C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India PvtC R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvtrder dt:16/9/08
1/7
S.B.CIVIL (S.T.)REVISION NO.538/2006
Commercial Taxes Officer, Circle B, Udaipur
vs.
M/s.Metals & Alloys India Pvt. Ltd.
S.B.CIVIL (S.T.)REVISION NO.286/2005
Commercial Taxes Officer, Circle B, Udaipur
vs.
M/s.Metals & Alloys India Pvt. Ltd.
S.B.CIVIL (S.T.)REVISION NO.532/2005
Commercial Taxes Officer, Circle B, Udaipur
vs.
M/s.Metals & Alloys India Pvt. Ltd.
DATE OF ORDER : 16/9/2008
HON'BLE DR.JUSTICE VINEET KOTHARI
Mr.Vineet Mathur standing counsel and
Mr.Rishabh Sancheti, for the petitioner-Revenue.
Mr.Tribhuvan Gupta, for the respondents-Assessee.
REPROTABLE
1. The Revenue has filed these revision petitions being aggrieved
of the orders of Tax Board dated 18/6/2003, whereby, the Tax Board
allowed the assessee's three appeals for assessment years 1990-91,
1991-92 and 1992-93 and set aside the order dated 16/2/2001 passed
by Deputy Commissioner (Appeals). The learned CTO had passed the
order on 14/3/1997 for these three assessment years invoking his
powers under Section 9 of the CST Act read with Section 12 of the
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
2/7
RST Act applicable to escaped turnover on the ground that inter-state
sales made by the assessee during these period sales were not
supported by `C' form required under Section 8(1) of the CST Act,
therefore, exemption under the Notification was not available to the
assessee and the exemption wrongly availed was liable to be
withdrawn and the assessee was liable to pay due CST applicable on
such inter-state sales made by him.
2. In the first appeal before the Deputy Commissioner (Appeals),
the Deputy Commissioner (Appeals) held in the order dated
16/2/2001 that the learned CTO could not invoke power under
Section 12 of the Act applicable for reassessment but on the basis of
judgment of Hon'ble Supreme Court in case of State of Rajasthan &
Anr. vs. Sarvotam Vegetable Products etc. (AIR 1996 SC 3178)
learned Assessing Authority could invoke jurisdiction to rectify the
mistake apparent on the face of record enshrined under Section 17 of
the Act and thus the learned Deputy Commissioner (Appeals) rejected
the appeal of assessee. The assessee took the matter further in second
appeal before the Tax Board which came to be allowed by the
impugned order dated 18/6/2003 and learned Tax Board held that
learned Deputy Commissioner (Appeals) could not convert the order
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
3/7
passed under Section 12 of the Act on 14/3/97 as one under Section
17 of the Act while passing the order dated 16/2/2001 as by that time
the limitation under Section 17 had run out. The learned Tax Board
also found that since no notice in prescribed form No.33 for invoking
the power under Section 17 of the Act was issued by the CTO but
only a notice in the form 12-A applicable to invoke the power under
Section 12 of the Act was issued, therefore, assessment could not be
rectified by resort to Section 17 of the Act. Learned Tax Board,
therefore, allowed the assessee's appeal and set aside the order of
Deputy Commissioner (Appeals) dated 16/2/2001.
3. Being aggrieved by the said order of learned Tax Board, the
Revenue is in revision before this Court.
4. Mr.Rishabh Sancheti for Mr.Vineet Mathur appearing for the
Revenue submitted that lack of prescribed form or reference to wrong
provision cannot invalidate the assessment and, therefore, the power
to reassess or rectify the order to levy the tax in the absence of
compliance with the mandatory provision of furnishing `C' form was
not complied with by the assessee, the assessment to recover such
revenue cannot be invalidated merely on the ground that notice was
not issued in the prescribed form. He referred to the decision of
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
4/7
Supreme Court in case of Sarvotam Vegetable Products (supra) and
submitted that the controversy relating to requirement of furnishing
`C' form was put at rest while reversing the decision of Rajasthan
High Court in case of Shyam Oil Cake and by holding that such
concession could be availed only upon furnishing of `C' form.
Admittedly, in the present case, `C' form was not furnished by the
assessee despite grant of opportunity in the order dated 14/3/1997
which was passed following the aforesaid decision of Supreme Court
with reference to Section 12 of the Act. He also contended that resort
to Section 12 by the learned CTO was correct in the facts and
circumstances of the case. He, therefore, submitted that the impugned
assessment order was wrongly set aside by the learned Tax Board by
impugned order dated 18/6/2003 and the present revisions deserve to
be allowed.
5. On the side opposite, Mr. Tribhuvan Gupta, learned counsel
appearing for the respondent assessee urged that since no notice
under Section 17 was given to the assessee the learned Deputy
Commissioner (Appeals) had rightly held that assessment could not
be rectified under Section 17 of the Act. He submitted that learned
Tax Board has not erred in setting aside the order of Deputy
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
5/7
Commissioner (Appeals). He also submitted that since the assessee
availed the benefit under the Incentive Scheme of 1987, therefore, at
a later stage the Revenue Authority could not take back the said
benefit on the ground of non-furnishing of 'C' form as the said
authority had never any occasion to consider this aspect of the matter.
He, therefore, prayed for remand of case to the Assessing Authority.
6. I have heard learned counsels at length and given my
thoughtful consideration. Once it is not disputed and cannot be
possibly disputed that exemption could not be availed by the assessee
without furnishing `C' form in question in respect of inter-State sales,
reassessment for recovery of such exemption wrongly granted to the
assessee in the original assessment, cannot be questioned. The
enactment gives ample powers to the Revenue authority to reassess
such cases and it is nothing but escapement of turnover in true sense,
if exemption was allowed to the assessee without compliance of
mandatory requirement of law by furnishing of `C' form in
accordance with Section 8(1) of the CST Act.
7. In the opinion of this Court, learned Assessing Authority was
perfectly justified in invoking Section 12 of the Act within limitation
to reassess escaped turnover and withdrawing such exemption
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
6/7
wrongly granted to the assessee in view of the binding decision of
Supreme Court in case of Sarvotam Vegetable Products (supra). Both
the learned Deputy Commissioner (Appeals) as well as Tax Board
have apparently fallen into error in holding that resort could be had in
such circumstance to provisions of Section 17 of the Act applicable
for rectification of apparent mistake on the face of record. Though by
some stretch of argument, such reassessment could also fall within
the scope of rectification of apparent mistake as there is no water
tight compartment between the two powers, yet the learned counsel
for Revenue rightly contends that mention of wrong provision even it
can be said to be so for withdrawing the exemption and recovering
such taxes from the assessee would not vitiate the assessment order.
A bare perusal of Section 19-A of the RST act would support this
contention besides catena of judgments on this point.
8. In view of this, this court is of the opinion that learned Tax
Board has wrongly set aside the order of Deputy Commissioner
(Appeals) dated 16/2/2001 as well as order of learned Assessing
Authority passed Section 12 of the Act dated 14/3/1997. The
contention of learned counsel for the respondent assessee that since
assessee was availaing benefit under the Incentive Scheme of 1987
C R.(S.T.).538/06-CTO, Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt. Ltd.-(2)CR (S.T.).
286/05-CTO,Circle B, Udaipur vs.M/s.Metals &Alloys India Pvt. Ltd.(3) C.R (S.T.).532/05-CTO,
Circle B, Udaipur vs.M/s.Metals & Alloys India Pvt order dt:16/9/08
7/7
and, therefore, no such additional tax could be imposed upon him is
also of no avail. The said Incentive Scheme operated in a different
field for granting exemption from taxes on the basis of eligible
investment made by the assessee during the operative period of the
Scheme. Such exemption could not override the exemption wrongly
granted to the assessee on account of non-compliance of the
mandatory provisions of Section 8(1) of the CST Act by not
furnishing `C' form as prescribed in law.
9. Consequently, this revision petition is allowed and the
impugned order of Tax Board dated 18/6/2003 is set aside. The
Revenue would be entitled to recover the due tax in pursuance of
reassessment order dated 14/3/1997. No costs.
(DR.VINEET KOTHARI), J.
item no.9 to 11
baweja/
Saturday, April 25, 2009
Mangalam Yarn Agencies versus Assistant Commissioner, Commercial Taxes
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR.
JUDGMENT
M/s Manglam Yarn Agencies Vs.
Assistant Commissioner,
Commercial Taxes, Special
Circle, Bhilwara.
S.B. SALES TAX REVISION PETITION NO.129/2008
against the judgment and order dt.10.1.2001
passed by Raj. Tax board, Ajmer in Appeal
No.1802/2006/Bhilwara.
Date of order
: 25th September, 2008
PRESENT
HON'BLE DR. JUSTICE VINEET KOTHARI
Mr. Dinesh Mehta for the petitioner.
Mr. Vineet Mathur with Mr. Rishab Sancheti for the respondents.
REPORTABLE
BY THE COURT:
1. The question of law which was framed for consideration
in the present revision petition filed by the assessee is as under:
“Whether the exemption notification No.1490
dated 17.9.2001 SO No.183 issued under Section
15 of the RST Act exempting sale or purchase of
all kinds of man-made fibers and man-made yarn
to which the rate of tax in respect thereof exceeds
2% also covered the turn-over tax imposed on the
respondent-assessee under Section 13A of the
RST Act, 1994 or the said exemption is limited to
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
the individual sale or purchase of the specified
commodities in the said notification.”
2. The Revenue Authorities, all three, concurrently held
against the petitioner-assessee that the notification dated 17.9.2001
did not cover the turnover tax payable by the assessee under Section
13A of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as
'the Act').
3. Before coming to the controversy and case laws, it is
considered expedient to reproduce provisions of the Act and
exemption notification and rate notification in question for ready
reference :
“13-A. Levy of turnover tax.-
(1) Every registered dealer and every dealer who is liable
to get himself registered under section 3, and whose
total turnover in a year exceeds three lacs rupees,
whether or not the whole or any portion of such
turnover is liable to tax under any other provisions of
this Act, shall be liable to pay turnover tax, from such
date and at such rate as may be notified by the State
Government but not exceeding ten percent of his gross
annual turnover.
(2) No tax under sub-section (1) shall be payable on that
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
part of turnover which relates to:
(i)
sale or purchase of exempted goods;
(ii)
sale or purchase of goods in the course of inter-
State trade or commerce;
(iii) sale or purchase of goods in the course of export
out of the territory of India or sale or purchase
in the course of import into the territory of
India;
(iv) all amounts collected by way of tax under the
provisions of this Act or the Central Sales Tax
Act, 1956 (Central Act 74 of 1956);
(v)
all amounts allowed to dealers in respect of
goods returned to the dealer when goods are
taxable on sales provided that the goods were
returned within a period of six months from the
date of delivery of the goods and the accounts
show the date on which, and the amount for
which, refund was made;
(vi) all amounts realised by a dealer by the sale of
his business as a whole;
and except as provided above, no other
deduction shall be made from the gross turnover
of a dealer for the purpose of this section.
(3) For the purpose of assessment, collection and refund
of tax levied under this section, the provisions
pertaining to assessment, collection and refund under
other provisions of this Act and Rules made
thereunder shall mutatis mutandis apply.”
“15.
Exemption of tax.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
Notwithstanding anything contained in this Act,
where the State Government is of the opinion that it is
necessary or expedient in the public interest so to do,
it may, by notification in the Official Gazette, the
exempt fully or partially, whether prospectively or
retrospectively from tax the sale or purchase of any
goods or class of goods or any person or class of
persons, without any condition or with such condition
as may be specified in the notification.”
4. The relevant notification providing for rate of turnover
tax of 0.25 % dated 30.3.2000 and notification dated 17.9.1981
exempting the rate of tax on all kinds of man-made fibers and man-
made yarn exceeding 2% subject to certain conditions, are also
reproduced herein-under:
“NOTIFICATIONS ON TURNOVER TAX
FINANCE DEPARTMENT
Tax Division
NOTIFICATIONS
Jaipur, March 30, 2000
S.O. 377.-In exercise of the powers conferred by
section 13A of the Rajasthan Sales Tax Act, 1994
(Rajasthan Act No.22 of 1995), the State Government
being of the opinion that it is expedient in the public
interest so to do, hereby notifies that every registered
dealer and every dealer who is liable to get himself
registered under the Act and whose total turnover is not
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
less than fifty lac rupees in a year, shall be liable to pay
turnover tax under the said section, at the rate of 0.25%.
[F.4(1)FD/Tax Div./2000-301]
By order of the Governor,
V. Srinivas,
Deputy Secretary to Government.”
“S.NO.1340 No.F.4(18)FD/Tax-Div./97-Part-III-92, Dated : 17-09-2001
In exercise of the powers conferred by section 15 of the
Rajasthan Sales Tax Act, 1994 (Rajasthan Act No.223 of 1995), the
State Government being of the opinion that it is expedient in the
public interest so to do, hereby exempts from tax sale or purchase of
all kinds of man made fibers and man made yarn whether synthetic or
non-;synthetic, collusosic or non-cellulosic, blended or not and waste
thereof, worsted and semi-worsted woolen yarn including carpet
woolen yarn, embroidery yarn, cotton yarn and cotton yarn waste, to
the extent to which the rate of tax in respect thereof exceeds 2%, on
the following conditions, namely :
1. that these commodities are used as raw material for manufacture of
fabrics in the State ; and
2. that such manufacturer shall issue to the selling dealer a certificate
in the Form appended to this notification.
CERTIFICATE
I, ..........................(Name)................... (Status) authorised to
make purchase on behalf of M/s ...................... (Name and address of
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
the purchasing dealer), do hereby certify that the ............................
(description of goods) purchased from M/s ......... (complete address
of the seller), holder of R.C. No................... (RST) ................ (CST),
as per cash memorar dum/bill No.................. Dated ...................... will
be used as raw material for manufacture of fabric in the State of
Rajasthan.”
5. The principal submissions made by the learned counsel
for the petitioner-assessee Mr. Dinesh Mehta are as follows:(
a)
That since the exemption notification dated 17.9.2001
came after the turnover tax rate notification dated
30.3.2000 providing for 0.25% turnover tax, the exemption
notification dated 17.9.2001 should be deemed to have an
overriding effect and the rate of tax on sale of all kinds of
man made fibers and man made yarn including the turnover
tax cannot exceed 2% and, therefore, the turnover tax
levied by the Assessing Authority and upheld by the
appellate authorities upto the Tax board is wrong in law
and the same deserves to be quashed and set aside.
(b)
That turnover tax in effect is also a tax on sale or purchase
of the commodity and, therefore, the notification dated
17.9.2001 would cover that also.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
(b)
Since the word 'tax' has been defined in Section 2(41) of
the Act as any tax or other levy by any name leviable under
the provisions of the Act and 'turnover tax' has not been
separately defined, therefore, 'turnover tax' is included
within the definition of 'tax' under Section 2(41) of the Act
and is governed by the notification dated 17.9.2001.
(c)
That since Section 13-A(2) of the Act stipulates that no
turnover tax shall be payable in relation to sale or purchase
of exempted goods, therefore, the exemption over 2% rate
of tax granted under the notification dated 17.9.2001
cannot be indirectly taken away by imposition of turnover
tax under Section 13A of the Act.
(e)
That since the Hon'ble Supreme Court in S. Kodar V. State
of Kerala – 1974 (34) STT 73 SC as well as this Court in
Merta Trade & Industries Vs. State of Rajasthan & Ors. (
2002) 13 STO 462 (Raj) held that turnover tax is nothing
but tax on purchase or sale of goods and is as good as
additional rate of tax on such purchase or sale of the goods,
therefore, the exemption over 2% of rate of tax under
notification dated 17.9.2001, would exempt the essessee
from levy of turnover tax also.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
(f)
That the judgments of Hon'ble Supreme Court in Sun Oil
Company (P) Ltd. & Anr. Vs. State of West Bengal & Ors.
-(1998) 111 STC 420 upholding the decision of West
Bengal Taxation Tribunal in Kejriwal Electronics Pvt. Ltd.
& Co. V. Commercial Tax Officer (1991) 81 STC 20
(WBTT) [FB] and over ruling the decision of Single Judge
of Calcutta High Court in the case of ABN Food &
Beverage Pvt. Ltd. V. Assistant Commissioner of
Commercial Taxes (1990) 77 STC 339 (Cal.) was
distinguishable from the facts of the present case since
exemption provisions contained under Section 4AA in
West Bengal Act referred to only Section 4 for exemption
whereas Section 15 of the Rajasthan Act without reference
to any specific provisions for levy of tax, empowered the
State Government to exempt fully or partially the assessee
from payment of tax on the sale or purchase of any goods,
and, therefore, the exemption in the present case under the
notification dated 17.9.2001 exempted the assessee from
turnover tax also.
(g)
that relying on the decisions of the Hon'ble Supreme Court
in Mangalore Chemicals & Fertilizers Ltd. V. Dy.
Commissioner of Commercial Taxes and ors.-1991 (83)
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STC 234 and Unionof India & Ors. Vs. Wood Papers Ltd.
& Anr. -1991 (83) STC 251, the learned counsel for the
petitioner-assessee urged that while interpreting the taxing
statute including the exemption notifications, the Rule of
interpretation to be adopted is that while strict
interpretation has to be given to decide the question
whether the subject falls within the exemption or not but
once exemption is held applicable, full play to such
exemption clause has to be given :
“The choice between a strict and a liberal
construction arises only in case of doubt in regard
to the intention of the Legislature manifest on the
statutory language. Indeed, the need to resort to
any interpretative process arises only where the
meaning is not manifest on the plain words of the
statute. If the words are plain and clear and
directly convey the meaning, there is no need for
any interpretation. It appears to us the true rule of
construction of a provision as to exemption is the
one stated by this Court in Union of India V.
Wood Papers Ltd. [1991] 83 STC 251 infra ; 1991
JT (1) 151 at 155:
“True, speaking, liberal and strict
construction of an exemption provision are to be
invoked at different stages of interpreting it. When
the question is whether a subject falls in the
notification or in the exemption clause then it
being in nature of exception is to be construed
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
strictly and against the subject but once ambiguity
or doubt about applicability is lifted and the
subject falls in the notification then full play
should be given to it and it calls for a wider and
liberal construction...”
The learned counsel for the petitioner-assessee
submitted that exemption under notification dated
17.9.2001 cannot be narrowly construed and would also
cover exemption from turnover tax.
