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TMI Blog2023 (3) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 17(5)(b) has taken away the right conferred under Sub Sections (2)(3)(4) and (7). We find no conflict or inconsistency between sub-section (5) and other sub-sections and therefore, vires of Section 17(5) cannot be questioned. Whether the petitioner is to be assessed as ToT dealer only for his single transaction of purchase of goods from outside the State and for that single transaction the petitioner shall be assessed to tax as a casual trader under relevant provisions of the AP VAT Act? - HELD THAT:- A tax is imposed for public purpose for raising general revenue of the State. As per Article 366(28) of the Constitution of India, the term taxation includes the imposition of any tax or impost, whether general or local or special and the tax shall be construed accordingly. The term impost means a compulsory levy. Since imposition of tax involves a compulsory levy or exaction of money by Government, the same is not permissible except by or under the authority of a statutory provision. The petitioner shall be treated as a TOT dealer only irrespective of his involvement in a single transaction of purchase from outside the State. The said single transaction of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcement of fundamental rights or where there has been a violation of principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the instant case the petitioner challenged the validity of Section 17(5)(b) of AP VAT Act. As such the writ is maintainable. The impugned Assessment Order dated 04.08.2018 penalty proceedings dated 23.11.2018 and Appellate Order dated 22.10.2020 are hereby set aside - Petition allowed. - W.P.No.629 of 2021 - - - Dated:- 15-2-2023 - HON BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON BLE SRI JUSTICE T. MALLIKARJUNA RAO For the Petitioner: Sri Girish Kumar For the Respondents: Learned Advocate General ORDER: (PER HON BLE SRI JUSTICE U. DURGA PRASAD RAO) The petitioner seeks writ of mandamus (a) declaring the action of respondents 2 and 3 in levying tax U/s 4(1) of the AP VAT Act on the same turnover which has already suffered tax U/s 4(2) for the tax periods June, 2015 to August, 2016 as arbitrary, without jurisdiction, barred by limitation and violative of Article 265 of the Constitution of India. (b) declaring the words any dealer make purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a penalty of 25% of the amount of the tax due prior to the date of registration and the petitioner will not eligible for Input Tax Credit (ITC) for the sales made prior to date from which registration is affected. However under no circumstances tax can be levied again on the same turnover U/s 4(1) since the said turnover has already suffered tax U/s 4(2) of the Act. (e) Aggrieved by the action of 3rd respondent, the petitioner filed appeal before the 2nd respondent. However the appeal was unjustly dismissed by the 2nd respondent. Hence the writ petition. 3. The 1st respondent filed counter and opposed the writ petition inter alia contending thus: (a) The writ petition is not maintainable as the petitioner has alternative and efficacious remedy of appeal before VAT Appellate Tribunal, Visakhapatnam. (b) The petitioner is a TOT dealer and for the tax period from 01.04.2013 to 30.09.2016, the petitioner filed TOT returns in Form-007 before the 4th respondent and paid tax @ 1% on the turnover. (c) Thereafter, the 3rd respondent conducted audit of petitioner s accounts and found that the petitioner has made one purchase of paint on 06.06.2015 worth of Rs.54,000/- from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner and learned Advocate General representing respondents. 5. Learned counsel for the petitioner firstly argued that for a stray act of purchase of goods from outside the State in the circumstances narrated by the petitioner, the 3rd respondent cannot legally compel him to obtain VAT registration and assess him as VAT dealer. Section 17(5)(b) contains only the plural words purchases or sales but not purchase or sale . Learned counsel would alternatively argue that for the single transaction as aforesaid, at the best he can be treated as a casual trader U/s 2(7) of the AP VAT Act and can be assessed to tax on that single item U/s 4(6) of the APVAT Act but not as a VAT dealer for all the transactions from the date of purchase of single item from outside State. Secondly, challenging the imposition of 100% of penalty by the 3rd respondent, learned counsel would argue that even assuming that the petitioner was required to obtain registration as VAT dealer on account of a single transaction of purchase from outside the State, the maximum penalty that can be imposed U/s 49(2) of the AP VAT Act is 25% on the amount of tax due but not 100% and hence the penalty of 100% im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be struck down. On the aspect of the construction of different provisions of the statute, learned Advocate General relied upon on Padma Ben Banushali v. Yogendra Rathore (2006) 12 SCC 138. So far as the argument of the petitioner that the assessment for the period April 2013 to July 2014 is time barred, learned Advocate General would submit that since the petitioner wilfully evaded payment of tax and also failed to obtain registration as VAT dealer, 3rd respondent can seek aid of Section 21(5) and assess the entire period from 2013 to 2016. He thus prayed to dismiss the writ petition. 