification is to be made. Certainly, this classification cannot be a product of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a policy decision rejected such trend by observing as Under: 12. The judgment of this Court in Kasinka Trading's case : (1995) 1 SCC 274, no doubt, lays down the principle that there is wide discretion available to the Government in the matter of granting, curtailing, withholding, modifying or repealing the exemptions granted by earlier notifications. It is also correct that the Government is not bound to grant exemption to anyone to which it so desires. When the duty is payable under the provisions of the Act, grant of exemption from payment of the said duty to particular class of persons or products etc. is entirely within the discretion of the Government. This discretion rests on various factors which are to be considered by the Government as these are policy decisions. In the present case, however, the issue is not of granting or not granting the exemption. When the exemption is granted to a particular class of persons, then the benefit thereof is to be extended to all similarly situated person. The notification has to apply to the entire class and the Government cannot create sub-classification thereby excluding one sub-category, even when both the sub-categories a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution. Article 14, which is treated as basic feature of the Constitution, ensures equality before the law or equal protection of laws. Equal protection means the right to equal treatment in similar circumstances, both in the privileges conferred and in the liabilities imposed. Therefore, if the two persons or two sets of persons are similarly situated/placed, they have to be treated equally. At the same time, the principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position. It would mean that the State has the power to classify persons for legitimate purposes. The legislature is competent to exercise its discretion and make classification. Thus, every classification is in some degree likely to produce some inequality but mere production of inequality is not enough. Article 14 would be treated as violated only when equal protection is denied even when the two persons belong to same class/category. Therefore, the person challenging the act of the State as violative of Article 14 has to show that there is no reasonable basis for the differentiation between the two classes cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e differential and a rational basis germane to the purpose. If the State Government fails to support its action on the touchstone of the above principle then this decision has to be held as arbitrary and discriminatory. It is relevant to note here that the acquisition of the lands is for the purpose of planned development of the area which includes both residential and commercial purposes. That being the purpose of acquisition it is difficult to accept the case of the State Government that certain types of structures which according to its own classification are of 'A' class can be allowed to remain while other structures situated in close vicinity and being used for same purposes (residential or commercial) should be demolished. At the cost of repetition, it may be stated here that no material was placed before us to show the basis of classification of the existing structures on the land proposed to be acquired. This assumes importance in view of the specific contention raised on behalf of the appellants that they have pucca structures with R.C. roofing, Mozaic flooring etc. No attempt was also made from the side of the State Government to place any architectural plan of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any of the two methods. When two methods are permissible under the statutory scheme itself, obviously option is that of the assessee to choose in all those methods to pay the custom duty. Duty, thus, paid is to be naturally treated as validly paid. Merely because with the adoption of one particular method the duty that becomes payable is lesser would not mean that two such persons belong to different categories. The important factors for the purposes of parity are same in the instant case, viz. the goods are same; they fall under the same Heading and the custom duty is leviable as per the Act which has been paid. Therefore, the impugned Notification giving exemption only to those persons who paid a particular amount of duty, namely ₹ 1,400/- per LDT, would not mean that such persons belong to a different category and would be entitled to exemption and not other persons like the respondent herein who paid the duty on the same goods under the same Act but on the formula which he opted and which is permissible, which rate of duty comes to ₹ 1,035/- per LDT. 17. It is also important to bear in mind that the appellants have not supported the withdrawal of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought about as is apparent from the following passages in that judgment: 15. The learned counsel appearing for the State relying heavily on Kerala Hotel and Restaurant Assn. v. State of Kerala : (1990) 2 SCC 502, contended that the State has widest latitude where measures of economic and fiscal regulation are concerned. There is no dispute on this principle of law as enumerated in the aforesaid decision of this Court. However, this same law must not be repugnant to Article 14 of the Constitution i.e. it must not violate the right to equality of the people of India, and if such repugnancy prevails then, it shall stand void up to the