6. These submissions are opposed by Mr. V.K. Mathur
appearing with Mr. Rishab Sancheti in the following manner:(
a) That
the notification dated 17.9.2001 exempts only
individual transactions of sale or purchase of all kinds of
man made fibers and man made yarn from the rate of tax
exceeding 2% subject to condition of the same being used
as raw material for manufacture of fabrics in the State and
subject to further condition of manufacture giving
certificate in prescribed form appended in the said
notification and, therefore, the same does not include the
turnover tax leviable on the gross annual turnover of the
assessee in the year.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
(b) That event of taxation for levy of tax on sale or purchase on
each transaction is different from levy of turnover tax on
the gross annual turnover exceeding a particular limit of
turnover and these two being different concepts, cannot be
mixed up and, therefore, the Revenue Authorities have
rightly held the assessee not entitled to the exemption from
turnover tax under the notification dated 17.9.2001.
(c) The words 'on' is absent before the words 'sale or purchase
of all kinds of man made fibers and man made yarn' in the
notification dated 17.9.2001 and, therefore, the turnover tax
which is levied on gross sale value or turnover of the
assessee during particular year cannot be covered by the
said exemption notification and the said notification clearly
exempts only individual transaction of sale or purchase
from tax exceeding 2% rate subject to condition of
certificate of the commodity being used as raw material for
manufacture of fabrics in the State, whereas the turnover
tax on the basis of gross annual turnover as determined
under Section 13A of the Act on which the turnover tax at
the rate of 0.25% was leviable if the turnover exceeded
Rs.50 lacs in a year.
(d) That the controversy was longer res integra and was
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
covered by the decision of the Hon'ble Supreme Court in
case of Sun Oil Company Vs. State of West Bengal (supra)
and, therefore, the present revision petition filed by the
assessee deserve to be dismissed as being without force.
7. I have heard learned counsels at length and given my
thoughtful consideration to the controversy in hand and also the
judgments cited at the Bar.
8. While it is true that the turnover tax is nothing but tax on
turnover viz. Aggregation of sale or purchase of goods and is,
therefore, exigible with reference to Entry 54 of List II of Seventh
Schedule to the Constitution of India, but the exigibility of the
turnover tax is upon happening of different kind of taxable event. It
gets attracted when the gross annual turnover exceeds a particular
limit or bench mark. The character of tax remains the tax on sale or
purchase of goods, but the levy is attracted if the criteria of its levy is
fulfilled as defined in Section 13-A of the Act. The whole of the
turnover does not attract the turnover tax. The exclusion of turnover
mentioned in sub-section (2) of Section 13A has to be made viz.
turnover of exempted goods, turnover of goods sold in the course of
inter State trade or commerce or in the course of export out of India
etc. The levy of turnover tax is also subject to restrictions imposed
under Article 286 of the Constitution of India and Sections 14 and 15
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
of the CST Act as held by this Court in Merta Trade & Industries'
case (supra) but the question is, can rate of turnover tax prescribed in
the notification dated 30.3.2000 at 0.25% on the taxable turnover as
determined under Section 13A of the Act exceeding Rs.50 lacs, be
further slashed down by implied exemption by a subsequent
notification about the rate of tax in relation to sale or purchase of all
kinds of man made fibers and man made yarn under notification dated
17.9.2001. The answer has to be in the negative. The reason is that
notification dated 17.9.2001 which in fact reduced the rate of tax
applicable on the said commodity to 2% or in other words granted
exemption from rate of tax in excess of 2% on the individual
transaction of sale or purchase of the said commodity subject to
fulfillment of conditions specified in the said notification itself. The
said notification issued under Section 15 of the Act which is the only
source of power available with the State Government to grant
exemption does not refer to tax leviable under Section 13A of the
Act. As rightly contended by the learned counsel for the Revenue
there is no intendment about tax, there is no equity about tax. On a
plain reading of the notification as per golden rule of the
interpretation i.e. to go by the plain language of the text of the
notification, one can only come to the conclusion that the said
notification dt.17.9.2001 operates in a different field, whereas the
levy of turnover tax under Section 13A operates in another field. If
the State Government wanted to exempt turnover tax under Section
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
13 A also, nothing prevented the State Government from issuing such
separate notification or to mention it specifically in the same
notification also. The exemption under Notification dated 17.9.2001
is available with reference to individual transaction of sale or
purchase only, is further fortified by the certificate appended in the
said Notification as a condition for grant of exemption, which
certificate can be given by the purchasing dealer only in respect of
individual sale or purchase of goods. There is no concept of implied
exemption or exemption by stretching exemption notification to cover
the turnover tax also whereas the same is not clearly exempted under
the said notification dated 17.9.2001. As is well-known on the other
hand, the taxing statutes including the exemption notifications have
to be strictly construed and plainly read. On a plain reading of the
notification, it does not appears to the Court that the State
Government has exempted turnover tax also under the said
notification dated 17.9.2001.
9. As a matter of fact, the similar kind of controversy which
was dealt at a great length by the West Bengal Tribunal in Kejriwal
Electronics Private Ltd.'s case (supra), the controversy has been
finally decided by the Apex Court in Sun Oil Company's case (supra)
in the following manner:“
In the West Bengal Sales Tax Act, 1954,
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
the Legislature itself has clearly and
unambiguously referred to the two forms of
impost, one under section 4, which is referred to as
“a tax” and the other under section 4-AAA, which
is referred to as “a turnover tax”. The difference in
nomenclature is consistently maintained in those as
well as other sections of the Act. Under Section 4AA
which provides for exemption, the
empowerment to notify that no tax shall be payable
relates to “tax” levied under section 4. Therefore,
Notification No.1809/F.T. dated April 1, 1976,
issued under section 4-AA obviously refers to the
tax under section 4 and not to “turnover tax”
imposed under section 4-AAA. A small-scale
industrial unit is not entitled exemption from
payment of turnover tax during the period of the
validity of the eligibility certificate by virtue of the
notification issued under Section 4-AA.
Kejriwal Electronics Private Limited & Co.
V. Commercial Tax Officer [1991] 81 STC 20
(WBTT) [FB] approved.
ABN Food & Beverage Pvt. Ltd. v.
Assistant Commissioner of Commercial Taxes
[1990] 77 STC 339 (Cal) overruled.
Decision of the West Bengal Taxation
Tribunal in SUN OIL Co. Vs. PVT LTD. V.
STATE OF WEST BENGAL [1994] 93 STC 24
affirmed.”
10. Another judgment which was relied upon by the learned
counsel for the assessee in the case of Additional Commissioner Vs.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
Arihant Industries -2002 127 STC page 419 is also of no avail to the
petitioner assessee. The learned Single Judge in that case held that
the words used in the notification “exempts from tax” on a plain
reading of the notification indicated that the women entrepreneurs in
tiny sectors have been exempted from the payment of tax under the
Act. The word 'tax' has been defined under Section 2(r) which means
tax leviable under the provisions of the Act. The sales tax is leviable
under Section 4 of the Purchase Tax is leviable under Section 11 of
the Act and thus, the exemption notification refers to all tax leviable
under the Act which includes Sales Tax as well as purchase tax. The
said judgment did not touch upon the controversy in hand at all. As
already observed the turnover tax leviable under Section 13A is not
the same as sales tax or purchase tax leviable on the individual
transaction of sale or purchase. It is a levy on the basis of gross
turnover of the assessee exceeding a particular limit and treating the
class of dealers, who have turnover over that particular limit as a
different class, the legislature has imposed turnover tax under Section
13A of the Act. The constitutional validity of the turnover tax was
upheld by the Hon'ble Supreme Court in S. Kodar's case itself (supra).
The judgments of Supreme Court in Manglore Chemicals and Wood
Paper's case (supra) in this context help the case of Revenue more in
the present case rather than the assessee.
11. Thus, this Court finds no force in the contentions raised
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
by the learned counsel for the assessee that the turnover tax imposed
upon the assessee should also be deemed to have been exempted
under the notification dated 17.9.2001 and nothing beyond 2% on
sale of all kind of man made fibers and yarn could be imposed in the
face of the said notification. The said notification, in the considered
opinion of this Court does not cover and exempt turnover tax leviable
under Section 13A of the Act and the said turnover tax imposed at
0.25% under notification dated 30.3.2000 is neither hit nor eclipsed
nor cut by the subsequent notification dated 17.1.2001.
12. The revision petition of the assessee is thus, found to be
devoid of merit. The same is accordingly dismissed. No order as to
costs.
[ DR. VINEET KOTHARI ], J.
item No._
babulal/
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JODHPUR.
JUDGMENT
M/s Manglam Yarn Agencies Vs.
Assistant Commissioner,
Commercial Taxes, Special
Circle, Bhilwara.
S.B. SALES TAX REVISION PETITION NO.129/2008
against the judgment and order dt.10.1.2001
passed by Raj. Tax board, Ajmer in Appeal
No.1802/2006/Bhilwara.
Date of order
: 25th September, 2008
PRESENT
HON'BLE DR. JUSTICE VINEET KOTHARI
Mr. Dinesh Mehta for the petitioner.
Mr. Vineet Mathur with Mr. Rishab Sancheti for the respondents.
REPORTABLE
BY THE COURT:
1. The question of law which was framed for consideration
in the present revision petition filed by the assessee is as under:
“Whether the exemption notification No.1490
dated 17.9.2001 SO No.183 issued under Section
15 of the RST Act exempting sale or purchase of
all kinds of man-made fibers and man-made yarn
to which the rate of tax in respect thereof exceeds
2% also covered the turn-over tax imposed on the
respondent-assessee under Section 13A of the
RST Act, 1994 or the said exemption is limited to
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
the individual sale or purchase of the specified
commodities in the said notification.”
2. The Revenue Authorities, all three, concurrently held
against the petitioner-assessee that the notification dated 17.9.2001
did not cover the turnover tax payable by the assessee under Section
13A of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as
'the Act').
3. Before coming to the controversy and case laws, it is
considered expedient to reproduce provisions of the Act and
exemption notification and rate notification in question for ready
reference :
“13-A. Levy of turnover tax.-
(1) Every registered dealer and every dealer who is liable
to get himself registered under section 3, and whose
total turnover in a year exceeds three lacs rupees,
whether or not the whole or any portion of such
turnover is liable to tax under any other provisions of
this Act, shall be liable to pay turnover tax, from such
date and at such rate as may be notified by the State
Government but not exceeding ten percent of his gross
annual turnover.
(2) No tax under sub-section (1) shall be payable on that
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
part of turnover which relates to:
(i)
sale or purchase of exempted goods;
(ii)
sale or purchase of goods in the course of inter-
State trade or commerce;
(iii) sale or purchase of goods in the course of export
out of the territory of India or sale or purchase
in the course of import into the territory of
India;
(iv) all amounts collected by way of tax under the
provisions of this Act or the Central Sales Tax
Act, 1956 (Central Act 74 of 1956);
(v)
all amounts allowed to dealers in respect of
goods returned to the dealer when goods are
taxable on sales provided that the goods were
returned within a period of six months from the
date of delivery of the goods and the accounts
show the date on which, and the amount for
which, refund was made;
(vi) all amounts realised by a dealer by the sale of
his business as a whole;
and except as provided above, no other
deduction shall be made from the gross turnover
of a dealer for the purpose of this section.
(3) For the purpose of assessment, collection and refund
of tax levied under this section, the provisions
pertaining to assessment, collection and refund under
other provisions of this Act and Rules made
thereunder shall mutatis mutandis apply.”
“15.
Exemption of tax.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
Notwithstanding anything contained in this Act,
where the State Government is of the opinion that it is
necessary or expedient in the public interest so to do,
it may, by notification in the Official Gazette, the
exempt fully or partially, whether prospectively or
retrospectively from tax the sale or purchase of any
goods or class of goods or any person or class of
persons, without any condition or with such condition
as may be specified in the notification.”
4. The relevant notification providing for rate of turnover
tax of 0.25 % dated 30.3.2000 and notification dated 17.9.1981
exempting the rate of tax on all kinds of man-made fibers and man-
made yarn exceeding 2% subject to certain conditions, are also
reproduced herein-under:
“NOTIFICATIONS ON TURNOVER TAX
FINANCE DEPARTMENT
Tax Division
NOTIFICATIONS
Jaipur, March 30, 2000
S.O. 377.-In exercise of the powers conferred by
section 13A of the Rajasthan Sales Tax Act, 1994
(Rajasthan Act No.22 of 1995), the State Government
being of the opinion that it is expedient in the public
interest so to do, hereby notifies that every registered
dealer and every dealer who is liable to get himself
registered under the Act and whose total turnover is not
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
less than fifty lac rupees in a year, shall be liable to pay
turnover tax under the said section, at the rate of 0.25%.
[F.4(1)FD/Tax Div./2000-301]
By order of the Governor,
V. Srinivas,
Deputy Secretary to Government.”
“S.NO.1340 No.F.4(18)FD/Tax-Div./97-Part-III-92, Dated : 17-09-2001
In exercise of the powers conferred by section 15 of the
Rajasthan Sales Tax Act, 1994 (Rajasthan Act No.223 of 1995), the
State Government being of the opinion that it is expedient in the
public interest so to do, hereby exempts from tax sale or purchase of
all kinds of man made fibers and man made yarn whether synthetic or
non-;synthetic, collusosic or non-cellulosic, blended or not and waste
thereof, worsted and semi-worsted woolen yarn including carpet
woolen yarn, embroidery yarn, cotton yarn and cotton yarn waste, to
the extent to which the rate of tax in respect thereof exceeds 2%, on
the following conditions, namely :
1. that these commodities are used as raw material for manufacture of
fabrics in the State ; and
2. that such manufacturer shall issue to the selling dealer a certificate
in the Form appended to this notification.
CERTIFICATE
I, ..........................(Name)................... (Status) authorised to
make purchase on behalf of M/s ...................... (Name and address of
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
the purchasing dealer), do hereby certify that the ............................
(description of goods) purchased from M/s ......... (complete address
of the seller), holder of R.C. No................... (RST) ................ (CST),
as per cash memorar dum/bill No.................. Dated ...................... will
be used as raw material for manufacture of fabric in the State of
Rajasthan.”
5. The principal submissions made by the learned counsel
for the petitioner-assessee Mr. Dinesh Mehta are as follows:(
a)
That since the exemption notification dated 17.9.2001
came after the turnover tax rate notification dated
30.3.2000 providing for 0.25% turnover tax, the exemption
notification dated 17.9.2001 should be deemed to have an
overriding effect and the rate of tax on sale of all kinds of
man made fibers and man made yarn including the turnover
tax cannot exceed 2% and, therefore, the turnover tax
levied by the Assessing Authority and upheld by the
appellate authorities upto the Tax board is wrong in law
and the same deserves to be quashed and set aside.
(b)
That turnover tax in effect is also a tax on sale or purchase
of the commodity and, therefore, the notification dated
17.9.2001 would cover that also.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
(b)
Since the word 'tax' has been defined in Section 2(41) of
the Act as any tax or other levy by any name leviable under
the provisions of the Act and 'turnover tax' has not been
separately defined, therefore, 'turnover tax' is included
within the definition of 'tax' under Section 2(41) of the Act
and is governed by the notification dated 17.9.2001.
(c)
That since Section 13-A(2) of the Act stipulates that no
turnover tax shall be payable in relation to sale or purchase
of exempted goods, therefore, the exemption over 2% rate
of tax granted under the notification dated 17.9.2001
cannot be indirectly taken away by imposition of turnover
tax under Section 13A of the Act.
(e)
That since the Hon'ble Supreme Court in S. Kodar V. State
of Kerala – 1974 (34) STT 73 SC as well as this Court in
Merta Trade & Industries Vs. State of Rajasthan & Ors. (
2002) 13 STO 462 (Raj) held that turnover tax is nothing
but tax on purchase or sale of goods and is as good as
additional rate of tax on such purchase or sale of the goods,
therefore, the exemption over 2% of rate of tax under
notification dated 17.9.2001, would exempt the essessee
from levy of turnover tax also.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
(f)
That the judgments of Hon'ble Supreme Court in Sun Oil
Company (P) Ltd. & Anr. Vs. State of West Bengal & Ors.
-(1998) 111 STC 420 upholding the decision of West
Bengal Taxation Tribunal in Kejriwal Electronics Pvt. Ltd.
& Co. V. Commercial Tax Officer (1991) 81 STC 20
(WBTT) [FB] and over ruling the decision of Single Judge
of Calcutta High Court in the case of ABN Food &
Beverage Pvt. Ltd. V. Assistant Commissioner of
Commercial Taxes (1990) 77 STC 339 (Cal.) was
distinguishable from the facts of the present case since
exemption provisions contained under Section 4AA in
West Bengal Act referred to only Section 4 for exemption
whereas Section 15 of the Rajasthan Act without reference
to any specific provisions for levy of tax, empowered the
State Government to exempt fully or partially the assessee
from payment of tax on the sale or purchase of any goods,
and, therefore, the exemption in the present case under the
notification dated 17.9.2001 exempted the assessee from
turnover tax also.
(g)
that relying on the decisions of the Hon'ble Supreme Court
in Mangalore Chemicals & Fertilizers Ltd. V. Dy.
Commissioner of Commercial Taxes and ors.-1991 (83)
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STC 234 and Unionof India & Ors. Vs. Wood Papers Ltd.
& Anr. -1991 (83) STC 251, the learned counsel for the
petitioner-assessee urged that while interpreting the taxing
statute including the exemption notifications, the Rule of
interpretation to be adopted is that while strict
interpretation has to be given to decide the question
whether the subject falls within the exemption or not but
once exemption is held applicable, full play to such
exemption clause has to be given :
“The choice between a strict and a liberal
construction arises only in case of doubt in regard
to the intention of the Legislature manifest on the
statutory language. Indeed, the need to resort to
any interpretative process arises only where the
meaning is not manifest on the plain words of the
statute. If the words are plain and clear and
directly convey the meaning, there is no need for
any interpretation. It appears to us the true rule of
construction of a provision as to exemption is the
one stated by this Court in Union of India V.
Wood Papers Ltd. [1991] 83 STC 251 infra ; 1991
JT (1) 151 at 155:
“True, speaking, liberal and strict
construction of an exemption provision are to be
invoked at different stages of interpreting it. When
the question is whether a subject falls in the
notification or in the exemption clause then it
being in nature of exception is to be construed
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
strictly and against the subject but once ambiguity
or doubt about applicability is lifted and the
subject falls in the notification then full play
should be given to it and it calls for a wider and
liberal construction...”
The learned counsel for the petitioner-assessee
submitted that exemption under notification dated
17.9.2001 cannot be narrowly construed and would also
cover exemption from turnover tax.
6. These submissions are opposed by Mr. V.K. Mathur
appearing with Mr. Rishab Sancheti in the following manner:(
a) That
the notification dated 17.9.2001 exempts only
individual transactions of sale or purchase of all kinds of
man made fibers and man made yarn from the rate of tax
exceeding 2% subject to condition of the same being used
as raw material for manufacture of fabrics in the State and
subject to further condition of manufacture giving
certificate in prescribed form appended in the said
notification and, therefore, the same does not include the
turnover tax leviable on the gross annual turnover of the
assessee in the year.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
(b) That event of taxation for levy of tax on sale or purchase on
each transaction is different from levy of turnover tax on
the gross annual turnover exceeding a particular limit of
turnover and these two being different concepts, cannot be
mixed up and, therefore, the Revenue Authorities have
rightly held the assessee not entitled to the exemption from
turnover tax under the notification dated 17.9.2001.
