The Assistant Commissioner of Purchase Tax (S.C.) does not have jurisdiction to invoke revisional power under section 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962, to impose interest under section 7-B of the Act, where the Purchase Tax Officer did not pass any order levying interest.

Headnote:
MAHARASHTRA PURCHASE TAX ON SUGARCANE ACT, 1962 - SECTION 7-B, 9 - INTEREST ON DELAYED PAYMENT - REVISION OF ORDERS - JURISDICTION - ORDER AS PRE-REQUISITE: The Assistant Commissioner of Purchase Tax (S.C.) does not have jurisdiction to invoke revisional power under section 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962, to impose interest under section 7-B of the Act, where the Purchase Tax Officer did not pass any order levying interest. An order is a pre-requisite for invoking section 9 and passing an order.
Fact of the Case:

The petitioners, a sugar factory, were granted a remission of purchase tax and interest-free loan under various Government Resolutions due to a grave depression in the sugar industry. However, the Assistant Commissioner of Purchase Tax (S.C.) later imposed interest on the petitioners for the period when the tax was remitted or treated as a loan, claiming that the Purchase Tax Officer had not levied interest or deferred it to a future date. The petitioners challenged this imposition of interest, arguing that the Assistant Commissioner lacked jurisdiction and that the agreement with the State of Maharashtra provided for an interest-free loan.
Finding of the Court:

The Court held that the Assistant Commissioner of Purchase Tax (S.C.) did not have jurisdiction to impose interest under section 7-B of the Act because the Purchase Tax Officer had not passed any order levying interest. The Court found that an order is a pre-requisite for invoking section 9 and passing an order, and that the Assistant Commissioner had not revised any order passed by the Purchase Tax Officer.
Issues: 1. Whether the Assistant Commissioner of Purchase Tax (S.C.) had jurisdiction to impose interest under section 7-B of the Act where the Purchase Tax Officer did not pass any order levying interest? 2. Whether the agreement between the petitioners and the State of Maharashtra provided for an interest-free loan?
Ratio Decidendi: The Court relied on the provisions of sections 7-B and 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962, which empower the Commissioner or any other prescribed revisional authority to revise any order made under the Act. The Court held that the Assistant Commissioner of Purchase Tax (S.C.) could not invoke section 9 to impose interest because there was no order passed by the Purchase Tax Officer that could be revised.
Final Decision: The Court allowed the writ petition and quashed the orders of the Assistant Commissioner of Purchase Tax (S.C.) and the Deputy Commissioner of Purchase Tax (S.C.) imposing interest on the petitioners.

JUDGEMENT - A.S. VENKATACHALA MOORTHY, J. :---By this writ petition, under Article 226 of the Constitution of India, the petitioners pray this Court to issue a writ of certiorari calling for the records of the petitioners' case and after satisfying itself as to the legality of the orders dated 5-11-1986 and demand notice dated 11-11-1986 and orders dated 27-10-1987 (Exhs. L-1 to L-9, A-1 to A-9 and M-1 to M-9) to quash and set aside the same, and also a writ of prohibition prohibiting and restraining the respondents, their servants and agents from giving effect to and/or continuing to take any steps or proceedings and/or in furtherance of the impugned orders and notices.

2. The facts of the writ petition can be narrated as follows:-

The 1st petitioner is a Society registered under the Maharashtra Co-operative Societies Act. It is a co-operative sugar factory which is mainly engaged in the manufacture of sugar. The petitioners, inter-alia, manufacture spirit and liquor etc. The State of Maharashtra passed the Maharashtra Purchase Tax on Sugarcane Act, 1962 with a view to levy tax on the purchase of sugarcane for the use in the manufacture or production of sugar including Khandasari sugar. As per section 3 of the said Act, tax can be levied on the purchase of sugarcane which is used in manufacture or production of sugar in a factory. The Act also provides the rate of tax that can be levied, but it is made clear therein that in no case the rate so specified shall exceed 2 paise per kg of sugarcane. The Act came into force in the year 1982 and the petitioners were being subjected to the levy of purchase tax which they had been paying.

3. According to the petitioners during the accounting year July 1978 to June 1979, there was a grave depression among the sugar manufacturers as a result of which the petitioners suffered a set-back and this was due to decontrol of the sugar during that period, the price of sugar crashed from Rs. 450/- per quintal to Rs. 250/- per quintal. Due to the sudden fall in the price of sugar, the petitioners like the other sugar manufacturers were exposed to grave risk of suffering huge losses and possible closure of the business. To save themselves from the imminent danger of disaster, the petitioners and others approached the Government of Maharashtra to assist the petitioners in overcoming these crisis, so that they are able to carry on their business without suffering heavy losses. Appreciating the gravity of situation, the Government of Maharashtra devised a scheme under a Government Resolution, Agriculture and Co-operation Department No. CSK. 1076/69742/13-C/CR-489 dated 7th April, 1977. With a view to help the sugar factories to tide over the crisis, the Government of Maharashtra issued a G.R. No. SOC. 1279/175 RES-9 dated 7-4-1979 wherein it has been brought out that due to steep fall in sugar prices after the decontrol of sugar on 16-8-1978, the sugar industry has been passing through a difficult phase and the sugar industry has been repeatedly representing to the State Government for some relief in purchase tax., and that considering this, the State Government decided to give certain relief in purchase tax, to sugar factories in the shape of remission of the whole or part of the purchase tax due on sugarcane crushed for manufacture or production of sugar during the period 1978-79 crushing season. In terms of Clause 2(1) of the said Resolution, the factories like the petitioners were granted a remission of purchase tax at Rs. 8.10 per tonne of sugarcane crushed.

4. The petitioners further submitted that the Government of Maharashtra in its resolution No. CSK/1079/Purchase Tax/18748/13-C dated 16-5-1979 gave further relief to the sugar factories including the petitioners, and according to which the sugar factories should be charged purchase tax at the rate of Rs. 8.50 per M.T. of sugarcane crushed during 1978-79 and the entire amount due at this rate should be treated as interest free loan to the factor

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1996 Supreme(Bom) 146

The Assistant Commissioner of Purchase Tax (S.C.) does not have jurisdiction to invoke revisional power under section 9 of the Maharashtra Purchase Tax on Sugarcane Act, 1962, to impose interest under section 7-B of the Act, where the Purchase Tax Officer did not pass any order levying interest.

Cases Referred (2)

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