level of such repugnancy under Article 13(2) of the Constitution of India. Therefore, every law has to pass through the test of constitutionality, which is nothing but a formal name of the test of rationality. We understand that whenever there is to be made any type of law for the purpose of levying taxes on a particular commodity or exempting some other commodity from taxation, a sought of classification is to be made. Certainly, this classification cannot be a product of blind approach by the administrative authorities on which the responsibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. The same principle has been stated by the apex court in Dr. Subramanian Swamy vs. Director, Central Bureau of Investigation Anr., reported in (2014) 8 SCC 682. Even Gauhati High Court in Makum Tea Co. (India) Ltd. vs. State of Assam, reported in (1997) 1 GLR 138 has observed likewise. In Makum Tea Co. (India) Ltd. (supra) the Gauhati High Court has laid down as under: 17. Under section 27 of the Act, the Government, the Government companies and the public companies are under obligation to deduct tax at source and deposit it to the Government in the manner prescribed therein. Mr. Goswami in this connection has drawn my attention to the piece of legislation prior to the enactment of the Act. Under the previous Act the Government was empowered to notify the authority or persons who were to deduct tax at source. Pursuant to the provisions of the earlier legislation, notification had been issued by the Government. As per the said notification two categories of persons were required to deduct tax at source viz the Government and Government companies. But the present legislation has also include 'the public companies'. Now the 'public companies' are also under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution and liable to be struck down. [Emphasis added] 24. Mr. Gulati, learned senior counsel has, therefore, strongly contended that Section 10(3)(a) and Section 10(3)(b) of the TVAT Act is violative of Article 14 of the Constitution of India inasmuch as no intelligible differentia or no reason how to achieve the object for which the classification has been made has been provided by the respondents and as consequence, this court may strike down the said sub-sections of Section 10 of the TVAT Act as ultra vires the Constitution of India. As corollary thereof, this Court may also quash the impugned assessment orders and demand notices therefrom. Mr. Gulati, learned senior counsel has however has submitted that the petitioner-company shall not insist on the challenge based on the Article 301 of the Constitution of India inasmuch as TVAT Act has got the Presidential Assent on 30.03.2005. 25. Mr. Todi, learned senior counsel appearing for the respondents at the beginning has submitted that TVAT Act was passed by Tripura Legislative Assembly and assented by the President of India on 02.04.2005 whereas the CST Act was passed by the Parliament. CST Act makes a dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and explicit, effect must be given to it, for in such a case the words best declare the intention of the law-giver. It would not be right to refuse to place on the language of the statute the plain and natural meaning which it must bear on the ground that it produces a consequence which could not have been intended by the legislature. It is only from the language of the statute that the intention of the Legislature must be gathered, for the legislature means no more and no less than what it says. It is not permissible to the Court to speculate as to what the Legislature must have intended and then to twist or bend the language of the statute to make it accord with the presumed intention of the legislature. [Emphasis added] 26. Mr. Todi, learned senior counsel has specifically stated that the petitioner-company has failed to explain how the dealer effecting inter-state sale is similarly situated or at par with the dealer who transfers goods on stock transfer, otherwise than the sale. The petitioner-company cannot be stated to be similarly situated or in the same class of their position is substantively same. When stock transfer and inter-state sale are all together on di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as violative of Article 14 of the Constitution of India in that case for making the public company only liable to deduct the tax at source leaving aside the private company or HUF and individuals. The petitioner's contention that equals were treated as unequal. Therefore, the provision contained in Section 27 making obligatory on the part of public companies to deduct tax at source etc. is arbitrary, unreasonable and without having nexus to the object sought to be achieved. Mr. Todi, learned senior counsel has submitted that the ratio from Makum Tea Companies Case cannot be applied in the present case inasmuch as the fact-situation is entirely different. In East India Tobacco Company etc. vs. State of Andhra Pradesh, reported in AIR 1962 SC 1733, according to Mr. Todi, learned senior counsel, one question arose before the Constitution Bench of the apex court for determination is that - is the impugned act repugnant to Article 14 for the reason that it singles out Virginia Tobacco from taxation? The point for consideration was whether there is in fact a real distinction between Virginia Tobacco and other tobacco viz. the country tobacco called 'Nattu Tobacco'. If there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might, support it,? How wide the powers of the Legislature are in classifying objects for purposes of taxation will be seen from the following resume of the law given by Rottschaefer, in his 'Constitutional Law' p. 668:- The federal Supreme Court has seldom held invalid any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public highways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms or wasting asset, nor even the imposition of a tax upon antracite that is no levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution. [Emphasis held] 29. Mr. Todi, learned senior counsel has contended having reference to Tata Iron and Steel Company Ltd. vs. State of Bihar others, reported in (1999) 114 STC 434 that in the federal structure of our country each state as per Entry. 