(c) The words 'on' is absent before the words 'sale or purchase
of all kinds of man made fibers and man made yarn' in the
notification dated 17.9.2001 and, therefore, the turnover tax
which is levied on gross sale value or turnover of the
assessee during particular year cannot be covered by the
said exemption notification and the said notification clearly
exempts only individual transaction of sale or purchase
from tax exceeding 2% rate subject to condition of
certificate of the commodity being used as raw material for
manufacture of fabrics in the State, whereas the turnover
tax on the basis of gross annual turnover as determined
under Section 13A of the Act on which the turnover tax at
the rate of 0.25% was leviable if the turnover exceeded
Rs.50 lacs in a year.
(d) That the controversy was longer res integra and was
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
covered by the decision of the Hon'ble Supreme Court in
case of Sun Oil Company Vs. State of West Bengal (supra)
and, therefore, the present revision petition filed by the
assessee deserve to be dismissed as being without force.
7. I have heard learned counsels at length and given my
thoughtful consideration to the controversy in hand and also the
judgments cited at the Bar.
8. While it is true that the turnover tax is nothing but tax on
turnover viz. Aggregation of sale or purchase of goods and is,
therefore, exigible with reference to Entry 54 of List II of Seventh
Schedule to the Constitution of India, but the exigibility of the
turnover tax is upon happening of different kind of taxable event. It
gets attracted when the gross annual turnover exceeds a particular
limit or bench mark. The character of tax remains the tax on sale or
purchase of goods, but the levy is attracted if the criteria of its levy is
fulfilled as defined in Section 13-A of the Act. The whole of the
turnover does not attract the turnover tax. The exclusion of turnover
mentioned in sub-section (2) of Section 13A has to be made viz.
turnover of exempted goods, turnover of goods sold in the course of
inter State trade or commerce or in the course of export out of India
etc. The levy of turnover tax is also subject to restrictions imposed
under Article 286 of the Constitution of India and Sections 14 and 15
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
of the CST Act as held by this Court in Merta Trade & Industries'
case (supra) but the question is, can rate of turnover tax prescribed in
the notification dated 30.3.2000 at 0.25% on the taxable turnover as
determined under Section 13A of the Act exceeding Rs.50 lacs, be
further slashed down by implied exemption by a subsequent
notification about the rate of tax in relation to sale or purchase of all
kinds of man made fibers and man made yarn under notification dated
17.9.2001. The answer has to be in the negative. The reason is that
notification dated 17.9.2001 which in fact reduced the rate of tax
applicable on the said commodity to 2% or in other words granted
exemption from rate of tax in excess of 2% on the individual
transaction of sale or purchase of the said commodity subject to
fulfillment of conditions specified in the said notification itself. The
said notification issued under Section 15 of the Act which is the only
source of power available with the State Government to grant
exemption does not refer to tax leviable under Section 13A of the
Act. As rightly contended by the learned counsel for the Revenue
there is no intendment about tax, there is no equity about tax. On a
plain reading of the notification as per golden rule of the
interpretation i.e. to go by the plain language of the text of the
notification, one can only come to the conclusion that the said
notification dt.17.9.2001 operates in a different field, whereas the
levy of turnover tax under Section 13A operates in another field. If
the State Government wanted to exempt turnover tax under Section
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
13 A also, nothing prevented the State Government from issuing such
separate notification or to mention it specifically in the same
notification also. The exemption under Notification dated 17.9.2001
is available with reference to individual transaction of sale or
purchase only, is further fortified by the certificate appended in the
said Notification as a condition for grant of exemption, which
certificate can be given by the purchasing dealer only in respect of
individual sale or purchase of goods. There is no concept of implied
exemption or exemption by stretching exemption notification to cover
the turnover tax also whereas the same is not clearly exempted under
the said notification dated 17.9.2001. As is well-known on the other
hand, the taxing statutes including the exemption notifications have
to be strictly construed and plainly read. On a plain reading of the
notification, it does not appears to the Court that the State
Government has exempted turnover tax also under the said
notification dated 17.9.2001.
9. As a matter of fact, the similar kind of controversy which
was dealt at a great length by the West Bengal Tribunal in Kejriwal
Electronics Private Ltd.'s case (supra), the controversy has been
finally decided by the Apex Court in Sun Oil Company's case (supra)
in the following manner:“
In the West Bengal Sales Tax Act, 1954,
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
the Legislature itself has clearly and
unambiguously referred to the two forms of
impost, one under section 4, which is referred to as
“a tax” and the other under section 4-AAA, which
is referred to as “a turnover tax”. The difference in
nomenclature is consistently maintained in those as
well as other sections of the Act. Under Section 4AA
which provides for exemption, the
empowerment to notify that no tax shall be payable
relates to “tax” levied under section 4. Therefore,
Notification No.1809/F.T. dated April 1, 1976,
issued under section 4-AA obviously refers to the
tax under section 4 and not to “turnover tax”
imposed under section 4-AAA. A small-scale
industrial unit is not entitled exemption from
payment of turnover tax during the period of the
validity of the eligibility certificate by virtue of the
notification issued under Section 4-AA.
Kejriwal Electronics Private Limited & Co.
V. Commercial Tax Officer [1991] 81 STC 20
(WBTT) [FB] approved.
ABN Food & Beverage Pvt. Ltd. v.
Assistant Commissioner of Commercial Taxes
[1990] 77 STC 339 (Cal) overruled.
Decision of the West Bengal Taxation
Tribunal in SUN OIL Co. Vs. PVT LTD. V.
STATE OF WEST BENGAL [1994] 93 STC 24
affirmed.”
10. Another judgment which was relied upon by the learned
counsel for the assessee in the case of Additional Commissioner Vs.
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
Arihant Industries -2002 127 STC page 419 is also of no avail to the
petitioner assessee. The learned Single Judge in that case held that
the words used in the notification “exempts from tax” on a plain
reading of the notification indicated that the women entrepreneurs in
tiny sectors have been exempted from the payment of tax under the
Act. The word 'tax' has been defined under Section 2(r) which means
tax leviable under the provisions of the Act. The sales tax is leviable
under Section 4 of the Purchase Tax is leviable under Section 11 of
the Act and thus, the exemption notification refers to all tax leviable
under the Act which includes Sales Tax as well as purchase tax. The
said judgment did not touch upon the controversy in hand at all. As
already observed the turnover tax leviable under Section 13A is not
the same as sales tax or purchase tax leviable on the individual
transaction of sale or purchase. It is a levy on the basis of gross
turnover of the assessee exceeding a particular limit and treating the
class of dealers, who have turnover over that particular limit as a
different class, the legislature has imposed turnover tax under Section
13A of the Act. The constitutional validity of the turnover tax was
upheld by the Hon'ble Supreme Court in S. Kodar's case itself (supra).
The judgments of Supreme Court in Manglore Chemicals and Wood
Paper's case (supra) in this context help the case of Revenue more in
the present case rather than the assessee.
11. Thus, this Court finds no force in the contentions raised
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
STR 129/08 -M/s Manglam Yarn Agencies Vs. Assistant Commissioner, Commercial Taxes,
Special Circle, Bhilwara. Judgment dt.25.9.08
7
by the learned counsel for the assessee that the turnover tax imposed
upon the assessee should also be deemed to have been exempted
under the notification dated 17.9.2001 and nothing beyond 2% on
sale of all kind of man made fibers and yarn could be imposed in the
face of the said notification. The said notification, in the considered
opinion of this Court does not cover and exempt turnover tax leviable
under Section 13A of the Act and the said turnover tax imposed at
0.25% under notification dated 30.3.2000 is neither hit nor eclipsed
nor cut by the subsequent notification dated 17.1.2001.
12. The revision petition of the assessee is thus, found to be
devoid of merit. The same is accordingly dismissed. No order as to
costs.
[ DR. VINEET KOTHARI ], J.
item No._
babulal/
Mahadev Marmo versus Union of India
1
1R
CIVIL WRIT No. 5078 of 2008
MAHADEV MARMO PVT. LTD.
V/S
UNION OF INDIA & ORS.
Mr. DINESH MEHTA, for the appellant / petitioner
Mr. VINEET KUMAR MATHUR], for the respondent UOI
Mr. RAVI BHANSALI ]
Mr. RISHABH SANCHETI] ]
Mr. P.S.BHATI ]
Mr. AJEET KUMAR SHARMA ] for applicants
Date of Order : 15.9.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J.
ORDER
By this petition, the petitioner seeks to have
declared illegal, arbitrary and unconstitutional, the
following words in Policy Circular No.13(RE-2008) dt.
30.6.2008 produced with the writ petition as Annexure-4
“units who have been granted marble block import licence
under previous licensing years or are eligible to avail
license in the current licensing year (2008-09) under SIL
category”. Other relief as claimed is, that the petitioner
may be declared entitled to avail import license under
Annexure-4.
Necessary facts are, that according to the
petitioner, in exercise of powers conferred by section 5 of
2
2e
concerned Ministry published Foreign Trade Policy 20042009,
incorporating the provisions, relating to export and
import of goods and service. Then, the Director General of
Foreign Trade, New Delhi has issued annual supplement for
the year 2007-08 and 2008-09, and the said Director General
issued a Policy Circular No.1 (RE-2007) dt. 26.7.2007,
issuing guidelines for import of rough marble blocks/slabs
for the year 2007-08, laying down the entitlement or quota
of import of rough marble blocks, subject to ceiling
provided therein, however, out of the said quota,
individual importers were allocated their share of total
quantity of import. Accordingly, the petitioner has been
availing the quota. This licence was issued to the
petitioner for import, under Special Import Licences (SIL).
It is alleged, that till the year 2007-08, the import
licences have been issued, only under SIL, and there was no
policy for entrepreneurs, other than those availing licence
under SIL.
It is then alleged, that for the year 2008-09, the
Director General issued Policy Circular No.12 dt.
27.6.2008, laying down guidelines for import of rough
marble blocks for the year 2008-09, and the upper ceiling
of the total import was fixed at 1.40 lacks metric ton.
This Circular has been produced as Annexure-3. Then, the
said Director also issued a Policy Circular No.13 dt.
3
3,
according to which, units, who have been granted import
licences under SIL, or who are eligible for avail licences,
in the current year, under the SIL, have been excluded. It
is also alleged, that quantity of licence or entitlement of
licence thereunder, is in accordance with gang saw machines
installed in the premises. This Circular No.13 has been
produced as Annexure-4.
The precise challenge, for the above relief, is on
the ground, that according to Annexure-4, the eligibility
is based on the criteria being, units, who have installed
marble gang saw machine, and the units should have been in
operation since prior to 31.3.2001, and from out of this
category, 100% EOU's, units in SEZ, and units who have been
granted marble block import licence under previous
licensing years, or are eligible to avail licence in the
current licensing year (2008-09), under SIL category, has
been excluded. Then, it has also been provided, that all
eligible units as above, should have indigenous sales turn
over of marble slabs/tiles of Rs.1.00 crore and above in
each of three financial years 2004-05, 2005-06, 2007-08
(2006-07). According to the petitioner, exclusion of those
units, who have been granted licence under SIL, or who are
eligible to avail licence in the current licensing year
under SIL, is highly arbitrary and contrary to Foreign
Trade Policy, unjust and unwarranted, particularly in wake
4
4l
entitlement for import licence is 3000 metric ton marble
blocks/slabs for the first gang saw machine, and 1500
metric ton for additional gang saw machine. It is
contended, that once the Central Government decides to
permit import of such a huge quantity, based on
manufacturing capacity, exclusion of the units obtaining
import licence under SIL, is highly arbitrary and illegal.
It is also contended, that the Government could and should
have provided an option, to be exercised by an individual
entrepreneur, either to apply and avail licence under
Annexure-3, or Annexure-4. It is next contended, that
Annexure-4 has been issued to give benefit to the
particular sect of entrepreneurs, excluding the existing
licence holders, under SIL category.
Reply has been filed on behalf of the respondents,
contending inter alia, that Annexure-4 was issued,
especially to redress the grievance of the entrepreneurs,
who were not given the import licence under SIL Scheme, and
the petitioner, who was, and is enjoying the benefits under
SIL Scheme, cannot question, when the benefit is extended
to those entrepreneurs, who were not enjoying the benefit
under the SIL Scheme. It is also contended, that by
Annexure-4, Government has broad based licensing, by
including units, which were earlier not covered under the
SIL Category. The policy has been devised in consultation
5
5s
of the industries. It is contended, that if the option
suggested by the petitioner is provided, very purpose of
broad basing the eligible entities would be defeated. It is
also contended that on the same consideration, 100% EOU
units, and units in SEZ, have been excluded. It is denied
that there is vast difference between the maximum quantity
of import, given under the import licence to the
petitioner, and the quantity to which the entrepreneur may
be entitled, under Annexure-4, rather the quantity 3000
metric ton is upper most ceiling, which can be allowed to
importers. Thus, the apprehension of the petitioner is
unfounded.
Rejoinder has been filed by the petitioner,
reiterating the averments of the writ petition. However,
additional pleadings taken therein are, that the
eligibility criteria of quota, to which each unit is
entitled, are different under Annexures-3 and 4, inasmuch
as under Annexure-3, the unit is entitled on the basis of
eligible turnover of the previous year, whereas under
Annexure-4, entitlement is according to the turnover and
number of gang saw machines, installed in the unit before
2001.
During the pendency of this petition, certain
applications have been filed by individual entrepreneurs,
6
6r
grant of licence under Annexure-4, so also by some of the
persons, who have been granted some licences, seeking their
impleadment as party respondent of the writ petition.
Replies to those applications have been filed, and before
proceeding with the arguments on the main writ petition, we
have heard learned counsel for the applicants, and in view
of the averments contained at page 50 of the paper book,
being internal page 5 of the rejoinder, the applications
are allowed, and all the applicants are impleaded as party
respondents.
Thereafter, we have heard learned counsels on the
merits of the matter.
At the outset, it may be observed that by
Annexure-4, the persons like petitioner, who have been
enjoying, and are availing, import licences under the SIL,
have not been, altogether excluded from their entitlement
to get import licence, rather they continue to remain
entitled to avail the licence under the SIL. Therefore, it
cannot be said, that by issuing the policy scheme Annexure4,
the persons including the petitioner have been deprived
to do their business or profession, within the meaning of
Article 19(1)(g).
Coming to the aspect of the arbitrariness, as
7
7g
of the total import has been fixed at 1.40 lacks metric
ton, under Annexure-3, and identical upper limit has been
fixed separately under Annexure-4, thus they do not
overlap, in the manner, that one does not take away the
share of other. Then much of the apprehension of the
petitioner, is based on the entitlement to obtain licence
up to 3000 metric ton on one gang saw machine, and 1500
metric ton for additional gang saw machine, may be taken
up. From a combined reading of Annexures-3 and 4, it would
be clear, that the eligibility to get the licence to the
extent of quantity of marbles, to be imported under
licence, to be availed under Annexure-3, depends on the
figure to be worked out, on the basis of eligible turnover
for the year 2007-08 i.e. the turnover of eligible firms
for the year 2006-07, or the turnover of these firms for
the year 2004-05 with the cap of 10%, whichever is less.
Likewise, under Annexure-4, the eligibility of the unit for
getting import licence is to be pro rata, on the basis of
average indigenous sales turnover of marble slabs/tiles,
only in the financial years 2004-05, 2005-06 and 2006-07.
Thus, inherently and basically, the entitlement to import
licence for particular quantity of marbles under both
Annexure-3 and 4 is, relatable to the turnover of the firm
concerned. Under Annexure-3, it is relatable to eligible
turnover for the relevant years with a specified cap, while
under Annexure-4, it is relatable to average indigenous
8
8r
less, the same criterion has been applied for determining
the eligibility, viz. depending on the turnover, under
Annexure-3 and Annexure-4 respectively. Then so far as the
limit of 3000 metric ton for one marble gang saw, and 1500
metric ton for additional gang saw is concerned, it is
clear, that this is the upper most overall ceiling for each
individual applicant. Significantly, under Annexure-3, no
such overall ceiling has been prescribed. Obviously, with
the result, that a person, falling under Annexure-3, in a
given case, may even be eligible for import licence for
marble, to an extent, for beyond the one permissible under
Annexure-4.
Thus, it cannot be said, that the policy, being
Annexure-4, is either arbitrary or irrational. May be, that
in given individual case, for the individual entrepreneur,
at a given point of time, and for given reason also,
Annexure-4 may appear to be more beneficial than Annexure3,
but then, for deciding the validity of Annexure-4, that
alone cannot be considered. We have to consider the two
policies Annexure-3 and Annexure-4 on their own, and
consider the various aspects thereof, as considered above.
However with a view to satisfy our ultimate judicial
conscience, we asked the rough figures, from the
respondents about the number of persons having licenses, or
having applied under the two policy circulars, and we have
9
9e
under SIL, is around or less than 30, while the persons
applying for, or having granted licenses under Annexure-4
far exceed 100. It would suffice to observe, that the
ultimate upper limit of import under Annexure-3, as well as
Annexure-4, is 1.40 lacks metric ton. It is simply required
to be comprehended, that on the one hand, as per Annexure3,
the total quantity 1.40 lacks metric ton is available
for obtaining import licence, to the persons numbering
around 30, on the other hand, same quantity of goods is
available for obtaining import licence to persons, under
Annexure-4, far outnumber 100. This, by itself, is enough
to dispel all contentions, regarding arbitrariness,
irrationality of Annexure-4.
The writ petition thus lacks merit, and is,
therefore, dismissed summarily.
( KISHAN SWAROOP CHAUDHARI ),J. ( N P GUPTA ),J.
/m.asif/
1R
CIVIL WRIT No. 5078 of 2008
MAHADEV MARMO PVT. LTD.
V/S
UNION OF INDIA & ORS.
Mr. DINESH MEHTA, for the appellant / petitioner
Mr. VINEET KUMAR MATHUR], for the respondent UOI
Mr. RAVI BHANSALI ]
Mr. RISHABH SANCHETI] ]
Mr. P.S.BHATI ]
Mr. AJEET KUMAR SHARMA ] for applicants
Date of Order : 15.9.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J.
ORDER
By this petition, the petitioner seeks to have
declared illegal, arbitrary and unconstitutional, the
following words in Policy Circular No.13(RE-2008) dt.
