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2018 Supreme(Bom) 1368
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. DHARMADHIKARI, ANUJA PRABHUDESSAI, JJ.
Axis Mutual Fund through its trustee Axis Mutual Fund Trustee Co. Limited – Petitioner
Versus
The State of Maharashtra through Government Pleader High Court, Mumbai – Respondent
Writ Petition No. 710 of 2018
Decided On : 06-08-2018
For the Petitioners: Mr. V. Sridharan, Mr. Prakash Shah.
For the Respondents: Mr. V.A. Sonpal, B.V. Samant.
Headnote:
Constitution of India,1950 - Article 226 -MVAT Act - section 48 - MVAT Rules - Rule 52 - Schemes of Axis Mutual Fund - Evaluation of investment operations - Petition Article Constitution of India petitioner seeks writ of certiorari or any other appropriate writ order direction in nature thereof calling for records pertaining to impugned orders September November and after scrutinizing legality and validity thereof to quash and set aside same - Petitioner is also challenging another order as well - Circumstances in which these orders are challenged are briefly set out herein below - By Deed of Trust made by and between Axis Bank Limited settler and Axis Mutual Fund Trustee Company Limited trustee an irrevocable trust trusts called Axis Mutual Fund was created – Held, Pertinently set off has not been disallowed in full - It is hold that in case clearly specified of gross receipts of dealer in any year and if from that receipts on account sale are less than of total receipts then insofar as dealer who is not hotel or restaurant set off is permissible only on those purchases effected in that year where corresponding goods are sold or resold within six months from date of purchase - There is no creation of separate Trusts but separate schemes single Trust Deed are floated - To our mind therefore none authorities were in any error nor their view can be termed as perverse while granting partial relief to petitioner – Court do not see how view taken by first appellate authority in facts and circumstances peculiar to petitioners case is perverse Court are of view that conclusion reached by first appellate authority is imminently possible - It is evident from same that petitioner obtained registration MVAT Act - It invested in gold and disposed it of may be on behalf of customers - However it paid VAT on it and was held liable to pay interest if payment of VAT is delayed - Hence first appellate authority has rightly concluded that tax amount together with interest is payable - He confirmed demand to that extent Tribunals also confirmed this view - It concurred with assessing officer and first appellate authority as both took view on facts and on law which is not perverse or vitiated by error of law apparent on face of record - In these circumstances disallowance of input tax credit Rule was also confirmed and in our opinion rightly – Petition dismissed
S.C. DHARMADHIKARI, J.
1. By this petition under Article 226 of the Constitution of India, the petitioner seeks a writ of certiorari or any other appropriate writ, order or direction in the nature thereof calling for the records pertaining to the impugned orders dated 26th September, 2017, 7th November, 2017 and 11th April, 2018 and after scrutinising the legality and validity thereof, to quash and set aside the same. The petitioner is also challenging another order dated 29th March, 2017 as well.
2. The facts and circumstances in which these orders are challenged, are briefly set out herein-below.
3. By the Deed of Trust dated 27.06.2009 made by and between Axis Bank Limited, a settlor and Axis Mutual Fund Trustee Company Limited, trustee, an irrevocable trust/trusts called Axis Mutual Fund was created.
4. Axis Mutual Fund Trustee Company Limited (“Trustee Company”), incorporated under the provisions of the Companies Act, 1956, was approved by Securities and Exchange Board of India (“SEBI”) to act as a Trustee of the various schemes of the Axis Mutual Fund.
5. Axis Asset Management Company Limited (“Axis AMC”), incorporated under the provisions of the Companies Act, 1956, was approved by SEBI to act as the Asset Management Company for the schemes of the Axis Mutual Fund.
6. By the Deed of Trust dated 27th June, 2009, the settlor, inter-alia, declared and agreed that the Trustee Company shall manage the mutual fund in accordance with the applicable regulations. Further, as per para 6.1.1 of the Deed of Trust dated 27th June, 2009, the Trustee Company is allowed to float one or more schemes for the issue of units to be subscribed by the public.
7. The responsibility for the daily operations of the schemes of Axis Mutual Fund has been delegated to the Axis AMC through an investment Management Agreement dated 27th June, 2009 executed between the Trustee Company and Axis AMC. As enumerated in Clause 3 of this Agreement dated 27th June, 2009, the delegated responsibilities, inter-alia, include the maintenance of accounts and records, evaluation of investment operations, carrying out credit assessments in relation to proposes investments.
8. It is the contention of the Petitioner that by the Deed of Trust dated 27th June, 2009, multiple trusts, i.e. schemes, were created as and when floated. The various clauses of the Deed of Trust indicating independent existence of each scheme is provided in the table below:-
Para
Text
4.3.1
Entrustment of property
The liabilities of a particular Scheme shall be met out of assets of the same scheme and shall in no way attach to or become a liability of any other scheme.
4.3.2
Entrustment of property
The Trustee Company shall ensure that proper and separate accounting records are maintained for each scheme.
6.1.14
Functions of Trustee Company
Distribute dividend and income of the relevant Scheme, as and when the same may become due and payable.
9. A trust is an obligation annexed to the ownership of property. As clearly evident from Deed of Trust, such obligations are towards the beneficiaries of each scheme and not towards the beneficiaries of all the schemes put together.
10. The relevant portion of the SEBI (Mutual Fund) Regulations, 1996, reads as under:-
Definition of “mutual fund”
(a) “mutual fund” means a fund established in the form of a trust to raise monies through the sale of units to the public or section of the public under one or more schemes for investing in securities including money market instruments or gold or gold related instruments or real estate assets. Provided that infrastructure debt fund schemes may raise monies through private placement of units, subject to conditions specified in these regulations.
Regulation No. 50
50. (1) Every asset management company for each scheme shall keep and maintain proper books of