54, List 2 of Seventh Schedule of the Constitution has been granted liberty to enact its taxation laws and thus, while doing so the State is well within its jurisdiction when the classification is based upon rational grounds. The only care to be taken is that in the Act itself there should not be any discrimination against the class of persons situated similarly. In Tata Iron and Steel Company Ltd. (supra), it has been observed as under: 13. Equal protection guaranteed under Article 14 of the Constitution only speaks of equal protection amongst the persons and class of persons of the same category. Thus, what Article 14 of the Constitution prohibits is unequal treatment to the persons similarly situated meaning thereby that the traders of a particular State cannot be and should not be discriminated. The words occurring in Article 14 of the Constitution 'within the territory of India' in this context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in sequel, contended that the dealers of those two transactions are similarly situated and hence, denial of Input Tax Credit to the dealer making inter-state sale of good, in the similar backdrop, is hit by Article 14 of the Constitution as the differential is not intelligent and it has no nexus or relation with the object as stated to be achieved. 32. Mr. Das, learned Advocate General has raised a serious objection contending that Section 10(3)(a) and Section 10(3)(e) of the TVAT Act deal with to whom Input Tax Credit can be granted and thus, 'the impugned statutory provisions are not attracted in the fact-situation of the case for determination of their validity.' He has submitted that if the said clause is set aside that may disentitle the other dealers from Input Tax Credit but that would not entitle the petitioner-company to claim Input Tax Credit in that event and in that respect, his assessment order could not be quashed. In sum and substance, even if the statutory provisions as challenged are struck down, the petitioner-company will not be entitled to any relief as his assessment cannot be quashed on that ground. In such a case, deciding the constitutional val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 of 1955, relating to abolition of religious and charitable Inams were challenged. In the Writ Petitions filed by the aforesaid Kudli Sringeri Maha Samsthanam, the validity of Mysore Act 1 of 1955 which was amended by Section 2 of the Amendment Act of 1979 was not in question. Yet, the High Court declared the entire Amendment Act to be ultra vires which was wholly unnecessary. In this context, he relied upon the decisions of this Court to the effect that in exercise of writ jurisdiction, while dealing with the vires of statutory provisions the Court must not decide issues which are merely academic. He has drawn our attention to the Judgment of this Court in State of Bihar vs. Rai Bahadur Hurdut Roy Moti Lall Jute Mills and another : AIR 1960 SC 378 wherein this Court observed:- 'In cases, where the vires of the statutory provisions are challenged on constitutional grounds, it is essential that the material facts should first be clarified and ascertained with a view to determine whether the impugned statutory provisions are attracted; if they are, the constitutional challenge to their validity must be examined and decided. If, however, the facts admitted or proved do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anic law of constitution, it shall be allowed to stand as the true expression of the people's will. In this Regard, Mr. Das, learned Advocate General has drawn attention of this court to a decision of the apex court in Union of India vs. Elphinstone Spinning And Weaving Co. Ltd. And Others, reported in (2001) 4 SCC 139, where the apex court has enunciated the position of law as under: 9. A statute is construed so as to make it effective and operative. There is always a presumption that the legislature does not exceed its jurisdiction and the burden of establishing that the legislature has transgressed constitutional mandates, such as those relating to fundamental rights is always on the person who challenges its vires. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the Constitution it must be allowed to stand as the true expression of the national will - Shell Company of Australia v. Federal Commissioner of Taxation : 1931 AC 275 (Privy Council). The aforesaid principle, however, is subject to one exception that if a citizen is able to establish that the legislation has invaded its fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation of the coking coal mines, and the specified coke oven plants for the above purpose was towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good? and that there has been no discrimination or infringement of Article 14 of the Constitution (SCC p. 173, Para-25). Justice A. N. Sen in his separate judgment also agreed with the ultimate conclusion of Chinnappa Reddy, J and had said that there was logical basis for the nationalisation of the 4 oven plants of the petitioners, leaving out a few and I am not satisfied that there has been any wrong and arbitrary discrimination of Article 14 of the Constitution. While examining the constitutional validity of the special Courts Bill on the anvil of Article 14 of the Constitution, after an exhaustive review of all the decisions bearing on the question, in : (1979) 1 SCC 380 : (AIR 1979 SC 478), it was held as follows:- (3) The constitutional command to the State to afford equal protection of its laws sets a goal not attainable by the invention and application of a precise formula. Therefore, classification need not be constituted by an exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament with which we are concerned. The aforesaid observation had been made in the context of an argument sought for by the petitioner for production of certain documents to ascertain the question whether the shares vested in the Government or not? 11. In Bearer Bonds' case (1981) 4 SCC 675, this Court held that it is a rule of equal importance that laws relating to economic activities should be viewed with greater latitude than law touching civil rights, such as freedom of speech, religion etc. The Court observed that (SCC pp. 690-91, Para 8):- It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The Court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by perverted human ingenuity. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. 12. In Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar : AIR 1958 SC 538) this Court held: '(a) *** *** *** (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inative power and its devotion to the theory of judicial restraint.' The Court further held: 'It would seem that in fiscal and regulatory matters the Court not only entertains a greater presumption of constitutionality but also places the burden on the party challenging its validity to show that it has no reasonable basis for making the classification.' [Emphasis added] 35. Mr. Das, learned Advocate General has asserted that the State has a wider discretion in selecting the persons and objects it will tax and the statute is not open to be challenged on the ground that it taxes on person or object and not others. The State is allowed to pick and choose districts, objects, persons, methods and even rates of taxation. Holmes, J. says that the legislature should be allowed some play in the joints because it has to deal with complex problems. Regarding the latitude that the State enjoyed in respect of the taxation, Mr. Das, learned Advocate General has relied on East India Tobacco Company (supra) where the apex court has also observed as under: 4. It is not in dispute that taxation laws must also pass the test of Art. 14. That has been laid down rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re are differences between the two varieties, but that it must further be show, as held in Budhan Choudhry v. State of Bihar : AIR 1955 SC 191 and Ram Krishna Dalmia v. S. R. Tendolkar : AIR 1958 SC 538 that the differential has reasonable relation to the object of the legislation. The differences between that Virginia tobacco and the country tobacco, as found by the learned Judges are not, it is argued, germane to the levy of sales tax, so there is no valid classification. We are unable to agree with this contention. If a state can validly pick and choose one commodity for taxation and that is not open to attack under Art. 14, the same result must follow when the State picks out one category of goods and subjects it to taxation. 6. It should, in this connection, be remembered that under the law it is for the person who assails a legislation as discriminatory to establish that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing statute. In taxation even more than in other fields? it was observed by the Supreme Court of United States in Madden v. Kentucky, (1940) 309 U.S., 83, : 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for issue of special bearer bonds with a view to inducing persons belonging to the former class to invest their unaccounted money in purchase of special bearer bonds, so that such money which is today Lying idle outside the regular economy of the country is canalised into productive purposes. The object of the Act being to unearth black money for being utilised for productive purposes with a view to effective social and economic planning, there has necessarily to be a classification between persons possessing black money and others and such classification cannot be regarded as arbitrary or irrational. ............ The validity of a classification has to be judged with reference to the object of the legislation and if that is done, there can be no doubt that the classification made by the Act is rational and intelligible and the operation of the provisions of the Act is rightly confined to persons in possession of black money. [From Para-17 of the above judgment] ............................... The legislature had obviously only two alternatives: either to allow the black money to remain idle and unproductive or to induce those in possession of it to bring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10(3)(a) and Section 10(3)(b) of the TVAT Act makes it clear that Input Tax Credit is permissible only in respect of sales or resale made within the State of Tripura and in respect of taxes collected payable under the TVAT Act. Sale in course of interstate commerce comes within the purview of CST