30.6.2008 produced with the writ petition as Annexure-4
“units who have been granted marble block import licence
under previous licensing years or are eligible to avail
license in the current licensing year (2008-09) under SIL
category”. Other relief as claimed is, that the petitioner
may be declared entitled to avail import license under
Annexure-4.
Necessary facts are, that according to the
petitioner, in exercise of powers conferred by section 5 of
2
2e
concerned Ministry published Foreign Trade Policy 20042009,
incorporating the provisions, relating to export and
import of goods and service. Then, the Director General of
Foreign Trade, New Delhi has issued annual supplement for
the year 2007-08 and 2008-09, and the said Director General
issued a Policy Circular No.1 (RE-2007) dt. 26.7.2007,
issuing guidelines for import of rough marble blocks/slabs
for the year 2007-08, laying down the entitlement or quota
of import of rough marble blocks, subject to ceiling
provided therein, however, out of the said quota,
individual importers were allocated their share of total
quantity of import. Accordingly, the petitioner has been
availing the quota. This licence was issued to the
petitioner for import, under Special Import Licences (SIL).
It is alleged, that till the year 2007-08, the import
licences have been issued, only under SIL, and there was no
policy for entrepreneurs, other than those availing licence
under SIL.
It is then alleged, that for the year 2008-09, the
Director General issued Policy Circular No.12 dt.
27.6.2008, laying down guidelines for import of rough
marble blocks for the year 2008-09, and the upper ceiling
of the total import was fixed at 1.40 lacks metric ton.
This Circular has been produced as Annexure-3. Then, the
said Director also issued a Policy Circular No.13 dt.
3
3,
according to which, units, who have been granted import
licences under SIL, or who are eligible for avail licences,
in the current year, under the SIL, have been excluded. It
is also alleged, that quantity of licence or entitlement of
licence thereunder, is in accordance with gang saw machines
installed in the premises. This Circular No.13 has been
produced as Annexure-4.
The precise challenge, for the above relief, is on
the ground, that according to Annexure-4, the eligibility
is based on the criteria being, units, who have installed
marble gang saw machine, and the units should have been in
operation since prior to 31.3.2001, and from out of this
category, 100% EOU's, units in SEZ, and units who have been
granted marble block import licence under previous
licensing years, or are eligible to avail licence in the
current licensing year (2008-09), under SIL category, has
been excluded. Then, it has also been provided, that all
eligible units as above, should have indigenous sales turn
over of marble slabs/tiles of Rs.1.00 crore and above in
each of three financial years 2004-05, 2005-06, 2007-08
(2006-07). According to the petitioner, exclusion of those
units, who have been granted licence under SIL, or who are
eligible to avail licence in the current licensing year
under SIL, is highly arbitrary and contrary to Foreign
Trade Policy, unjust and unwarranted, particularly in wake
4
4l
entitlement for import licence is 3000 metric ton marble
blocks/slabs for the first gang saw machine, and 1500
metric ton for additional gang saw machine. It is
contended, that once the Central Government decides to
permit import of such a huge quantity, based on
manufacturing capacity, exclusion of the units obtaining
import licence under SIL, is highly arbitrary and illegal.
It is also contended, that the Government could and should
have provided an option, to be exercised by an individual
entrepreneur, either to apply and avail licence under
Annexure-3, or Annexure-4. It is next contended, that
Annexure-4 has been issued to give benefit to the
particular sect of entrepreneurs, excluding the existing
licence holders, under SIL category.
Reply has been filed on behalf of the respondents,
contending inter alia, that Annexure-4 was issued,
especially to redress the grievance of the entrepreneurs,
who were not given the import licence under SIL Scheme, and
the petitioner, who was, and is enjoying the benefits under
SIL Scheme, cannot question, when the benefit is extended
to those entrepreneurs, who were not enjoying the benefit
under the SIL Scheme. It is also contended, that by
Annexure-4, Government has broad based licensing, by
including units, which were earlier not covered under the
SIL Category. The policy has been devised in consultation
5
5s
of the industries. It is contended, that if the option
suggested by the petitioner is provided, very purpose of
broad basing the eligible entities would be defeated. It is
also contended that on the same consideration, 100% EOU
units, and units in SEZ, have been excluded. It is denied
that there is vast difference between the maximum quantity
of import, given under the import licence to the
petitioner, and the quantity to which the entrepreneur may
be entitled, under Annexure-4, rather the quantity 3000
metric ton is upper most ceiling, which can be allowed to
importers. Thus, the apprehension of the petitioner is
unfounded.
Rejoinder has been filed by the petitioner,
reiterating the averments of the writ petition. However,
additional pleadings taken therein are, that the
eligibility criteria of quota, to which each unit is
entitled, are different under Annexures-3 and 4, inasmuch
as under Annexure-3, the unit is entitled on the basis of
eligible turnover of the previous year, whereas under
Annexure-4, entitlement is according to the turnover and
number of gang saw machines, installed in the unit before
2001.
During the pendency of this petition, certain
applications have been filed by individual entrepreneurs,
6
6r
grant of licence under Annexure-4, so also by some of the
persons, who have been granted some licences, seeking their
impleadment as party respondent of the writ petition.
Replies to those applications have been filed, and before
proceeding with the arguments on the main writ petition, we
have heard learned counsel for the applicants, and in view
of the averments contained at page 50 of the paper book,
being internal page 5 of the rejoinder, the applications
are allowed, and all the applicants are impleaded as party
respondents.
Thereafter, we have heard learned counsels on the
merits of the matter.
At the outset, it may be observed that by
Annexure-4, the persons like petitioner, who have been
enjoying, and are availing, import licences under the SIL,
have not been, altogether excluded from their entitlement
to get import licence, rather they continue to remain
entitled to avail the licence under the SIL. Therefore, it
cannot be said, that by issuing the policy scheme Annexure4,
the persons including the petitioner have been deprived
to do their business or profession, within the meaning of
Article 19(1)(g).
Coming to the aspect of the arbitrariness, as
7
7g
of the total import has been fixed at 1.40 lacks metric
ton, under Annexure-3, and identical upper limit has been
fixed separately under Annexure-4, thus they do not
overlap, in the manner, that one does not take away the
share of other. Then much of the apprehension of the
petitioner, is based on the entitlement to obtain licence
up to 3000 metric ton on one gang saw machine, and 1500
metric ton for additional gang saw machine, may be taken
up. From a combined reading of Annexures-3 and 4, it would
be clear, that the eligibility to get the licence to the
extent of quantity of marbles, to be imported under
licence, to be availed under Annexure-3, depends on the
figure to be worked out, on the basis of eligible turnover
for the year 2007-08 i.e. the turnover of eligible firms
for the year 2006-07, or the turnover of these firms for
the year 2004-05 with the cap of 10%, whichever is less.
Likewise, under Annexure-4, the eligibility of the unit for
getting import licence is to be pro rata, on the basis of
average indigenous sales turnover of marble slabs/tiles,
only in the financial years 2004-05, 2005-06 and 2006-07.
Thus, inherently and basically, the entitlement to import
licence for particular quantity of marbles under both
Annexure-3 and 4 is, relatable to the turnover of the firm
concerned. Under Annexure-3, it is relatable to eligible
turnover for the relevant years with a specified cap, while
under Annexure-4, it is relatable to average indigenous
8
8r
less, the same criterion has been applied for determining
the eligibility, viz. depending on the turnover, under
Annexure-3 and Annexure-4 respectively. Then so far as the
limit of 3000 metric ton for one marble gang saw, and 1500
metric ton for additional gang saw is concerned, it is
clear, that this is the upper most overall ceiling for each
individual applicant. Significantly, under Annexure-3, no
such overall ceiling has been prescribed. Obviously, with
the result, that a person, falling under Annexure-3, in a
given case, may even be eligible for import licence for
marble, to an extent, for beyond the one permissible under
Annexure-4.
Thus, it cannot be said, that the policy, being
Annexure-4, is either arbitrary or irrational. May be, that
in given individual case, for the individual entrepreneur,
at a given point of time, and for given reason also,
Annexure-4 may appear to be more beneficial than Annexure3,
but then, for deciding the validity of Annexure-4, that
alone cannot be considered. We have to consider the two
policies Annexure-3 and Annexure-4 on their own, and
consider the various aspects thereof, as considered above.
However with a view to satisfy our ultimate judicial
conscience, we asked the rough figures, from the
respondents about the number of persons having licenses, or
having applied under the two policy circulars, and we have
9
9e
under SIL, is around or less than 30, while the persons
applying for, or having granted licenses under Annexure-4
far exceed 100. It would suffice to observe, that the
ultimate upper limit of import under Annexure-3, as well as
Annexure-4, is 1.40 lacks metric ton. It is simply required
to be comprehended, that on the one hand, as per Annexure3,
the total quantity 1.40 lacks metric ton is available
for obtaining import licence, to the persons numbering
around 30, on the other hand, same quantity of goods is
available for obtaining import licence to persons, under
Annexure-4, far outnumber 100. This, by itself, is enough
to dispel all contentions, regarding arbitrariness,
irrationality of Annexure-4.
The writ petition thus lacks merit, and is,
therefore, dismissed summarily.
( KISHAN SWAROOP CHAUDHARI ),J. ( N P GUPTA ),J.
/m.asif/
Kamra Bottling Versus Commissioner of Central Excise
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
OTHER TAX REF. CIVIL No. 5 of 2005
KAMRA BOTTLING CO
V/S
COMMISSIONER CENTRAL EXCISE JAIPUR
Mr. R.D. Sidhu, for the appellant / petitioner/
Mr. Rishabh Sancheti for Mr. V.K. Mathur, for the respondent
Date of Order : 3.4.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI SANGEET LODHA,J.
ORDER
This is a petition under Section 35(H) of the
Central Excise Act by the assessee, on the following
question framed in the application :
“Whether the substantive benefit of exemption can
be denied for procedural irregularities?”
The necessary facts are, that the petitioner is a
manufacturer of aerated water. The manufacturer used to
manufacture aerated water in two brands; one being Campa,
and another being Mr. Dik Soda. Out of the two products,
the product manufactured in the name of Campa is excisable.
However, the product in the name of Mr. Dik is not
excisable, being covered by exemption notification.
The controversy involved in the present case arose
in the circumstances, that petitioner is using inputs in
manufacture of two products, and is availing MODVAT Credit
on such inputs. As the inputs for the two products are
common, the question arose, because the petitioner sought
to avail the MODVAT Credit, with respect to the product, on
which excise duty is not leviable. But the department did
not allow such Credit, on the ground, that there is no
provision for reversal.
Learned Assistant Collector vide order dated
16.03.95 held, that full exemption upto Rs. 30 lacs under
the Notification 1/93, in respect of Dik brand aerated
water is not admissible. It was also held, that
Classification list effective from 01.03.94 and 01.04.94
are accordingly modified, to deny the benefit of full
exemption upto Rs. 30 lacs, to Dik brand Aerated water.
It may be clarified here, that there is no
controversy, as to whether the Dik brand product is liable
to excise duty or not, as admittedly it is exempted. The
only controversy is, as to whether in the circumstances of
the present case, the petitioner is entitled to avail the
MODVAT Credit, with respect to inputs used for manufacture
of products, on which no excise duty is leviable?
The petitioner filed appeal which was dismissed
vide order dated 06th June, 2000, and then a further appeal
was filed before the learned Tribunal, which too was
dismissed vide order dated 06th February, 2003.
The petitioner placed strong reliance on the
judgment of Hon'ble Supreme Court, in the matter of
Chandrapur Magnet Wires (P) Ltd. Vs Collector of C. Excise,
Nagpur, reported in 1996(81) E.L.T.3 (S.C.) Page 3. This
reliance was placed before the learned Commissioner, so
also the learned Tribunal, and also before us.
Learned Tribunal found, that in Chandrapur Magnet
Wire's Case, the Hon'ble Supreme Court considered the case
of an SSI unit, which availed the benefit of SSI exemption,
in respect of final product after reversing the input-
credit, which they had earlier taken. In the instant case,
the reversal of input-credit was, admittedly, made after
clearance of the final product, under the exemption
notification, and therefore, it was found, that ratio in
Chandrapur Magnet case is not applicable to the instant
case.
With the assistance of learned counsels for the
parties, we have gone through the impugned judgment, and
have closely gone through the judgment of Hon'ble Supreme
Court, in Chandrapur Magnet case.
In Chandrapur Magnet’s case, of course the
controversy involved was, as to whether there is any
provision for reversal of MODVAT Credit, with respect to
the products, which are not liable to excise duty, or in
other words are exempted goods ? However, in that case, as
a fact, it was noticed, that the appellants therein had
reversed the MODVAT Credit availed by them, and it was
found to have been reversed prior to clearance of the
goods. The Hon'ble Supreme Court quoted para 3 of the
notification dated 28.02.93, which provides, that where a
manufacturer produces, alongwith dutiable final products,
final products, which would be exempt from duty by a
notification, and in respect of which it is not reasonably
possible to segregate the inputs, the manufacturer may be
allowed to take credit of duty paid on all inputs, used in
the manufacture of the final products, provided that credit
of duty paid on the inputs used in such exempted products
is debited in the credit account before the removal of such
exempted final products.
(Emphesys Supplied)
In our view, this notification and the judgment of
Hon’ble the Supreme Court, firstly, nullify and negative
the stand taken by the department, that there is no
provision for reversal of the MODVAT Credit taken, and
since in that case, it was found as a fact that the credit
was reversed before clearance of the goods, the appeal of
the assessee was allowed. In the present case also, so far
the legal proposition, about the appellant's entitlement to
exemption from payment of duty on exempted goods is
concerned, on that there is no dispute, inasmuch as the
appellant cannot be made liable to pay the excise duty on
exempted goods, simply because he has availed MODVAT
Credit. But the question here precisely is, as to whether
the appellant is entitled to retain the MODVAT Credit
already availed by him on such inputs consumed in
production of such exempted goods ?
In our view, the proviso contained in para 3 of
the said notification, as referred to above, is a complete
answer, which in no ambiguous terms provides, that the
credit of duty paid on the inputs, used in such exempted
products is debited, in the credit account, specially by
using the words, “before the removal of exempted final
products.”
An attempt was made by the learned counsel for the
petitioner to contend, that the petitioner had been
consistently following the practice of submitting monthly
returns in register RG 23, and therein, he was showing
reversal of credit, which was always being considered by
the department, and therefore, he is entitled to avail the
credit, and on the basis of that register, it was sought to
be contended, that this amounts to the petitioner reversing
the credit, before removal of goods.
In our view, the contention cannot be accepted,
for the simple reason, that the question as to whether
reversal has been effected before removal of the goods or
after removal of the goods, is purely a question of fact,
and all the authorities below have found it as a fact, that
un-disputedly the appellant reversed the credit after
removal of the goods.
On our request, learned counsel for the petitioner
read to us, even the memo of appeal, submitted before the
Tribunal below, and even therein also, we did not find any
contention, to the effect, that the appellant had reversed
the credit, before removal of the goods. Rather the whole
burden of the appeal was, that simply because the appellant
had availed the MODVAT Credit, he cannot be denied
exemption from payment of excise duty, on exempted goods.
Thus, since admittedly the appellant had not
reversed the credit before removal of the exempted final
products, we do not find any error in the orders of the
authorities below.
The reference application is therefore, dismissed.
( SANGEET LODHA ),J. ( N P GUPTA ),J.
/bjsh/
OTHER TAX REF. CIVIL No. 5 of 2005
KAMRA BOTTLING CO
V/S
COMMISSIONER CENTRAL EXCISE JAIPUR
Mr. R.D. Sidhu, for the appellant / petitioner/
Mr. Rishabh Sancheti for Mr. V.K. Mathur, for the respondent
Date of Order : 3.4.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI SANGEET LODHA,J.
ORDER
This is a petition under Section 35(H) of the
Central Excise Act by the assessee, on the following
question framed in the application :
“Whether the substantive benefit of exemption can
be denied for procedural irregularities?”
The necessary facts are, that the petitioner is a
manufacturer of aerated water. The manufacturer used to
manufacture aerated water in two brands; one being Campa,
and another being Mr. Dik Soda. Out of the two products,
the product manufactured in the name of Campa is excisable.
However, the product in the name of Mr. Dik is not
excisable, being covered by exemption notification.
The controversy involved in the present case arose
in the circumstances, that petitioner is using inputs in
manufacture of two products, and is availing MODVAT Credit
on such inputs. As the inputs for the two products are
common, the question arose, because the petitioner sought
to avail the MODVAT Credit, with respect to the product, on
which excise duty is not leviable. But the department did
not allow such Credit, on the ground, that there is no
provision for reversal.
Learned Assistant Collector vide order dated
16.03.95 held, that full exemption upto Rs. 30 lacs under
the Notification 1/93, in respect of Dik brand aerated
water is not admissible. It was also held, that
Classification list effective from 01.03.94 and 01.04.94
are accordingly modified, to deny the benefit of full
exemption upto Rs. 30 lacs, to Dik brand Aerated water.
It may be clarified here, that there is no
controversy, as to whether the Dik brand product is liable
to excise duty or not, as admittedly it is exempted. The
only controversy is, as to whether in the circumstances of
the present case, the petitioner is entitled to avail the
MODVAT Credit, with respect to inputs used for manufacture
of products, on which no excise duty is leviable?
The petitioner filed appeal which was dismissed
vide order dated 06th June, 2000, and then a further appeal
was filed before the learned Tribunal, which too was
dismissed vide order dated 06th February, 2003.
The petitioner placed strong reliance on the
judgment of Hon'ble Supreme Court, in the matter of
Chandrapur Magnet Wires (P) Ltd. Vs Collector of C. Excise,
Nagpur, reported in 1996(81) E.L.T.3 (S.C.) Page 3. This
reliance was placed before the learned Commissioner, so
also the learned Tribunal, and also before us.
Learned Tribunal found, that in Chandrapur Magnet
Wire's Case, the Hon'ble Supreme Court considered the case
of an SSI unit, which availed the benefit of SSI exemption,
in respect of final product after reversing the input-
credit, which they had earlier taken. In the instant case,
the reversal of input-credit was, admittedly, made after
clearance of the final product, under the exemption
notification, and therefore, it was found, that ratio in
Chandrapur Magnet case is not applicable to the instant
case.
With the assistance of learned counsels for the
parties, we have gone through the impugned judgment, and
have closely gone through the judgment of Hon'ble Supreme
Court, in Chandrapur Magnet case.