7. The points for consideration in this writ petition are: (1) Whether Section 17(5)(b) without reference to quantum of turnover is ultra vires to Section 17(2)(3)(4)(7) as well as charging Section 4(2) of AP VAT Act and liable to be struck down? (2) If point No.1 is held negatively, still whether the petitioner is to be assessed as ToT dealer only for his single transaction of purchase of goods from outside the State and for that single transaction the petitioner shall be assessed to tax as a casual trader under relevant provisions of the AP VAT Act? (3) Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orty lakhs only) shall be liable to be registered as a VAT dealer before the commencement of business. (3) Every dealer whose taxable turnover in the preceding three months exceeds Rs.10,00,000/- (Rupees ten lakhs only) or in the twelve preceding months exceeds Rs.40,00,000/- (Rupees forty lakhs only), shall be liable to be registered as a VAT dealer. (4) Every dealer whose taxable turnover during the period from 1st January, 2004 to 31st December, 2004 is more than Rs.40,00,000/- (Rupees forty lakhs only), shall be liable to be registered as a VAT dealer. (5) Notwithstanding anything contained in sub-sections (2), (3) and (4), the following classes of dealers shall be liable to be registered as VAT dealers irrespective of their taxable turnover namely:- (a) every dealer importing goods in the course of business from outside the territory of India; (b) every dealer registered or liable to be registered under the Central Sales Tax Act 1956, or any dealer making purchases or sales in the course of inter-state trade or commerce or dispatches any goods to a place outside the State otherwise than by way of sale; (c) every dealer residing outside the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dealers enumerated in clauses (a) to (h) shall be liable to be registered as VAT dealers irrespective of their taxable turnover (emphasis applied). The dealers enumerated in clause (b) is germane for our purpose because admittedly petitioner does not fall within the categories of (a), (c), (d), (e), (f), (g) and (h). (e) Clause (b) says that every dealer registered or liable to be registered under the Central Sale Tax Act, 1956 or any dealer making purchases or sales in the course of interstate trade or commerce or dispatches any goods to a place outside the State otherwise than by way of sale shall be registered as VAT dealer. Thus, in essence, if a dealer makes purchases or sales in the course of interstate trade or commerce, then irrespective of his taxable turnover, he shall be liable to be registered as a VAT dealer. 10. As stated supra, the petitioner impugns Section 17(5)(b) on the ground that the said provision deprives a dealer his privilege of being a TOT dealer, the moment he conducts the interstate trade or commerce, irrespective of his annual taxable turnover being less than Rs.40,00,000/- and thereby Section 17(5) directly contravenes Sub Sections (2) to ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of that principal clause what is included in it and what the legislature desires should be excluded. 42. In Hiralal Rattanlal etc. v. State of U.P. and Anr. etc. MANU/SC/0553/1972 : [1973] 2 SCR 502 this Court made the following observations: Ordinarily, a proviso to a section is intended to take out a part of the main section for special treatment. It is not expected to enlarge the scope of the main section. But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so-called proviso has substantially altered the main section. The Apex Court ultimately summed up the different purposes of proviso as follows: 1) qualifying or excepting certain provisions from the main enactment; 2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; 3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and 4) it may be used mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dead letter or useless lumber is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose. With the aid of above principles, when Section 17 is comprehensively studied, it does not appear that 17(5)(b) has totally negated the operation of Sub Sections (2)(3)(4) and (7), rather it has limited their operation by carving out an exception. In other words, Sub Sections (2)(3)(4) and (7) are still operable so long as they do not fall within the groove of exception. Therefore, the petitioner cannot contend that Section 17(5)(b) has taken away the right conferred under Sub Sections (2)(3)(4) and (7). We find no conflict or inconsistency between sub-section (5) and other sub-sections and therefore, vires of Section 17(5) cannot be questioned. This point is answered accordingly. 