Act and therefore, it has been kept out of the purview of benefit of Input Tax Credit. It is submitted that the transaction of stock transfer made outside the State of Tripura and interstate sale are not similar but stands on two different footings. Article 14 of the Constitution of India postulates equal treatment to equals which means that there can be unequal treatment to unequals. When the transaction of stock transfer is made outside the State of Tripura by its nature it is distinctly different from the interstate sale. Article 14 of the Constitution does not require equal treatment to those transactions. Hence, there is no discrimination, to say least of hostile discrimination, as asserted by the petitioner-company. In order to nourish his submission, Mr. Das, learned Advocate General has relied on a few decision of the apex court which are referred hereunder. In Twyford Tea Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax'. The decisions of the Supreme Court in this field have permitted a State Legislature to exercise 'an extremely wide discretion' in classifying property for tax purposes 'so long as it refrained from clear and hostile discrimination against particular persons or classes'. (Emphasis (here in') added). The burden is on a person complaining of discrimination. The burden is proving not possible 'inequality' but hostile 'unequal' treatment. This is more so when uniform taxes are levied. It is not proved to us how the different plantations can be said to be 'hostilely or unequally' treated. A uniform wheel tax on cars does not take into account the value of the car, the mileage it runs, or in the case of taxis, the profits it makes and the miles per gallon it delivers. An Ambassador taxi and a Fiat taxi give different out-turns in terms of money and mileage. Cinemas pay the same show fee. We do not take a doctrinaire view of equality. The Legislature has obviously thought of equalising the tax through a method which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retion to the legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of 'wide range and flexibility' so that it can adjust its system of taxation in all proper and reasonable ways.' [Emphasis added] In M/s. Murthy Match Works, etc. etc. vs. the Asst. Collector of Central Excise, etc., reported in AIR 1974 SC 497, the apex court has held that: 15. Certain principles which bear upon classification may be mentioned here. It is true that a State may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects. Every differentiation is not a discrimination. But classification can be sustained only if it is founded on pertinent and real difference as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests of a difference which bears a fair and just relation to the object for which it is proposed, it is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... care of complex situations and complex problems which do not admit of solutions through any doctrinaire approach or straight - jacket formulas. Their Lordships quoted with approval the observations made by Frank Further, J. in Morey v. Doud : (1957) 354 US 457. In the utilities, tax and economic regulations cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The Courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainly, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.? 12. The Legislature gaining wisdom from historical facts, existing situations, matters of common knowledge and practical problems and guided by considerations of policy must be given a free hand to divide classes to whom to tax or not to tax, to whom to exempt or not to exempt and to whom to give incentives and lay down the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of its judgment observed, and rightly in our opinion, that if the benefit conferred by the impugned amendment was made general, i.e., available to all the cinema owners then the cinema owners operating in rural area would have secured double benefit - one by way of grant-in-aid and other by way of recovering maintenance charges from the cinema-goers exempt from payment of entertainment tax and there is nothing wrong in the Legislature having chosen not to confer such double benefit on the cinema owners already enjoying benefit of an incentive scheme of the State Government. Moreover, it cannot be lost sight of that the incentive schemes releasing the grant-in-aid were optional. There was no compulsion on the cinema owners to opt for the incentive scheme and have the grant-in-aid released to them. Such option was available at the commencement of the scheme and remained available throughout. Such of the cinema owners as felt that the fixation of ₹ 2.50 or ₹ 5 as a ceiling on fee for admission was not beneficial to them and they would stand to benefit by opting out from the incentive scheme and availing the benefit of recovering charges for maintenance conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars from those records that for preparing the draft the model statute for Value Added Sales Tax as prepared by the National Institute of Public Finance and Policy, New Delhi, Model VAT Bill-2003 as prepared by Dr. B.R. Atre, Consultant to the Ministry of Revenue, Government of Tripura and various others states' draft bills along with the Tripura Sales Tax Act, 1976 were taken into consideration. Even though regarding Input Tax Credit and its definition there was some discussion but so far the exclusion of the sale in the course of interstate trade or commerce, from the records we do not find any specific reference. At the primary stage, it was