In Chandrapur Magnet’s case, of course the
controversy involved was, as to whether there is any
provision for reversal of MODVAT Credit, with respect to
the products, which are not liable to excise duty, or in
other words are exempted goods ? However, in that case, as
a fact, it was noticed, that the appellants therein had
reversed the MODVAT Credit availed by them, and it was
found to have been reversed prior to clearance of the
goods. The Hon'ble Supreme Court quoted para 3 of the
notification dated 28.02.93, which provides, that where a
manufacturer produces, alongwith dutiable final products,
final products, which would be exempt from duty by a
notification, and in respect of which it is not reasonably
possible to segregate the inputs, the manufacturer may be
allowed to take credit of duty paid on all inputs, used in
the manufacture of the final products, provided that credit
of duty paid on the inputs used in such exempted products
is debited in the credit account before the removal of such
exempted final products.
(Emphesys Supplied)
In our view, this notification and the judgment of
Hon’ble the Supreme Court, firstly, nullify and negative
the stand taken by the department, that there is no
provision for reversal of the MODVAT Credit taken, and
since in that case, it was found as a fact that the credit
was reversed before clearance of the goods, the appeal of
the assessee was allowed. In the present case also, so far
the legal proposition, about the appellant's entitlement to
exemption from payment of duty on exempted goods is
concerned, on that there is no dispute, inasmuch as the
appellant cannot be made liable to pay the excise duty on
exempted goods, simply because he has availed MODVAT
Credit. But the question here precisely is, as to whether
the appellant is entitled to retain the MODVAT Credit
already availed by him on such inputs consumed in
production of such exempted goods ?
In our view, the proviso contained in para 3 of
the said notification, as referred to above, is a complete
answer, which in no ambiguous terms provides, that the
credit of duty paid on the inputs, used in such exempted
products is debited, in the credit account, specially by
using the words, “before the removal of exempted final
products.”
An attempt was made by the learned counsel for the
petitioner to contend, that the petitioner had been
consistently following the practice of submitting monthly
returns in register RG 23, and therein, he was showing
reversal of credit, which was always being considered by
the department, and therefore, he is entitled to avail the
credit, and on the basis of that register, it was sought to
be contended, that this amounts to the petitioner reversing
the credit, before removal of goods.
In our view, the contention cannot be accepted,
for the simple reason, that the question as to whether
reversal has been effected before removal of the goods or
after removal of the goods, is purely a question of fact,
and all the authorities below have found it as a fact, that
un-disputedly the appellant reversed the credit after
removal of the goods.
On our request, learned counsel for the petitioner
read to us, even the memo of appeal, submitted before the
Tribunal below, and even therein also, we did not find any
contention, to the effect, that the appellant had reversed
the credit, before removal of the goods. Rather the whole
burden of the appeal was, that simply because the appellant
had availed the MODVAT Credit, he cannot be denied
exemption from payment of excise duty, on exempted goods.
Thus, since admittedly the appellant had not
reversed the credit before removal of the exempted final
products, we do not find any error in the orders of the
authorities below.
The reference application is therefore, dismissed.
( SANGEET LODHA ),J. ( N P GUPTA ),J.
/bjsh/
Friday, April 24, 2009
Jhoomarmal Dhanraj versus Assistant Commercial Taxes Officer
http://courtnic.nic.in/jodh/judfile.asp?ID=CR&nID=42&yID=2007&doj=7/1/2008
1
SALES TAX REVISION PETITION NO.42/2007
M/s. Jhoomarmal Dhanraj
Vs.
ACTO, Ward-III, Circle -C, Jodhpur
Date of Order :: 1st July 2008
HON'BLE MR. JUSTICE DINESH MAHESHWARI
Mr.Dinesh Mehta for the petitioner
Mr.Rishabh Sancheti for
Mr.V.K.Mathur for the respondent
....
BY THE COURT:
By way of this revision petition, the petitioner-dealer
seeks to question the order dated 28.03.2006 as passed by
the Rajasthan Tax Board, Ajmer in Appeal No.700/2005
whereby, while setting aside the order dated 24.02.2005 as
passed by the Dy. Commissioner (Appeals), Bikaner, the order
dated 14.10.2003 as passed by the Assessing Authority under
Section 78 (5) of the Rajasthan Sales Tax Act, 1994 ('the Act
of 1994') has been restored.
Briefly put, the background facts and relevant aspects of
the matter are that on 11.10.2003 a truck bearing registration
No.RJ 19 G 2026 coming from Nokha to Jodhpur was checked
at Nagaur road by the empowered authorities under the Act of
1994 and upon demanding the documents, a bilti of M/s.
Kamal Road Lines, Nokha dated 11.10.2003 and a bill issued
2
2
particulars of the goods were stated in the bill as '....
.
.
.S.T.F.(.....)'. The authorities checked the vehicle
and found it carrying damaged Moong and Urad; and
observed that the goods in question were liable to tax as pulse
but were wrongly sold as tax free goods in the name of ‘cattle
feed’. Hence, a notice under Section 78(4) (a) of the Act of
1994 was issued.
On 12.10.2003, the owner of dealer firm produced three
purchase bills dated 24.12.2002, 28.01.2003, and 31.01.2003
wherefrom it was noticed that earlier the dealer was
purchasing the goods in the name 'Moong Dal Damage' but
later on got it stated as 'Moong Dal Cattle Feed'. The
authorities formed the opinion that there had been a false
declaration where the goods in question were stated tax free
goods; and issued notice under Section 78(5) of the Act of
1994. The dealer submitted a reply to the notice that he had
dispatched ‘damaged Moong Dal (Cattle Feed)’ and to his
impression, it were sales tax free; and prayed that the matter
be decided immediately.
3
3
The aforesaid order passed by the Assessing Authority
was, however, reversed by the Dy. Commissioner (Appeals)
on 24.02.2005 while accepting the appeal filed by the dealer
with the observations that the commodity in question had been
‘wastage of Moong Dal’, which is not used for human
consumption and is used as cattle feed; and remains exempt
from tax as such. The learned Dy. Commissioner (Appeals)
also observed that the Assessing Authority had not stated any
reason wherefor it were treated to be a case of the goods
meant for human consumption.
The matter was taken in appeal by the Department to
the Tax Board against the order so passed by the Dy.
Commissioner (Appeals). The dealer-petitioner did not appear
4
4
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Seeking to assail the order aforesaid, learned counsel
for the petitioner strenuously contended that the consignment
in question had admittedly been of damaged Moong Dal; and
such damaged Moong Dal being not fit for human
consumption, its natural use remains that of cattle feed and
was rightly dealt with as such by the petitioner-dealer. Learned
counsel submitted that when nothing was concealed by the
dealer and description of goods as damaged Moong Dal was
not found incorrect, the Assessing Authority could not have
levied tax and inflicted penalty merely because of his different
opinion about the description of the goods. Learned counsel
further submitted that in the proceedings under Section 78 of
the Act of 1994, the authority concerned could not have
decided on the question of taxability or rate of tax applicable
on the goods for the scope of enquiry being limited to consider
if the requisite documents were not furnished or if the
documents were false. According to the learned counsel, all
the requisite documents were furnished complete in all
6
6
Learned counsel appearing for the Department
vehemently opposed with the submissions that the likely use
of the commodity cannot be decisive on its liability for taxation
and it is the classification of the goods that matters; that goods
in question being pulse, Moong Dal, were subject to sales tax
as such and merely by suggesting the consignment in
question to be of damaged pulse, the dealer could not have
declared it to be a cattle feed so as to evade tax. In support,
learned counsel referred to the decision of this Court in Gotilal
Bhonrilal (supra). Learned counsel further submitted that it is
very much within the domain of the authority concerned to
check the correctness of the documents and in the given case,
also to examine the question of taxability of goods. Learned
7
7
Learned counsel for the petitioner rejoined with the
submissions that if the contentions as urged on behalf of the
Department were to be accepted, it would lead to an
unacceptable result that all the exercise of regular assessment
would be undertaken in the proceedings under Section 78 of
the Act of 1994, something not contemplated by the statute.
Learned counsel submitted that the said provision being
essentially meant to check evasion of tax during
transportation, any dispute about taxability of goods, by its
very nature, has to be left to be determined during regular
assessment proceedings.
Having considered the rival submissions, this Court is
clearly of opinion that this revision petition remains bereft of
substance. The observations and findings of the Rajasthan
Tax Board as reproduced hereinbefore remain
8
8
The main plank of the submissions on behalf of the
dealer is that the goods in question being damaged pulse,
named 'Moong Dal Damaged', were purchased as cattle feed
and were sold as cattle feed, therefore, there had been no
false declaration in the documents in question. The
submission is fundamentally incorrect. The commodity
concerned had been nothing but a pulse, Moong Dal. Its
quality, be it excellent, or good, or average, or bad, or
damaged, in any event, would not alter its character as that of
a pulse. Even if it be assumed that the goods in question had
been ‘damaged Moong Dal’, it does not ipso facto lead to the
result that the so-called damage had changed the character of
the commodity from pulse to cattle feed. It cannot be assumed
that as soon as Moong Dal is damaged, it gets reduced to, or
turns into, a cattle feed and cannot be used for human
consumption at all.
In the case of Gotilal Bhonrilal (supra) this Court
rejected the contention that Urad and Gram be treated as
cattle feed and exempt from tax; and this Court held that the
Board was right, with reference to the fact that Urad and Gram
are primarily used for human consumption and it is only
incidental that these commodities are also used as the
9
9
The entire case of the present petitioner is founded on
incorrect premise where the petitioner makes assumptive
submission that natural use of damaged Moong Dal is that of
cattle feed. This Court is unable to find any basis for such
assumption and any rationale behind such submission. The
natural and primary use of Moong Dal being for human
consumption, its incidental or alternative use, say because of
some qualitative change, has no bearing on its classification
for the purpose of taxability; and in any case, it cannot be
classified as cattle feed merely with reference to the so-called
damage. Thus, the description of the goods in the bill and bilti
accompanying the consignment was incorrect where a taxable
commodity (Moong Dal) was described as a non-taxable one
(Cattle Feed).
Once it was found that the goods were not correctly
described in the documents that stated a taxable commodity
as a non-taxable one, such documents were incorrect on the
relevant facts and material particulars; and could only have
been termed as false. The present one was clearly a case of
submission of false documents and the goods in movement
being not accompanied by true and faithful documents. The
10
Assessing Authority has not committed any error in imposing
penalty in this case.
The decision in M/s Maheshwari Minerals & Chemicals
(supra) has no co-relation with the case at hands. Therein, the
Assessing Authority held the assessee liable to pay tax on his
products, which, as per the order of Assessing Authority were
stone powder and chips and which, according to the assessee,
were poultry feed, ‘murgidana’. The Dy. Commissioner
(Appeals), however, held that the assessee was not given
opportunity of hearing and proceeded to remand the matter
but with certain observations that if it be found that the product
of the assessee is used as poultry feed either independently or
by mixing in other poultry feed, then the assessee be given
benefit under the relevant notification. Aggrieved with such
observations, the department preferred appeal to the Tax
Board; and the Tax Board proceeded to allow the appeal with
the finding that the product in question was not a poultry feed.
In the revision petition as preferred by the assessee, this
Court did not approve of the decision of the Tax Board where,
even without setting aside the finding of the Dy. Commissioner
that the assessee was denied opportunity of hearing before
the Assessing Authority, the order of remand as made by the
Dy. Commissioner (Appeal) was interfered with and the Tax
Board decided the question itself that the product in question
11
was poultry feed or not. This court held that entire issue should
have been sent to the Assessing Authority for deciding after
opportunity of hearing to both the parties; and this Court
observed that opportunity of hearing having not been extended
to the assessee, there was no factual foundation with the
Assessing Authority and the department too had no
opportunity to meet with the grounds whereupon the assessee
claimed his product to be the poultry feed. This Court set aside
the order passed by the Tax Board; and directed that the
Assessing Authority shall decide the issue in accordance with
law after opportunity of hearing to both the parties and
uninfluenced by any of the observations made by the Dy.
Commissioner (Appeals) or by the Tax Board.
In the aforesaid order, this Court has never decided that
use of the product by the particular purchaser would be
decisive of its nature and classification; and it was left to be
determined by the Assessing Authority as to whether the
product was ‘poultry feed’ as claimed by the assessee without
being influenced by the observations made by the appellate
authorities including those of the Dy. Commissioner (Appeals).
It is noticeable that in the said case, the tenor of the
observations of the Dy. Commissioner (Appeals) had been as
if the end use of product by the particular purchaser would be
decisive of the nature of the product in question but those
12
observations were not approved as such by this Court; and
this Court only observed that in the given situation the Dy.
Commissioner (Appeals) ‘rightly held that the product of the
assessee, if is found as poultry feed, then the assessee is
entitled the benefit’. This Court has not said that the finding as
to whether it were a poultry feed would be reached with
reference to the end use of the product. The question of
classification of the product was left to be determined by the
Assessing Authority, and to be determined without being
influenced by what was said by the Dy. Commissioner
(Appeals). The said decision in M/s Maheshwari Minerals‘s
case has no bearing on the question at hands nor supports the
case of the present petitioner.
The arguments relating to the scope of proceedings
under Section 78(5), in the fact situation of the present case,
do not carry even a technical value what to say of substance.
Apart from other aspects that the goods in movement should
be supported by the requisite documents, and such
documents should be produced at the time of checking, the
requirement further remains that the concerned documents
should not be false; and for submission of false document or
declaration, one incurs the liability for penalty. The documents
produced in the present case declared a commodity liable to
taxation (Moong Dal) as something not liable to taxation
13
(Cattle Feed). The declaration and thereby the documents
were, therefore, false and the petitioner having knowingly and
deliberately drawn such documents cannot escape the liability
under Section 78 (5) of the Act of 1994. The submission that
such enquiry as to determine the question of taxability of
goods in question cannot be made in the proceedings under
Section 78 is not correct. Whether a declaration is correct or
not is definitely within the domain of the Authority concerned to
examine while proceeding under Section 78 of the Act of 1994.
A declaration stating a taxable commodity as non-taxable one
by giving a different name to the commodity is the mischief
very much within the ambit of Section 78 of the Act of 1994;
and enquiry into the correctness of the particulars of the goods
as stated in the documents and, as a necessary corollary, into
the aspect of taxability of such goods, is squarely within the
ambit and scope of the proceedings under Section 78 of the
Act of 1994.
It is noticed that the learned Dy. Commissioner
(Appeals) had gone even farther than the case of dealer and
termed the goods in question as ‘wastage of Moong Dal’
without appreciating that there is essential difference in the
two terms, ‘wastage’ and ‘damaged’. A damaged material
does not, by the damage itself, become wastage. The dealer
himself never claimed it to be the ‘wastage of Moong Dal’. The
14
learned Dy. Commissioner (Appeals) further proceeded on
unwarranted and baseless assumption that the goods in
question were not meant for human consumption and were
used as cattle feed. The Tax Board has not committed any
error in reversing the order passed by the Dy. Commissioner
(Appeals) that proceeded on fundamentally incorrect premise.
It may in the passing be observed that apart from the
facts as noticed by the Assessing Authority that in the two bills
dated 24.12.2002 and 28.01.2003 the petitioner purchased the
commodity in question as 'Moong Dal Damage' and the
expression ‘cattle feed’ got inserted only in the later bill dated
31.01.2003, noticeable further it is that the goods in question
were sold by the petitioner dealer only on 11.10.2003. It is
difficult to even co-relate the said purchase bills of the month
of December 2002 and January 2003 with the sale effected as
late as in the month of October 2003, of the goods said to be
‘damaged’ Moong Dal.
Viewed from any angle, there appears no reason to
consider any interference in this case.
The revision petition fails and is, therefore, dismissed.
No costs.
(DINESH MAHESHWARI), J.
MK
1
SALES TAX REVISION PETITION NO.42/2007
M/s. Jhoomarmal Dhanraj
Vs.
ACTO, Ward-III, Circle -C, Jodhpur
Date of Order :: 1st July 2008
HON'BLE MR. JUSTICE DINESH MAHESHWARI
Mr.Dinesh Mehta for the petitioner
Mr.Rishabh Sancheti for
Mr.V.K.Mathur for the respondent
....
BY THE COURT:
By way of this revision petition, the petitioner-dealer
seeks to question the order dated 28.03.2006 as passed by
the Rajasthan Tax Board, Ajmer in Appeal No.700/2005
whereby, while setting aside the order dated 24.02.2005 as
passed by the Dy. Commissioner (Appeals), Bikaner, the order
dated 14.10.2003 as passed by the Assessing Authority under
Section 78 (5) of the Rajasthan Sales Tax Act, 1994 ('the Act
of 1994') has been restored.
Briefly put, the background facts and relevant aspects of
the matter are that on 11.10.2003 a truck bearing registration
No.RJ 19 G 2026 coming from Nokha to Jodhpur was checked
at Nagaur road by the empowered authorities under the Act of
1994 and upon demanding the documents, a bilti of M/s.
Kamal Road Lines, Nokha dated 11.10.2003 and a bill issued
2
2
particulars of the goods were stated in the bill as '....
.
.
.S.T.F.(.....)'. The authorities checked the vehicle
and found it carrying damaged Moong and Urad; and
observed that the goods in question were liable to tax as pulse
but were wrongly sold as tax free goods in the name of ‘cattle
feed’. Hence, a notice under Section 78(4) (a) of the Act of
1994 was issued.
On 12.10.2003, the owner of dealer firm produced three
purchase bills dated 24.12.2002, 28.01.2003, and 31.01.2003
wherefrom it was noticed that earlier the dealer was
purchasing the goods in the name 'Moong Dal Damage' but
later on got it stated as 'Moong Dal Cattle Feed'. The
authorities formed the opinion that there had been a false
declaration where the goods in question were stated tax free
goods; and issued notice under Section 78(5) of the Act of
1994. The dealer submitted a reply to the notice that he had
dispatched ‘damaged Moong Dal (Cattle Feed)’ and to his
impression, it were sales tax free; and prayed that the matter
be decided immediately.
3
3
The aforesaid order passed by the Assessing Authority
was, however, reversed by the Dy. Commissioner (Appeals)
on 24.02.2005 while accepting the appeal filed by the dealer
with the observations that the commodity in question had been
‘wastage of Moong Dal’, which is not used for human
consumption and is used as cattle feed; and remains exempt
from tax as such. The learned Dy. Commissioner (Appeals)
also observed that the Assessing Authority had not stated any
reason wherefor it were treated to be a case of the goods
meant for human consumption.
The matter was taken in appeal by the Department to
the Tax Board against the order so passed by the Dy.
Commissioner (Appeals). The dealer-petitioner did not appear
4
4
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.
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......6
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.9....56.7..........7.......*...
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......#.;.9....K.......... ...78(4) .
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.....6....#..................9."