13. POINT No.2: As it is held in the preceding point that Section 17(5)(b) is valid and not inconsistent with other provisions, the alternative argument of the petitioner is that still he does not fall within the mischief of Section 17(5)(b) and hence he shall be treated as TOT dealer. As per Section 17(5)(b), if a dealer falls within one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any tax or impost, whether general or local or special and the tax shall be construed accordingly. The term impost means a compulsory levy. Since imposition of tax involves a compulsory levy or exaction of money by Government, the same is not permissible except by or under the authority of a statutory provision. In Hindustan Times v. State of U.P. MANU/SC/0903/2002 = AIR 2003 SC 250, the Apex Court observed thus: In any event, the State cannot make any compulsory exaction from any citizen unless there exists a specific provision of law operating in the field. In relation to a compulsory payment, it is well-settled, there is no room for any intendment. That is why Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. As the fiscal statutes involve exaction of money by the State from the subjects, the judicial pronouncements exhorted that they require strict construction. (i) In Tenant v. Smith (1892 AC 150) Lord Halsbury and Lord Simonds observed that the subject is not to be taxed without clear words for that purpose and also that every act of Parliament must be read according to the natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction. It is only in such cases that it becomes relevant to consider the mischief and defect which the Act purports to remedy and correct. xxxxx (iv) In Commissioner of Income Tax, Patiala v. Shahzada Nand Sons MANU/SC/0113/1966 = AIR 1966 SC 1342, the Apex Court referred the judgment in Cape Brandy Syndicate v. Inland Revenue Commissioner [(1921) 1 K.B. 64], wherein Rowlatt, Judge observed: In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Ultimately the Apex Court held thus: 12. To this may be added a rider: in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlying principle is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.I.T. Punjab MANU/SC/0190/1962 : [1963] 1 ITR 48(SC) ; C.I.T. Madras v. V. MR. P. Firm, Muar MANU/SC/0143/1964 : [1965] 56 ITR 67(SC) and Controller of Estate Duty Gujarat v. Kantilal Trikamlal : [1976] 10 ITR 92(SC) . 7. The question as to what is covered must be found out from the language according to its natural meaning fairly and squarely read. See the observations in IRC v. Duke of Westminster [1936] AC 1, and of this Court in AV Fernandez v. The State of Kerala MANU/SC/0093/1957 : [1957] 1 SCR 837. Justice Krishna Iyer of this Court in Martand Dairy Farm v. Union of India MANU/SC/0452/1975 : [1975] Supp. SCR 265 has observed that taxing consideration may stem from administrative experience and other factors of life and not artistic visualization or neat logic and so the literal, though pedestrian, interpretation must prevail. (vii) In Saraswathi Sugar Mills v. Haryana State Board AIR 1992 SC 224 = MANU/SC/0052/1992, the Apex Court was considering the issue whether the industries manufacturing sugar from sugarcane are covered by entry 15 of Schedule I to the Water (Prevention and Control of Pollution) Cess Act, 1977 (for short, the Cess Act ). Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Andhra Pradesh MANU/SC/0483/2000 = AIR 2000 SC 2905 , the Apex Court had an occasion to examine the correctness of the interpretation made by a Bench of Five judges of the Andhra Pradesh High Court of the clause where the land is used for any industrial purpose in section 3 of the A.P. Non-agricultural Lands Assessment Act, 1963 (the Act, 1963). The five judges Bench of A.P. High Court while concurring with the view of three Judges Bench which was referred to them, opined that the word used in section 3 of the Act, 1963 has to be interpreted in a wider sense to mean not only actually used but also meant to be used or set apart for being used . The larger Bench observed that if the word used has to be given the limited meaning as actually used it will not be in tune with the intendment of the legislature. The said decision was challenged before the Hon ble Apex Court. After discussing the principles of construction of taxing