intended to define the Input Tax Credit as the tax paid or payable by a registered dealer to another registered dealer on purchase of goods in Tripura in the course of business for resale or for manufacture of the taxable goods or for use as containers or packing materials or for the execution of the work contract. Therefore, the legislative intent has to be gathered from the statutory provisions alone. The definition of Input Tax Credit as provided above has been adopted without any change as provided in the model statute for Value Added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of constitutionality and the question of constitutionality to have been decided against him or such matter has been directly and substantially in issue. In Madhvi Amma Bhawani Amma vs. Kunjikutty Pillai Meenakshi Pillai and others, reported in (2000) 6 SCC 301, the apex court had clearly observed that in order to apply general principles of res judicata the court must find whether an issue in a subsequent suit was directly and substantially an issue in the earlier suit or proceeding, was in between the same parties and was it decided by such court. Even it has been further observed that 'there should be an issue raised and decided not merely a finding on any incidental question for reaching such a decision'. In view of the settled position of law, this Court is of the opinion that this petition is not barred under the public policy of res judicata inasmuch as the vires of the said provisions was not under challenge in the previous revision petition. Even in that proceeding the vires or constitutionality of those provisions could not have been challenged for jurisdictional limit. 41. Mr. Todi, learned senior counsel appearing for the respondents has strenuously submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mise or to bend the language of the statue to make it accord with the presumed intention of the legislature. Here it is not a case that the object of extending Input Tax Credit is in controversy inasmuch as none has disputed the statement made by the learned Advocate General in respect of the object of extending such benefit. It is to encourage industrialization and setting up of manufacturing units in the State based on the raw materials produced in the State. Even Mr. Todi, learned senior counsel did not invest any word in this respect. The entire challenge is that the classification as made for excluding the sale in the course of interstate trade or commerce is unintelligible having regard to the object and thus, it is anathematical to Article 14 of the Constitution. There is no quarrel what has been observed in Pathumma (supra) that before a person can claim to be discriminated against another, he must show that all the other persons are similarly situate or equally circumstanced. There should be no discrimination between one person and another if as regards the subject matter of the legislation their position is substantially the same. Pathumma (supra) has provided the key wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s preceded by same sort of activity based on which other three transactions are treated at par for granting the benefit of Input Tax Credit. It is on the basis of post-production commercial activity the benefit is denied to sale in the course of interstate trade and commerce. Such differential does not have any nexus with the object as gathered from the statute or from the statement of the learned Advocate General. Even in the transaction of stock or consignment transfer and export, the State does not get any tax, neither VAT nor CST even then those transactions are under the umbrella of getting benefit of the Input Tax Credit. Thus, the classification made for purpose of the subject matter is unintelligible. Difference in treatment cannot be explained in the light of the object for which Section 10 of TVAT Act generally stands for. The classification is not based on any reasonable distinction. The differential treatment could not be reasonably explained or justified by the respondents and hence, denial of the Input Credit Tax for sale in the course of interstate trade or commerce is discriminatory as already noted, even after we have unconventionally delved into the records, prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner-company for carrying out sale in the course of interstate trade or commerce. But that benefit shall not be extended to the petitioner-company in respect of the returns or the assessment orders unrelated to the assessment order dated 16.06.2015 or prior to but such benefit shall continue in respect of the return or the assessment order posterior to 16.06.2015. As corollary, the assessment order dated 16.06.2015 and demand notice dated 17.06.2015 passed or issued by the respondent No. 3 are interfered with and set aside. The respondent No. 3 is directed to reassess the liability of the petitioner-company within a period of 6(six) months from the date when a copy of this order shall be submitted by the petitioner-company to him. 45. We would be failing in our duty if we do not notice the premise on which this court had interpreted the extant provisions of Section 10 of TVAT Act. In Abhisar Buildwell Private Ltd. (supra), this Court has observed thus: A conjoint reading of the provisions of the Act clearly shows that input tax credit can be claimed only in respect of tax paid or payable under the Act. Section 10(3) makes it absolutely clear that input tax credit is pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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