Seeking to assail the order aforesaid, learned counsel
for the petitioner strenuously contended that the consignment
in question had admittedly been of damaged Moong Dal; and
such damaged Moong Dal being not fit for human
consumption, its natural use remains that of cattle feed and
was rightly dealt with as such by the petitioner-dealer. Learned
counsel submitted that when nothing was concealed by the
dealer and description of goods as damaged Moong Dal was
not found incorrect, the Assessing Authority could not have
levied tax and inflicted penalty merely because of his different
opinion about the description of the goods. Learned counsel
further submitted that in the proceedings under Section 78 of
the Act of 1994, the authority concerned could not have
decided on the question of taxability or rate of tax applicable
on the goods for the scope of enquiry being limited to consider
if the requisite documents were not furnished or if the
documents were false. According to the learned counsel, all
the requisite documents were furnished complete in all
6
6
Learned counsel appearing for the Department
vehemently opposed with the submissions that the likely use
of the commodity cannot be decisive on its liability for taxation
and it is the classification of the goods that matters; that goods
in question being pulse, Moong Dal, were subject to sales tax
as such and merely by suggesting the consignment in
question to be of damaged pulse, the dealer could not have
declared it to be a cattle feed so as to evade tax. In support,
learned counsel referred to the decision of this Court in Gotilal
Bhonrilal (supra). Learned counsel further submitted that it is
very much within the domain of the authority concerned to
check the correctness of the documents and in the given case,
also to examine the question of taxability of goods. Learned
7
7
Learned counsel for the petitioner rejoined with the
submissions that if the contentions as urged on behalf of the
Department were to be accepted, it would lead to an
unacceptable result that all the exercise of regular assessment
would be undertaken in the proceedings under Section 78 of
the Act of 1994, something not contemplated by the statute.
Learned counsel submitted that the said provision being
essentially meant to check evasion of tax during
transportation, any dispute about taxability of goods, by its
very nature, has to be left to be determined during regular
assessment proceedings.
Having considered the rival submissions, this Court is
clearly of opinion that this revision petition remains bereft of
substance. The observations and findings of the Rajasthan
Tax Board as reproduced hereinbefore remain
8
8
The main plank of the submissions on behalf of the
dealer is that the goods in question being damaged pulse,
named 'Moong Dal Damaged', were purchased as cattle feed
and were sold as cattle feed, therefore, there had been no
false declaration in the documents in question. The
submission is fundamentally incorrect. The commodity
concerned had been nothing but a pulse, Moong Dal. Its
quality, be it excellent, or good, or average, or bad, or
damaged, in any event, would not alter its character as that of
a pulse. Even if it be assumed that the goods in question had
been ‘damaged Moong Dal’, it does not ipso facto lead to the
result that the so-called damage had changed the character of
the commodity from pulse to cattle feed. It cannot be assumed
that as soon as Moong Dal is damaged, it gets reduced to, or
turns into, a cattle feed and cannot be used for human
consumption at all.
In the case of Gotilal Bhonrilal (supra) this Court
rejected the contention that Urad and Gram be treated as
cattle feed and exempt from tax; and this Court held that the
Board was right, with reference to the fact that Urad and Gram
are primarily used for human consumption and it is only
incidental that these commodities are also used as the
9
9
The entire case of the present petitioner is founded on
incorrect premise where the petitioner makes assumptive
submission that natural use of damaged Moong Dal is that of
cattle feed. This Court is unable to find any basis for such
assumption and any rationale behind such submission. The
natural and primary use of Moong Dal being for human
consumption, its incidental or alternative use, say because of
some qualitative change, has no bearing on its classification
for the purpose of taxability; and in any case, it cannot be
classified as cattle feed merely with reference to the so-called
damage. Thus, the description of the goods in the bill and bilti
accompanying the consignment was incorrect where a taxable
commodity (Moong Dal) was described as a non-taxable one
(Cattle Feed).
Once it was found that the goods were not correctly
described in the documents that stated a taxable commodity
as a non-taxable one, such documents were incorrect on the
relevant facts and material particulars; and could only have
been termed as false. The present one was clearly a case of
submission of false documents and the goods in movement
being not accompanied by true and faithful documents. The
10
Assessing Authority has not committed any error in imposing
penalty in this case.
The decision in M/s Maheshwari Minerals & Chemicals
(supra) has no co-relation with the case at hands. Therein, the
Assessing Authority held the assessee liable to pay tax on his
products, which, as per the order of Assessing Authority were
stone powder and chips and which, according to the assessee,
were poultry feed, ‘murgidana’. The Dy. Commissioner
(Appeals), however, held that the assessee was not given
opportunity of hearing and proceeded to remand the matter
but with certain observations that if it be found that the product
of the assessee is used as poultry feed either independently or
by mixing in other poultry feed, then the assessee be given
benefit under the relevant notification. Aggrieved with such
observations, the department preferred appeal to the Tax
Board; and the Tax Board proceeded to allow the appeal with
the finding that the product in question was not a poultry feed.
In the revision petition as preferred by the assessee, this
Court did not approve of the decision of the Tax Board where,
even without setting aside the finding of the Dy. Commissioner
that the assessee was denied opportunity of hearing before
the Assessing Authority, the order of remand as made by the
Dy. Commissioner (Appeal) was interfered with and the Tax
Board decided the question itself that the product in question
11
was poultry feed or not. This court held that entire issue should
have been sent to the Assessing Authority for deciding after
opportunity of hearing to both the parties; and this Court
observed that opportunity of hearing having not been extended
to the assessee, there was no factual foundation with the
Assessing Authority and the department too had no
opportunity to meet with the grounds whereupon the assessee
claimed his product to be the poultry feed. This Court set aside
the order passed by the Tax Board; and directed that the
Assessing Authority shall decide the issue in accordance with
law after opportunity of hearing to both the parties and
uninfluenced by any of the observations made by the Dy.
Commissioner (Appeals) or by the Tax Board.
In the aforesaid order, this Court has never decided that
use of the product by the particular purchaser would be
decisive of its nature and classification; and it was left to be
determined by the Assessing Authority as to whether the
product was ‘poultry feed’ as claimed by the assessee without
being influenced by the observations made by the appellate
authorities including those of the Dy. Commissioner (Appeals).
It is noticeable that in the said case, the tenor of the
observations of the Dy. Commissioner (Appeals) had been as
if the end use of product by the particular purchaser would be
decisive of the nature of the product in question but those
12
observations were not approved as such by this Court; and
this Court only observed that in the given situation the Dy.
Commissioner (Appeals) ‘rightly held that the product of the
assessee, if is found as poultry feed, then the assessee is
entitled the benefit’. This Court has not said that the finding as
to whether it were a poultry feed would be reached with
reference to the end use of the product. The question of
classification of the product was left to be determined by the
Assessing Authority, and to be determined without being
influenced by what was said by the Dy. Commissioner
(Appeals). The said decision in M/s Maheshwari Minerals‘s
case has no bearing on the question at hands nor supports the
case of the present petitioner.
The arguments relating to the scope of proceedings
under Section 78(5), in the fact situation of the present case,
do not carry even a technical value what to say of substance.
Apart from other aspects that the goods in movement should
be supported by the requisite documents, and such
documents should be produced at the time of checking, the
requirement further remains that the concerned documents
should not be false; and for submission of false document or
declaration, one incurs the liability for penalty. The documents
produced in the present case declared a commodity liable to
taxation (Moong Dal) as something not liable to taxation
13
(Cattle Feed). The declaration and thereby the documents
were, therefore, false and the petitioner having knowingly and
deliberately drawn such documents cannot escape the liability
under Section 78 (5) of the Act of 1994. The submission that
such enquiry as to determine the question of taxability of
goods in question cannot be made in the proceedings under
Section 78 is not correct. Whether a declaration is correct or
not is definitely within the domain of the Authority concerned to
examine while proceeding under Section 78 of the Act of 1994.
A declaration stating a taxable commodity as non-taxable one
by giving a different name to the commodity is the mischief
very much within the ambit of Section 78 of the Act of 1994;
and enquiry into the correctness of the particulars of the goods
as stated in the documents and, as a necessary corollary, into
the aspect of taxability of such goods, is squarely within the
ambit and scope of the proceedings under Section 78 of the
Act of 1994.
It is noticed that the learned Dy. Commissioner
(Appeals) had gone even farther than the case of dealer and
termed the goods in question as ‘wastage of Moong Dal’
without appreciating that there is essential difference in the
two terms, ‘wastage’ and ‘damaged’. A damaged material
does not, by the damage itself, become wastage. The dealer
himself never claimed it to be the ‘wastage of Moong Dal’. The
14
learned Dy. Commissioner (Appeals) further proceeded on
unwarranted and baseless assumption that the goods in
question were not meant for human consumption and were
used as cattle feed. The Tax Board has not committed any
error in reversing the order passed by the Dy. Commissioner
(Appeals) that proceeded on fundamentally incorrect premise.
It may in the passing be observed that apart from the
facts as noticed by the Assessing Authority that in the two bills
dated 24.12.2002 and 28.01.2003 the petitioner purchased the
commodity in question as 'Moong Dal Damage' and the
expression ‘cattle feed’ got inserted only in the later bill dated
31.01.2003, noticeable further it is that the goods in question
were sold by the petitioner dealer only on 11.10.2003. It is
difficult to even co-relate the said purchase bills of the month
of December 2002 and January 2003 with the sale effected as
late as in the month of October 2003, of the goods said to be
‘damaged’ Moong Dal.
Viewed from any angle, there appears no reason to
consider any interference in this case.
The revision petition fails and is, therefore, dismissed.
No costs.
(DINESH MAHESHWARI), J.
MK
Whether alternative relief of revision bars the exercise of power under Section 482
1
1
ORDER
Sanjay Bhandari Vs. State of Rajasthan
(1) S.B.CRIMINAL MISC.PETITION NO.289/2006
P.I.Industries Ltd. Vs. State of Rajasthan
(2) S.B.CRIMINAL MISC.PETITION NO.41/2008
UNDER SECTION 482 OF
THE CRIMINAL PROCEDURE CODE, 1973.
Date of Order: Feb.05, 2009
PRESENT
HON'BLE MR.JUSTICE DEO NARAYAN THANVI
Mr.Sandeep Mehta )
Mr.Suresh Kumbhat) for petitioners.
Mr.V.R.Mehta, Public Prosecutor.
REPORTABLE BY THE COURT:
1. Before entering into the merits of both
these Misc. Petitions filed against the order of
2
2
2. Since both these Misc. Petitions filed under
Section 482 of the Code relates to challenge to
the order of taking cognizance and issuing
process, therefore, they are being disposed-of
3
3
3. In Criminal Misc. Petition No.289/2006 filed
by Sanjay Bhandari, learned Judicial Magistrate,
Bhinder, Udaipur, took cognizance against him
for the offences u/ss.420 read with 120B IPC on
9.1.2006 on the basis of chargesheet filed by
the SHO, P.S., Bhinder, Distt.Udaipur on the
ground that the accused petitioner Sanjay
Bhandari obtained a hotel Rajmahal at Bhinder
from the complainant side on 9.11.2000 by way
of an agreement for a period of five years on
rent. In the name of this hotel business, the
accused petitioner purchased number of valuable
cars from foreign Companies but never used
those cars for the hotel and sold the same to
other persons, thereby he obtained tax relief on
one hand in the name of tourism business,
without being performed and on the other hand,
committed theft of custom duty. The rent of the
4
4
4. In Criminal Misc. Petition No.41/2008, a
complaint under Section 29(1) of the
Insecticides Act, 1968 was filed by the Assistant
Director of Agriculture (Extension) & Insecticides
Inspector, Hanumangarh Junction, on 17.3.2006
alleging therein that the insecticide product
“Imidachloprid 17.8% SL Batch No.2003-J-01
was misbranded. The sample of the aforesaid
insecticide was drawn and sent to the
Laboratory, which was found to be misbranded.
The learned Judicial Magistrate, Pilibanga, Distt.
Hanumangarh took cognizance on the basis of
this complaint as averred in para `H' of the
5
5
5. Learned counsel appearing on behalf of the
petitioners, while citing various pronouncements
of the Hon'ble Supreme Court on the scope &
ambit of Section 482 and 397 of the Code,
argued that there is no bar in filing direct
petition under Section 482 of the Code before
this Court despite there being alternative
remedy of filing revision petition under Section
397 CrPC, as according to them, even on merits
if the allegations are looked into, no case is
6
6sections(
2) and (3) of Section 397 of the Code,
the revision petition is barred which is against
the interlocutory order or further application by
the same person respectively. In support of their
contention, they have relied upon various
pronouncements, which are hereinafter referred.
7
7Before dealing with the ambit of both the
Sections i.e. S.397 & S.482 of the Code, it would
be worthwhile to reproduce them for the purpose
of their applicability.
7. Section 397 of the Code reads as under:
“397. Calling for records to exercise
powers of revision.-(1) The High Court or
any Sessions Judge may call for and
examine the record of any proceeding
before any inferior Criminal Court situate
within its or his local jurisdiction for the
purpose of satisfying itself or himself as to
the correctness, legality or propriety of any
finding, sentence or order, recorded or
passed, and as to the regularity of any
proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be
suspended, and if the accused is in
confinement, that he be released on bail or
on his own bond pending the examination of
the record.
(2) The powers of revision conferred by subsection
(1) shall not be exercised in relation
to any interlocutory order passed in any
appeal, inquiry, trial or other proceeding.
(3) If an application under this section has
been made by any person either to the High
Court or to the Sessions Judge, no further
8
8
8. Sections 482 & 483 of the Code reads thus:
“482. Saving of inherent power of High
Court.-Nothing in this Code shall be
deemed to limit or affect the inherent
powers of the High Court to make such
orders as may be necessary to give effect to
any order under this Code, or to prevent
abuse of the process of any Court or
otherwise to secure the ends of justice.”
483. Duty of High Court to exercise
continuous superintendence over Courts
of Judicial Magistrates.-Every High
Court shall so exercise its superintendence
over the Courts of Judicial Magistrates
subordinate to it as to ensure that there is
an expeditious and proper disposal of cases
by such Magistrates.”
9. A bare reading of Section 397(1) of the
Code speaks that record of any proceeding of
any inferior court can be examined by the High
Court or the Sessions Judge with regard to its
correctness, legality or propriety of any finding,
9
9o
its regularity. Under sub-section (2), a bar has
been imposed for exercise of such power in
relation to interlocutory order passed in any
appeal, inquiry, trial or other proceeding and
sub-section (3) bars further revision by the
same person. Thus, on a cumulative reading of
these three sub-sections, it is clear that except
in interlocutory orders or second revision by the
same person, the correctness, legality and
propriety of the impugned sentences or orders
may be examined either by the High Court or by
the Sessions Judge, whereas under Section 482
of the Code, while exercising inherent powers,
the High Court may make such orders, as may
be necessary to give effect to any order under
this Code or to prevent abuse of the process of
any court or otherwise to secure the ends of
justice. Though, on broad reading of both the
Sections, it can be said that exercise of powers
10
under Sec.397 and Section 482 of the Code are
by and large similar in granting relief to the
aggrieved party, except that of interlocutory
order and of second revision by the same party.
If the order is of such a nature as contemplated
under sub-sections (2) and (3) of Section 397 of
the Code, then the only remedy available to the
aggrieved party is by way of a petition under
Section 482 of the Code within its four corners.
But, if these two Sections are looked into in the
light of the words used, Section 397 is confined
to the extent of examining the correctness,
legality or propriety of the order, whereas
inherent powers can be exercised to give effect
to any order given under this Code or to prevent
abuse of the process of any Court or to secure
the ends of justice.
10. It is noticed rather shocking that in many of
the cases, aggrieved parties are trying to
11
approach the High Court in similarly situated
cases either under Section 397 or under Section
482 of the Code as advised or both the remedies
simultaneously through one or other party of the
same case. For instance, this Court came with a
situation when in a same case of framing
charges on 22.8.06 against three accused
u/ss.420, 467, 468 read with 120B IPC, one of
the accused Niranjan Kumar preferred a Misc.
Petition u/s.482 of the Code & another accused
Avadh Bihari filed revision being S.B.Cr.Revision
No.1025/07 under Section 397 of the Code in
this Court, which, on being noticed, have been
tagged together. Likewise, in Cr.Misc.Petition
No.736/99, accused, who was a Pradhan of
Panchayat Samiti, Dungla, on one hand,
challenged FIR for its quashing u/s.482 of the
Code, which was stayed by the High Court and
on the other hand, challenged the order of
Judicial Magistrate, who took cognizance u/s.509
12
IPC on the same facts in this Court u/s.397 of
the Code by way of filing Cr.Revision
No.742/1999, resulting in its dismissal in the
light of Natwarlal vs. State reported in 2008(1)
CrLR (Raj) 617. During pendency of this petition,
the accused was acquitted and the Misc. Petition
was dismissed as having become infructuous at
the request of learned counsel for the petitioner.
Certain more examples may be noticed of the
like nature in this Court and other High Courts
as well. Whether the High Court has some check
to control this dual process, which can be
termed as riding on two horses by the parties to
the litigation or abuse of the process by the
Courts itself? Answer to this lies by declaring a
definite law based on logical conclusion to give
proper effect to the provisions of this Code as
embodied u/ss.397 and 482 of the Code. Certain
judgments of the Hon'ble Apex Court are of wide
importance to determine the ratio in this regard,
13
which will be discussed hereinafter.
11. Broadly speaking, Section 397 of the Code
operates when the order is final because there is
a bar in filing revision under Section 397(2) with
regard to interlocutory order or u/s.397(3) in
second revision. Against such interlocutory
orders or second revisions, if they cover under
any of the three contingencies, provided-for
under Section 482 of the Code and as referred-
to above, the aggrieved party can approach the
High Court under Section 482 of the Code. The
order is said to be final under this Code, when
either the criminal proceedings are terminated
or they are commenced. Chapter XVI of the Code
deals with the commencement of proceedings
and Chapter XVII onwards of the Code deals
with the charge. Proceedings are said to have
commenced when a complaint is not dismissed
under Section 203 of the Code and the process
14
is issued against the accused under Section 204
of the Code and the trial is commenced when the
charge is framed under Chapter XVII of the
Code. Section 203 of the Code is limited to the
extent that if there are no sufficient grounds for
proceeding, the magistrate shall dismiss the
complaint and after issue of the process or when
the accused is brought before the court through
police investigation, he is discharged, when the
charge is groundless either under Section 239 of
the Code or under Section 245 of the Code, from
evidence, no case is made out, if unrebutted,
would warrant his conviction or no sufficient
grounds are made out under Section 227 of the
Code. This commencement of proceeding or
putting a person to face trial and discharge of
the accused i.e. termination of proceedings of
trial is termed as final order. Rest are said to be
interlocutory orders. This view has been
reiterated by the Hon'ble Supreme Court in
15
Amarnath vs. State of Haryana reported in AIR
1977 SC 2185 in the following terms:
“...It is difficult to hold that the impugned
order summoning the appellants
straightaway was merely an interlocutory
order which could not be revised by the High
Court under sub-sections (1) and (2) of
Section 397 of the 1973 Code. The order of
the Judicial Magistrate summoning the
appellants in the circumstances of the
present case, particularly having regard to
what had preceded, was undoubtedly a
matter of moment, and a valuable right of
the appellants had been taken away by the
Magistrate in passing an order prima facie in
sheer mechanical fashion without applying
his mind. We are, therefore, satisfied that
the order impugned was one which was a
matter of moment and which did involve a
decision regarding the rights of the
appellants. If the appellants were not
summoned, then they could not have faced
the trial at all, but by compelling the
appellants to face a trial without proper
application of mind cannot be held to be an
interlocutory matter but one which decided
a serious question as to the rights of the
appellants to be put on trial.”