statutes, the Apex Court disagreed with the judgment of five judges Bench and held thus: 9. We are in no doubt whatever, therefore, that it is only land which is actually in use for an industrial purpose as defined in the said Act that can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt that on the exercise of the option by the insurer over which the insured has no sway, the contract should be considered only as a contract for reinstatement and not as a contract for money. There is no question of any `money payable' under the contract. There is a fallacy in the contention that the money became payable on the occurrence of the accident and the exercise of the option thereafter by the insurer would not alter the nature of the contract. The contract itself gives the right to the insurer to exercise the option and the legal effect of such exercise is to make the contract one for reinstatement only from the inception. It is analogous to the `doctrine of relation back'. Such exercise of option could only be after the occurrence of the accident and not at any time earlier. Consequently, the expression `moneys payable' in Section 41(2) will not apply in this case. 19. We are unable to accept the contention that the word `money' should be interpreted as `money's worth' (emphasis supplied). The reasons given by us earlier are sufficient and we need not add to them. (xi) Recently, in Commissioner of Customs (Import), Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the framers would have employed suitable terminology in Section 17 5(b) viz., any dealer making even a single purchase or sale in the course of inter-state trade or commerce . That is not the case here. (a) We have also examined the meaning of the phrase, in the course of inter-state trade or commerce to know whether the interpretation of plural words as singular words as sought for by learned Advocate General is possible. For this purpose we examined Section 3 of CST Act, 1956 which explain the concept of inter-state trade or commerce. Section 3 of the CST Act, 1956 says that a sale or purchase of goods shall be deemed to take place in the course of inter-state trade or commerce if the sale or purchase (a) occasions the movement of goods from one State to another or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. It is true that in Section 3 the singular words sale or purchase has been used. It implies that a single sale or purchase causing movement of goods from one State to another will be sufficient to denote the transaction as during the course of inter-state trade or commerce. However, the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner of Income Tax, Nagpur AIR 1956 SC 354 = MANU/SC/0037/1956 the Supreme Court engaged with the question whether two or more individual partnership firms can constitute into a separate partnership firm and seek for registration U/s 26(A) of Income Tax Act. In this context, the Apex Court considered Section 4 of the Indian Partnership Act, 1932 which reads thus: 4. Definition of partnership , partner , firm and firm name :- Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually partners and collectively a firm , and the name under which their business is carried on is called the firm name . Having found that no definition is provided for person in the Partnership Act, the Apex Court considered the possibility of employing the definition of person given in Section 3(42) of General Clauses Act which reads thus: (42) person shall include any company or association or body of individuals, whether incorporated or not; (b) Having found that if the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner shall be treated as TOT dealer only but not as VAT dealer. As such, he need not pay tax as a VAT dealer. Consequently, Section 49 of the Act which deals with penalty for failure to registration does not apply to the instant case. On the other hand, the petitioner for his act of undervaluing the tax as a TOT dealer, shall be liable to pay penalty as per Section 53 of AP VAT Act. This point is answered accordingly. 23. POINT No.5: This point is concerned, the argument of learned Advocate General is that in view of availability of alternative and efficacious remedy of appeal, writ is not maintainable. We are unable to accept this argument. In Whirlpool Corporation v. Registrar of Trade Marks, Mumbai AIR 1999 SC 22 = MANU/SC/0664/1998 the Apex Court held that the alternative remedy will not operate as a bar in the contingencies namely where the writ petition has been filed for the enforcement of fundamental rights or where there has been a violation of principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the instant case the petitioner challenged the validity of Section 17(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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