12. In the present petitions, both the
petitioners have challenged the order of taking
cognizance i.e. initiation of proceedings being a
16
matter of moment for putting them on trial,
which is not an interlocutory order but a final
order, by way of these petitions filed u/s.482
CrPC. In this regard, if the law is looked into,
the leading case on this subject is of the larger
Bench of the Hon'ble Supreme Court in Madhu
Limaye vs. State of Maharashtra reported in AIR
1978 SC 47. While discussing the scope of
Section 482 and 397(2) of the Code, the Hon'ble
Supreme Court laid down the following principles
with regard to exercise of inherent powers by
the High Court:
“8. xxx At the outset the following principles
may be noticed in relation to the exercise of
the inherent power of the High Court which
have been followed ordinarily and generally,
almost invariably, barring a few exceptions:
(1) That the power is not to be resorted to if
there is a specific provision in the Code for
the redress of the grievance of the
aggrieved party;
(2) That it should be exercised very
sparingly to prevent abuse of process of any
Court or otherwise to secure the ends of
17
justice;
(3) That it should not be exercised as
against the express bar of law engrafted in
any other provision of the Code.
13. In the said decision, the Hon'ble Supreme
Court has also gone into the scope of
interlocutory order and has held that the order
under challenge was not an interlocutory one so
as to attract the bar of sub-section(2) of Section
397 of the Code. In this case, appellant Shri
Madhu Limaye was put to trial for the offence
u/s.500 IPC before the Court of Sessions Judge,
Greater Bombay, in pursuance to the sanction
issued by the State Govt. under Sec.199 of the
Code for making defamatory press note against
the then Law Minister of Maharashtra Shri
A.R.Antulay. Learned Sessions Judge took
cognizance and process was issued upon the
said complaint. The Chief Secretary to the Govt.
of Maharashtra was to be examined as a witness
18
to prove the sanction but the appellant Shri
Madhu Limaye filed an application before the
learned Sessions Judge to challenge the legality
of the trial. The learned Sessions Judge rejected
the application and framed charge u/s.500 IPC.
The appellant thereafter challenged the order by
way of revision in the High Court u/s.397 of the
Code. The High Court dismissed the revision
without entering into the merits of the case by
holding that the order being interlocutory in
nature, it was not maintainable in view of the
provisions contained in sub-sec.(2) of Section
397 of the Code. Against this, the appeal was
preferred. While discussing the scope of
interlocutory order, the Hon'ble Supreme Court
observed in para 13 as under:
“...On the one hand, the legislature kept
intact the revisional power of the High Court
and, on the other, it put a bar on the
exercise of that power in relation to any
interlocutory order. In such a situation, it
appears to us that the real intention of the
19
legislature was not to equate the expressing
“interlocutory order” as invariably being
converse of the words “final order”. There
may be an order passed during the course of
a proceeding which may not be final in the
sense noticed in Kuppuswami's case (AIR
1949 FC 1) (supra), but, yet it may not be
an interlocutory order – pure or simple.
Some kinds of order may fall in between the
two. By a rule of harmonious construction,
we think that the bar in sub-s.(2) fo S.397
is not meant to be attracted to such kinds of
intermediate orders. They may not be final
orders for the purposes of Art.134 of the
Constitution, yet it would not be correct to
characterise them as merely interlocutory
orders within the meaning of S.397(2). It is
neither advisable, nor possible to make a
catalogue of orders to demonstrate which
kinds of orders would be merely, purely or
simply interlocutory and which kinds of
orders would be final, and then to prepare
an exhaustive list of those types of orders
which will fall in between the two. The first
two kinds are well known and can be culled
out from many decided cases. We may,
however, indicate that the type of order
with which we are concerned in this case,
even though it may not be final in one
sense, is surely not interlocutory so as to
attract the bar of sub-sec.(2) of S.397. In
our opinion, it must be taken to be an order
of the type falling in the middle course.”
14. In para 17 of the said judgment, the Hon'ble
Supreme Court lastly observed as under:
20
“Before we conclude we may point out an
obvious, almost insurmountable, difficulty in
the way of applying literally the test laid
down in Kuppuswami Rao's case (AIR 1949
FC 1) and in holding that an order of the
kind under consideration being not a final
order must necessarily be an interlocutory
one. If a complaint is dismissed under S.203
or under S.204(4) or the Court holds the
proceeding to be void or discharges the
accused, a revision to the High Court at the
instance of the complainant or the
prosecutor would be competent, otherwise it
will make S.398 of the new Code otiose.
Does it stand to reason, then, that an
accused will have no remedy to move the
High Court in revision or invoke its inherent
power for the quashing of the criminal
proceeding initiated upon a complaint or
otherwise and which is fit to be quashed on
the face of it? The legislature left the power
to order further inquiry intact in S.398. Is it
not then in consonance with the sense of
justice to leave intact the remedy of the
accused to move the High Court for setting
aside the order adversely made against him
in similar circumstances and to quash the
proceeding? The answer must be given in
favour of the just and reasonable view
expressed by us above.”
Accordingly, the Hon'ble Supreme Court
allowed the appeal and remanded the case back
to the High Court for disposal on merits in the
light of the above judgment.
21
15. Apart from laying down the three principles
as referred-to above with regard to exercise of
inherent powers u/s.482 of the Code, the
Hon'ble Supreme Court also relied upon its
earlier judgment in R.P.Kapur v. The State of
Punjab reported in AIR 1960 SC 866, wherein
the Hon'ble Gajendragadkar J., as he then was,
laid down three categories of cases, wherein
inherent powers u/s.561A of the old Code
corresponding to Section 482 of the Code, can
be exercised. Firstly, where the institution or
commencement of the criminal proceeding is
against the legal bar; secondly from the bare
reading of the FIR or the complaint at the face
value, no offence is made out; and thirdly, there
is no legal evidence in support of the case but
while exercising the powers u/s.561A, the High
Court would not embark upon an enquiry as to
whether the evidence in question is reliable or
not. Even if the order is not final by way of
22
termination of proceedings and the continuance
of proceedings in a criminal court manifestly
shows that there is a legal bar against the
institution or continuance of the criminal
proceeding or the court exercised jurisdiction,
which was not vested in it, the High Court would
be justified in quashing the proceedings.
16. Thus, from the above judgment of Madhu
Limaye's case (supra), it can be gathered that
the order of taking cognizance and framing
charge cannot be termed as an interlocutory
order and the revision is maintainable against
this order and when there is a specific provision
for redress of the grievance of an aggrieved
party, the inherent powers u/s.482 CrPC cannot
be exercised.
17. In the other rulings of regular Benches cited
by learned counsel for the petitioner namely (1)
23
State of Haryana v. Bhajanlal reported in AIR
1992 SC 604; (2) M/s Pepsi Foods Ltd. v. Special
Judicial Magistrate reported in 1998 Cr.L.R.(SC)
18; (3) K. Ramakrishna Vs. State of Bihar,
reported in 2000 (4) Crimes 113 (SC), (4)
S.W.Palanitkar v. State of Bihar reported in
2001 Cr.L.R. (SC) 751; (5) N.K.Sharma v.
Abhimanyu reported in (2006) 2 SCC (Cri) 135;
and (6) Bholu Ram v. State of Punjab reported
in (2008) 3 SCC (Cri) 710, wherein the scope
and ambit of only Section 482 of the Code, has
been discussed as is provided for in the Section
itself, without there being any reference to
Section 397 of the Code as has been discussed
in the Larger Bench's decision of the Hon'ble
Supreme Court in Madhu Limaye's case (supra).
18. In Adalat Prasad Vs. Rooplal Jindal & Ors.,
reported in 2004 Cr.L.R. (SC) 800, the Larger
Bench of the Hon'ble Supreme Court while
24
confirming the order of the High Court held that
recalling summons issued by the Magistrate
under Section 204 of the Code will be a review
of its earlier order, which is not warranted under
the Code as the process is issued under Section
204 of the Code when complaint is not dismissed
under Section 203 of the Code. Opposite earlier
view taken by the three Judges Larger Bench in
K. K. Mathew Vs. State of Kerala & Anr.,
reported in (1992) 1 SCC 217 was held not to
be a correct law by holding that in the absence
of any review power or inherent power with the
subordinate courts, the remedies lie in invoking
Section 482 of the Code. Issue relating to scope
of Section 397 of the Code was also not involved
in this cited case as well.
19. On the applicability of Section 482 of the
Code despite there being alternative remedy
under Section 397 of the Code, leaned counsel
25
for the petitioner has cited the latest decision of
Dhariwal Tobaco Products Ltd. v. State of
Maharashtra decided by the Hon'ble Supreme
Court on 17.12.08 in Criminal Appeal No.2055 of
2007 (Arising out of SLP (Cri.) No.2272 of
2007). This was a case under the Prevention of
Food Adulteration Rules, 1955, wherein a
criminal complaint against a Company was filed,
which was dealing in the manufacturing of the
`Gutkha' having multiple Units. The learned
Magistrate took cognizance and issued summons
against which they filed a petition in the High
Court u/s.482 of the Code, which was dismissed
against which the appeal was filed in the Hon'ble
Supreme Court, wherein, at Para 10 it has been
held as under:
“10. Inherent power of the High Court is not
conferred by statute but has merely been
saved thereunder. It is, thus, difficult to
conceive that the jurisdiction of the High
Court would be held to be barred only
because the revisional jurisdiction could
26
also be availed of. (See Krishnan and Anr.
v. Krishnaveni and Anr. MANU/SC/0223/
1997). In fact in Adalat Prasad v. Rooplal
Jindal and Ors. MANU/SC/0688/2004 to
which reference has been made by the
learned Single Judge of the Bombay High
Court in V.K. Jain and Ors. (supra) this
Court has clearly opined that when a
process is issued, the provisions of Section
482 of the Code can be resorted to.”
20. In the said decision of Dhariwal's case
(supra), though the scope of Section 482 of the
Code has been discussed in the light of Art.227
of the Constitution but it has been observed
while relying upon the decision of the Hon'ble
Supreme Court in C.B.I. v. Ravi Shankar
Srivastava, MANU/SC/8405/2006 that inherent
powers under this Section, though wide, has to
be exercised sparingly, carefully and with
caution and it is to be exercised ex debito
justitiae to do real and substantial justice for
the administration of which alone the courts
exist. The ratio of the said case is that such
powers can be exercised, when there is an abuse
27
of the process of law of any court or to secure
the ends of justice. While allowing the appeal,
the case was remitted back to the High Court for
fresh decision on merits. In the said case also,
the earlier judgment of the larger Bench of the
Hon'ble Supreme Court in Madhu Limaye's case
(supra) has not been referred-to.
21. Thus, taking guidelines on the law laid down
by the larger Bench in Madhu Limaye's case
(supra) on the basis of the doctrine of star
decisis, which is a strong rule of precedent, I am
fortified with the view that when the petitioners,
who are aggrieved by the order of taking
cognizance, have a specific provision under the
Code for redressal of their grievances by way of
filing revision under Section 397 of the Code,
they cannot invoke the inherent powers of this
Court under Section 482 CrPC because the order
of taking cognizance is final one, not being an
28
interlocutory order. The revision can very well
be maintained before the learned Sessions Judge
as held by this Court in Natwarlal vs. State
reported in 2008(1) CrLR (Raj) 617.
22. This Court could have exercised the power
under Section 482 of the Code, had there been a
case from the perusal of the complaint that the
action of taking cognizance is without
jurisdiction or barred by law, which has resulted
in abuse of the process of law or is necessary to
secure the ends of justice, specially when
affected party for one or the other reason could
not resort to the remedy available u/s.397 of the
Code. The legality or correctness of the order in
appreciating evidence for the purpose of taking
cognizance and charge is purely a subject matter
of examination under Section 397 of the Code.
23. Likewise, the duty of superintendence under
29
Section 483 of the Code is confined only to the
extent of expeditious and proper disposal of
cases. Duty cast upon the High Court under this
Section is alike of an administrative nature,
which can be read with the inherent powers
under Section 482 of the Code, being a saving
provision where there is no other power to
interfere.
24. From the facts as stated above and the
statements recorded by the police during
investigation in Sanjay Bhandari's petition,
petitioner took the hotel by way of agreement on
rental basis but he had neither run the hotel nor
licence fee was deposited and on the contrary,
he purchased valuable cars from the foreign
Company in the name of tourism and thereby
alleged to have committed an act of cheating.
These allegations cannot be termed as purely of
civil nature, but is an offence u/s.420 IPC.
30
25. In Misc. Petition filed by P.I.Industries Ltd.,
petitioner was charged for having misbranded
the insecticide product. Objections with regard
to not sending of second sample or consent etc.
could have been raised even during the course
of trial or by way of filing revision before the
learned Sessions Judge.
26. From the face value of both the complaints,
neither the magistrate while taking cognizance,
has abused the process of law nor the cases are
of such nature, which bars his jurisdiction or
which comes under the category of civil nature
so as to attract the provisions of Section 482
CrPC. The appropriate remedy available to the
petitioners is to approach the revisional court
under Section 397 of the Code, if they so desire
and in that event, the period consumed in the
petition shall not come in the way for the
purpose of limitation.
31
27. Consequently, both these Misc. Petitions are
dismissed with the above observations.
(DEO NARAYAN THANVI), J.
RANKAWAT JK, PS
1
ORDER
Sanjay Bhandari Vs. State of Rajasthan
(1) S.B.CRIMINAL MISC.PETITION NO.289/2006
P.I.Industries Ltd. Vs. State of Rajasthan
(2) S.B.CRIMINAL MISC.PETITION NO.41/2008
UNDER SECTION 482 OF
THE CRIMINAL PROCEDURE CODE, 1973.
Date of Order: Feb.05, 2009
PRESENT
HON'BLE MR.JUSTICE DEO NARAYAN THANVI
Mr.Sandeep Mehta )
Mr.Suresh Kumbhat) for petitioners.
Mr.V.R.Mehta, Public Prosecutor.
REPORTABLE BY THE COURT:
1. Before entering into the merits of both
these Misc. Petitions filed against the order of
2
2
2. Since both these Misc. Petitions filed under
Section 482 of the Code relates to challenge to
the order of taking cognizance and issuing
process, therefore, they are being disposed-of
3
3
3. In Criminal Misc. Petition No.289/2006 filed
by Sanjay Bhandari, learned Judicial Magistrate,
Bhinder, Udaipur, took cognizance against him
for the offences u/ss.420 read with 120B IPC on
9.1.2006 on the basis of chargesheet filed by
the SHO, P.S., Bhinder, Distt.Udaipur on the
ground that the accused petitioner Sanjay
Bhandari obtained a hotel Rajmahal at Bhinder
from the complainant side on 9.11.2000 by way
of an agreement for a period of five years on
rent. In the name of this hotel business, the
accused petitioner purchased number of valuable
cars from foreign Companies but never used
those cars for the hotel and sold the same to
other persons, thereby he obtained tax relief on
one hand in the name of tourism business,
without being performed and on the other hand,
committed theft of custom duty. The rent of the
4
4
4. In Criminal Misc. Petition No.41/2008, a
complaint under Section 29(1) of the
Insecticides Act, 1968 was filed by the Assistant
Director of Agriculture (Extension) & Insecticides
Inspector, Hanumangarh Junction, on 17.3.2006
alleging therein that the insecticide product
“Imidachloprid 17.8% SL Batch No.2003-J-01
was misbranded. The sample of the aforesaid
insecticide was drawn and sent to the
Laboratory, which was found to be misbranded.
The learned Judicial Magistrate, Pilibanga, Distt.
Hanumangarh took cognizance on the basis of
this complaint as averred in para `H' of the
5
5
5. Learned counsel appearing on behalf of the
petitioners, while citing various pronouncements
of the Hon'ble Supreme Court on the scope &
ambit of Section 482 and 397 of the Code,
argued that there is no bar in filing direct
petition under Section 482 of the Code before
this Court despite there being alternative
remedy of filing revision petition under Section
397 CrPC, as according to them, even on merits
if the allegations are looked into, no case is
6
6sections(
2) and (3) of Section 397 of the Code,
the revision petition is barred which is against
the interlocutory order or further application by
the same person respectively. In support of their
contention, they have relied upon various
pronouncements, which are hereinafter referred.
7
7Before dealing with the ambit of both the
Sections i.e. S.397 & S.482 of the Code, it would
be worthwhile to reproduce them for the purpose
of their applicability.
7. Section 397 of the Code reads as under:
“397. Calling for records to exercise
powers of revision.-(1) The High Court or
any Sessions Judge may call for and
examine the record of any proceeding
before any inferior Criminal Court situate
within its or his local jurisdiction for the
purpose of satisfying itself or himself as to
the correctness, legality or propriety of any
finding, sentence or order, recorded or
passed, and as to the regularity of any
proceedings of such inferior Court, and may,
when calling for such record, direct that the
execution of any sentence or order be
suspended, and if the accused is in
confinement, that he be released on bail or
on his own bond pending the examination of
the record.
(2) The powers of revision conferred by subsection
(1) shall not be exercised in relation
to any interlocutory order passed in any
appeal, inquiry, trial or other proceeding.
(3) If an application under this section has
been made by any person either to the High
Court or to the Sessions Judge, no further
8
8
8. Sections 482 & 483 of the Code reads thus:
“482. Saving of inherent power of High
Court.-Nothing in this Code shall be
deemed to limit or affect the inherent
powers of the High Court to make such
orders as may be necessary to give effect to
any order under this Code, or to prevent
abuse of the process of any Court or
otherwise to secure the ends of justice.”
483. Duty of High Court to exercise
continuous superintendence over Courts
of Judicial Magistrates.-Every High
Court shall so exercise its superintendence
over the Courts of Judicial Magistrates
subordinate to it as to ensure that there is
an expeditious and proper disposal of cases
by such Magistrates.”
9. A bare reading of Section 397(1) of the
Code speaks that record of any proceeding of
any inferior court can be examined by the High
Court or the Sessions Judge with regard to its
correctness, legality or propriety of any finding,
9
9o
its regularity. Under sub-section (2), a bar has
been imposed for exercise of such power in
relation to interlocutory order passed in any
appeal, inquiry, trial or other proceeding and
sub-section (3) bars further revision by the
same person. Thus, on a cumulative reading of
these three sub-sections, it is clear that except
in interlocutory orders or second revision by the
same person, the correctness, legality and
propriety of the impugned sentences or orders
may be examined either by the High Court or by
the Sessions Judge, whereas under Section 482
of the Code, while exercising inherent powers,
the High Court may make such orders, as may
be necessary to give effect to any order under
this Code or to prevent abuse of the process of
any court or otherwise to secure the ends of
justice. Though, on broad reading of both the
Sections, it can be said that exercise of powers
10
under Sec.397 and Section 482 of the Code are
by and large similar in granting relief to the
aggrieved party, except that of interlocutory
order and of second revision by the same party.
If the order is of such a nature as contemplated
under sub-sections (2) and (3) of Section 397 of
the Code, then the only remedy available to the
aggrieved party is by way of a petition under
Section 482 of the Code within its four corners.
But, if these two Sections are looked into in the
light of the words used, Section 397 is confined
to the extent of examining the correctness,
legality or propriety of the order, whereas
inherent powers can be exercised to give effect
to any order given under this Code or to prevent
abuse of the process of any Court or to secure
the ends of justice.
10. It is noticed rather shocking that in many of
the cases, aggrieved parties are trying to
11
approach the High Court in similarly situated
cases either under Section 397 or under Section
482 of the Code as advised or both the remedies
simultaneously through one or other party of the
same case. For instance, this Court came with a
situation when in a same case of framing
charges on 22.8.06 against three accused
u/ss.420, 467, 468 read with 120B IPC, one of
the accused Niranjan Kumar preferred a Misc.
Petition u/s.482 of the Code & another accused
Avadh Bihari filed revision being S.B.Cr.Revision
No.1025/07 under Section 397 of the Code in
this Court, which, on being noticed, have been
tagged together. Likewise, in Cr.Misc.Petition
No.736/99, accused, who was a Pradhan of
Panchayat Samiti, Dungla, on one hand,
challenged FIR for its quashing u/s.482 of the
Code, which was stayed by the High Court and
on the other hand, challenged the order of
Judicial Magistrate, who took cognizance u/s.509
12
IPC on the same facts in this Court u/s.397 of
the Code by way of filing Cr.Revision
No.742/1999, resulting in its dismissal in the
light of Natwarlal vs. State reported in 2008(1)
CrLR (Raj) 617. During pendency of this petition,
the accused was acquitted and the Misc. Petition
was dismissed as having become infructuous at
the request of learned counsel for the petitioner.
Certain more examples may be noticed of the
like nature in this Court and other High Courts
as well. Whether the High Court has some check
to control this dual process, which can be
termed as riding on two horses by the parties to
the litigation or abuse of the process by the
Courts itself? Answer to this lies by declaring a
definite law based on logical conclusion to give
proper effect to the provisions of this Code as
embodied u/ss.397 and 482 of the Code. Certain
judgments of the Hon'ble Apex Court are of wide
importance to determine the ratio in this regard,
13
which will be discussed hereinafter.
11. Broadly speaking, Section 397 of the Code
operates when the order is final because there is
a bar in filing revision under Section 397(2) with
regard to interlocutory order or u/s.397(3) in
second revision. Against such interlocutory
orders or second revisions, if they cover under
any of the three contingencies, provided-for
under Section 482 of the Code and as referred-
to above, the aggrieved party can approach the
High Court under Section 482 of the Code. The
order is said to be final under this Code, when
either the criminal proceedings are terminated
or they are commenced. Chapter XVI of the Code
deals with the commencement of proceedings
and Chapter XVII onwards of the Code deals
with the charge. Proceedings are said to have
commenced when a complaint is not dismissed
under Section 203 of the Code and the process
14
is issued against the accused under Section 204
of the Code and the trial is commenced when the
charge is framed under Chapter XVII of the
Code. Section 203 of the Code is limited to the
extent that if there are no sufficient grounds for
proceeding, the magistrate shall dismiss the
complaint and after issue of the process or when
the accused is brought before the court through
police investigation, he is discharged, when the
charge is groundless either under Section 239 of
the Code or under Section 245 of the Code, from
evidence, no case is made out, if unrebutted,
would warrant his conviction or no sufficient
grounds are made out under Section 227 of the
Code. This commencement of proceeding or
putting a person to face trial and discharge of
the accused i.e. termination of proceedings of
trial is termed as final order. Rest are said to be
interlocutory orders. This view has been
reiterated by the Hon'ble Supreme Court in
15
Amarnath vs. State of Haryana reported in AIR
1977 SC 2185 in the following terms:
“...It is difficult to hold that the impugned
order summoning the appellants
straightaway was merely an interlocutory
order which could not be revised by the High
Court under sub-sections (1) and (2) of
Section 397 of the 1973 Code. The order of
the Judicial Magistrate summoning the
appellants in the circumstances of the
present case, particularly having regard to
what had preceded, was undoubtedly a
matter of moment, and a valuable right of
the appellants had been taken away by the
Magistrate in passing an order prima facie in
sheer mechanical fashion without applying
his mind. We are, therefore, satisfied that
the order impugned was one which was a
matter of moment and which did involve a
decision regarding the rights of the
appellants. If the appellants were not
summoned, then they could not have faced
the trial at all, but by compelling the
appellants to face a trial without proper
application of mind cannot be held to be an
interlocutory matter but one which decided
a serious question as to the rights of the
appellants to be put on trial.”
12. In the present petitions, both the
petitioners have challenged the order of taking
cognizance i.e. initiation of proceedings being a
16
matter of moment for putting them on trial,
which is not an interlocutory order but a final
order, by way of these petitions filed u/s.482
CrPC. In this regard, if the law is looked into,
the leading case on this subject is of the larger
Bench of the Hon'ble Supreme Court in Madhu
Limaye vs. State of Maharashtra reported in AIR
1978 SC 47. While discussing the scope of
Section 482 and 397(2) of the Code, the Hon'ble
Supreme Court laid down the following principles
with regard to exercise of inherent powers by
the High Court:
“8. xxx At the outset the following principles
may be noticed in relation to the exercise of
the inherent power of the High Court which
have been followed ordinarily and generally,
almost invariably, barring a few exceptions:
(1) That the power is not to be resorted to if
there is a specific provision in the Code for
the redress of the grievance of the
aggrieved party;
(2) That it should be exercised very
sparingly to prevent abuse of process of any
Court or otherwise to secure the ends of
17
justice;
(3) That it should not be exercised as
against the express bar of law engrafted in
any other provision of the Code.
13. In the said decision, the Hon'ble Supreme
Court has also gone into the scope of
interlocutory order and has held that the order
under challenge was not an interlocutory one so
as to attract the bar of sub-section(2) of Section
397 of the Code. In this case, appellant Shri
Madhu Limaye was put to trial for the offence
u/s.500 IPC before the Court of Sessions Judge,
Greater Bombay, in pursuance to the sanction
issued by the State Govt. under Sec.199 of the
Code for making defamatory press note against
the then Law Minister of Maharashtra Shri
A.R.Antulay. Learned Sessions Judge took
cognizance and process was issued upon the
said complaint. The Chief Secretary to the Govt.
of Maharashtra was to be examined as a witness
18
to prove the sanction but the appellant Shri
Madhu Limaye filed an application before the
learned Sessions Judge to challenge the legality
of the trial. The learned Sessions Judge rejected
the application and framed charge u/s.500 IPC.
The appellant thereafter challenged the order by
way of revision in the High Court u/s.397 of the
Code. The High Court dismissed the revision
without entering into the merits of the case by
holding that the order being interlocutory in
nature, it was not maintainable in view of the
provisions contained in sub-sec.(2) of Section
397 of the Code. Against this, the appeal was
preferred. While discussing the scope of
interlocutory order, the Hon'ble Supreme Court
observed in para 13 as under:
“...On the one hand, the legislature kept
intact the revisional power of the High Court
and, on the other, it put a bar on the
exercise of that power in relation to any
interlocutory order. In such a situation, it
appears to us that the real intention of the
19
legislature was not to equate the expressing
“interlocutory order” as invariably being
converse of the words “final order”. There
may be an order passed during the course of
a proceeding which may not be final in the
sense noticed in Kuppuswami's case (AIR
1949 FC 1) (supra), but, yet it may not be
an interlocutory order – pure or simple.
Some kinds of order may fall in between the
two. By a rule of harmonious construction,
we think that the bar in sub-s.(2) fo S.397
is not meant to be attracted to such kinds of
intermediate orders. They may not be final
orders for the purposes of Art.134 of the
Constitution, yet it would not be correct to
characterise them as merely interlocutory
orders within the meaning of S.397(2). It is
neither advisable, nor possible to make a
catalogue of orders to demonstrate which
kinds of orders would be merely, purely or
simply interlocutory and which kinds of
orders would be final, and then to prepare
an exhaustive list of those types of orders
which will fall in between the two. The first
two kinds are well known and can be culled
out from many decided cases. We may,
however, indicate that the type of order
with which we are concerned in this case,
even though it may not be final in one
sense, is surely not interlocutory so as to
attract the bar of sub-sec.(2) of S.397. In
our opinion, it must be taken to be an order
of the type falling in the middle course.”
14. In para 17 of the said judgment, the Hon'ble
Supreme Court lastly observed as under:
20
“Before we conclude we may point out an
obvious, almost insurmountable, difficulty in
the way of applying literally the test laid
down in Kuppuswami Rao's case (AIR 1949
FC 1) and in holding that an order of the
kind under consideration being not a final
order must necessarily be an interlocutory
one. If a complaint is dismissed under S.203
or under S.204(4) or the Court holds the
proceeding to be void or discharges the
accused, a revision to the High Court at the
instance of the complainant or the
prosecutor would be competent, otherwise it
will make S.398 of the new Code otiose.
Does it stand to reason, then, that an
accused will have no remedy to move the
High Court in revision or invoke its inherent
power for the quashing of the criminal
proceeding initiated upon a complaint or
otherwise and which is fit to be quashed on
the face of it? The legislature left the power
to order further inquiry intact in S.398. Is it
not then in consonance with the sense of
justice to leave intact the remedy of the
accused to move the High Court for setting
aside the order adversely made against him
in similar circumstances and to quash the
proceeding? The answer must be given in
favour of the just and reasonable view
expressed by us above.”
Accordingly, the Hon'ble Supreme Court
allowed the appeal and remanded the case back
to the High Court for disposal on merits in the
light of the above judgment.
21
15. Apart from laying down the three principles
as referred-to above with regard to exercise of
inherent powers u/s.482 of the Code, the
Hon'ble Supreme Court also relied upon its
earlier judgment in R.P.Kapur v. The State of
Punjab reported in AIR 1960 SC 866, wherein
the Hon'ble Gajendragadkar J., as he then was,
laid down three categories of cases, wherein
inherent powers u/s.561A of the old Code
corresponding to Section 482 of the Code, can
be exercised. Firstly, where the institution or
commencement of the criminal proceeding is
against the legal bar; secondly from the bare
reading of the FIR or the complaint at the face
value, no offence is made out; and thirdly, there
is no legal evidence in support of the case but
while exercising the powers u/s.561A, the High
Court would not embark upon an enquiry as to
whether the evidence in question is reliable or
not. Even if the order is not final by way of
22
termination of proceedings and the continuance
of proceedings in a criminal court manifestly
shows that there is a legal bar against the
institution or continuance of the criminal
proceeding or the court exercised jurisdiction,
which was not vested in it, the High Court would
be justified in quashing the proceedings.
16. Thus, from the above judgment of Madhu
Limaye's case (supra), it can be gathered that
the order of taking cognizance and framing
charge cannot be termed as an interlocutory
order and the revision is maintainable against
this order and when there is a specific provision
for redress of the grievance of an aggrieved
party, the inherent powers u/s.482 CrPC cannot
be exercised.
17. In the other rulings of regular Benches cited
by learned counsel for the petitioner namely (1)
23
State of Haryana v. Bhajanlal reported in AIR
1992 SC 604; (2) M/s Pepsi Foods Ltd. v. Special
Judicial Magistrate reported in 1998 Cr.L.R.(SC)
18; (3) K. Ramakrishna Vs. State of Bihar,
reported in 2000 (4) Crimes 113 (SC), (4)
S.W.Palanitkar v. State of Bihar reported in
2001 Cr.L.R. (SC) 751; (5) N.K.Sharma v.
Abhimanyu reported in (2006) 2 SCC (Cri) 135;
and (6) Bholu Ram v. State of Punjab reported
in (2008) 3 SCC (Cri) 710, wherein the scope
and ambit of only Section 482 of the Code, has
been discussed as is provided for in the Section
itself, without there being any reference to
Section 397 of the Code as has been discussed
in the Larger Bench's decision of the Hon'ble
Supreme Court in Madhu Limaye's case (supra).
18. In Adalat Prasad Vs. Rooplal Jindal & Ors.,
reported in 2004 Cr.L.R. (SC) 800, the Larger
Bench of the Hon'ble Supreme Court while
24
confirming the order of the High Court held that
recalling summons issued by the Magistrate
under Section 204 of the Code will be a review
of its earlier order, which is not warranted under
the Code as the process is issued under Section
204 of the Code when complaint is not dismissed
under Section 203 of the Code. Opposite earlier
view taken by the three Judges Larger Bench in
K. K. Mathew Vs. State of Kerala & Anr.,
reported in (1992) 1 SCC 217 was held not to
be a correct law by holding that in the absence
of any review power or inherent power with the
subordinate courts, the remedies lie in invoking
Section 482 of the Code. Issue relating to scope
of Section 397 of the Code was also not involved
in this cited case as well.
19. On the applicability of Section 482 of the
Code despite there being alternative remedy
under Section 397 of the Code, leaned counsel
25
for the petitioner has cited the latest decision of
Dhariwal Tobaco Products Ltd. v. State of
Maharashtra decided by the Hon'ble Supreme
Court on 17.12.08 in Criminal Appeal No.2055 of
2007 (Arising out of SLP (Cri.) No.2272 of
2007). This was a case under the Prevention of
Food Adulteration Rules, 1955, wherein a
criminal complaint against a Company was filed,
which was dealing in the manufacturing of the
`Gutkha' having multiple Units. The learned
Magistrate took cognizance and issued summons
against which they filed a petition in the High
Court u/s.482 of the Code, which was dismissed
against which the appeal was filed in the Hon'ble
Supreme Court, wherein, at Para 10 it has been
held as under:
“10. Inherent power of the High Court is not
conferred by statute but has merely been
saved thereunder. It is, thus, difficult to
conceive that the jurisdiction of the High
Court would be held to be barred only
because the revisional jurisdiction could
26
also be availed of. (See Krishnan and Anr.
v. Krishnaveni and Anr. MANU/SC/0223/
1997). In fact in Adalat Prasad v. Rooplal
Jindal and Ors. MANU/SC/0688/2004 to
which reference has been made by the
learned Single Judge of the Bombay High
Court in V.K. Jain and Ors. (supra) this
Court has clearly opined that when a
process is issued, the provisions of Section
482 of the Code can be resorted to.”
20. In the said decision of Dhariwal's case
(supra), though the scope of Section 482 of the
Code has been discussed in the light of Art.227
of the Constitution but it has been observed
while relying upon the decision of the Hon'ble
Supreme Court in C.B.I. v. Ravi Shankar
Srivastava, MANU/SC/8405/2006 that inherent
powers under this Section, though wide, has to
be exercised sparingly, carefully and with
caution and it is to be exercised ex debito
justitiae to do real and substantial justice for
the administration of which alone the courts
exist. The ratio of the said case is that such
powers can be exercised, when there is an abuse
27
of the process of law of any court or to secure
the ends of justice. While allowing the appeal,
the case was remitted back to the High Court for
fresh decision on merits. In the said case also,
the earlier judgment of the larger Bench of the
Hon'ble Supreme Court in Madhu Limaye's case
(supra) has not been referred-to.
21. Thus, taking guidelines on the law laid down
by the larger Bench in Madhu Limaye's case
(supra) on the basis of the doctrine of star
decisis, which is a strong rule of precedent, I am
fortified with the view that when the petitioners,
who are aggrieved by the order of taking
cognizance, have a specific provision under the
Code for redressal of their grievances by way of
filing revision under Section 397 of the Code,
they cannot invoke the inherent powers of this
Court under Section 482 CrPC because the order
of taking cognizance is final one, not being an
28
interlocutory order. The revision can very well
be maintained before the learned Sessions Judge
as held by this Court in Natwarlal vs. State
reported in 2008(1) CrLR (Raj) 617.
22. This Court could have exercised the power
under Section 482 of the Code, had there been a
case from the perusal of the complaint that the
action of taking cognizance is without
jurisdiction or barred by law, which has resulted
in abuse of the process of law or is necessary to
secure the ends of justice, specially when
affected party for one or the other reason could
not resort to the remedy available u/s.397 of the
Code. The legality or correctness of the order in
appreciating evidence for the purpose of taking
cognizance and charge is purely a subject matter
of examination under Section 397 of the Code.
23. Likewise, the duty of superintendence under
29
Section 483 of the Code is confined only to the
extent of expeditious and proper disposal of
cases. Duty cast upon the High Court under this
Section is alike of an administrative nature,
which can be read with the inherent powers
under Section 482 of the Code, being a saving
provision where there is no other power to
interfere.
24. From the facts as stated above and the
statements recorded by the police during
investigation in Sanjay Bhandari's petition,
petitioner took the hotel by way of agreement on
rental basis but he had neither run the hotel nor
licence fee was deposited and on the contrary,
he purchased valuable cars from the foreign
Company in the name of tourism and thereby
alleged to have committed an act of cheating.
These allegations cannot be termed as purely of
civil nature, but is an offence u/s.420 IPC.
30
25. In Misc. Petition filed by P.I.Industries Ltd.,
petitioner was charged for having misbranded
the insecticide product. Objections with regard
to not sending of second sample or consent etc.
could have been raised even during the course
of trial or by way of filing revision before the
learned Sessions Judge.
26. From the face value of both the complaints,
neither the magistrate while taking cognizance,
has abused the process of law nor the cases are
of such nature, which bars his jurisdiction or
which comes under the category of civil nature
so as to attract the provisions of Section 482
CrPC. The appropriate remedy available to the
petitioners is to approach the revisional court
under Section 397 of the Code, if they so desire
and in that event, the period consumed in the
petition shall not come in the way for the
purpose of limitation.
31
27. Consequently, both these Misc. Petitions are
dismissed with the above observations.
(DEO NARAYAN THANVI), J.
RANKAWAT JK, PS
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