IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. Dhanuka, S.M. Modak, JJ.
United Spirits Limited – Appellant
Versus
State of Maharashtra & Ors. – Respondents
Writ Petition (Lodging ) No. 10092 of 2020
Decided On : 29-04-2022

Headnote:

Writ petition challenging the assessment order passed by the respondent no.2, the Assessing Officer for both Central Sales Tax and VAT in Maharashtra in the year 2015-16. Petitioner impugned the assessment order for the financial year 2015-16 only to the extent that it imposes (a) tax upon the petitioner in respect of the Bond to Bond sales on which VAT has been already paid on 'first point of sale' by another entity and (b) their right of tax on the petitioner despite the tax being paid by the Purchasing Dealer (Damania Enterprises) in the Designation State (Daman) on account of non-issuance of 'C' Forms. The respondent no.2 disallowed the claim of the petitioner for 'sale in the course of import' in light of subsequent judgments of this Hon'ble Court and the Hon'ble Supreme Court in case of Commissioner of Sales Tax vs. M/s.Radhasons International (supra). The levy of tax by the respondent no.2 upon the petitioner is ultra vires section 3 of MVAT Act read with Notification Vat- 1511- C.R.-57/Taxation-1 dated 30th April, 2011 on the ground that the levy could be only at the 'first point of sale'. The levy on the petitioner amounts to double taxation which is impermissible as per the law settled by the Hon'ble Supreme Court in the case of Union of India vs. Tara Iron and Steel Co. Ltd. 1977 (1) LET J61 (SC) and the judgment in case of Bravura Distributors (P) Ltd. vs. Collector of Customs CC, New Delhi 2004 (170) LET 513 (SC).

Fact of the Case:

During the period between 2015-16, the petitioner imported the goods from various countries and upon receipt of the imported goods, the petitioner effected the sales to M/s ASK Agencies. According to the petitioner, when the goods were sold to M/s ASK Agencies, VAT was discharged by M/s ASK Agencies at the rate of 50% and 60% as applicable as the 'first point of sale'. On 16th March, 2020, the petitioner requested it's Chartered Accountant to verify whether M/s ASK Agencies had sold the goods purchased from the petitioner under Bond to Bond sales in Maharashtra during the year 2015-16 and collected MVAT on the said sales.. The Chartered Accountant issued a certificate confirming payment of MVAT by M/s ASK Agencies with respect to the goods in question. M/s ASK Agencies issued an undertaking to the Deputy Commissioner of Sales Tax in respect of the purchase made from the petitioner from the customs bonded warehouse to the effect that the tax paid shall be treated as due discharge and tax liability of the petitioner on the subject products (if any). During the relevant period, the petitioner effected the sales to Damania Enterprises at Rs.8,35,87,125/-. It is the case of the petitioner that in the VAT returns of the said Damania Enterprises for the assessment year 2015-16 and 2016-17, provided by the said Tax Consultants, the goods purchased from the petitioner had been shown to have resold and the tax had been paid by Damania Enterprises. On 28th July, 2020, the petitioner issued a letter requesting the respondent no.3 to provide the petitioner a copy of the VAT and CST returns filed by Damania Enterprises for the period June, 2015 to January, 2017, to confirm that the goods sold by the petitioner to Damania Enterprise for the period June, 2015 to January, 2017 were resold by Damania Enterprises and to confirm that Damania Enterprises had paid applicable tax on the resold goods to third parties. On 18th July, 2019, the petitioner received a notice from the respondent no.2, the Assessing Officer for both Central Sales Tax and VAT in Maharashtra in the year 2015-16. The petitioner appeared before the respondent no.2 on various dates and filed various documents. On 31st March, 2020, the respondent no.2 passed the impugned assessment order, served on the petitioner on 30th June, 2020. By the said assessment order, the respondent no.2 disallowed the exemption sought by the petitioner under section 5(2) of the Central Sales Tax Act in respect of the sales made by the petitioner from its customers bonded warehouse to the said M/s ASK Agencies in Mumbai, Maharashtra and imposed tax in respect of the said sales transactions. By the said assessment order, the respondent no.2 also sought recovery of the concessional duty in respect of the sales transactions made to Damania Enterprises on account of failure to furnish 'C' Forms and imposed interest under section 9(2) of the Central Sales Tax Act read with section 30(2) and 30(3) of the MVAT Act in respect of the balance tax payable including the demands made.

Finding of the Court:

The impugned assessment order thereby imposing a levy of fresh tax at this stage on the same transaction which has been already paid by M/s ASK Agencies is contrary to and in the teeth of Articles 265, 286 and 300A of the Constitution of India and thus deserves to be quashed and set aside on this ground also.

Issues: Whether levy imposed by respondent Nos. 1, 2 and 3 is ultra virus Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 ? Whether transaction between the petitioner and M/s ASK Agencies and others were governed by the provisions applicable on the date of transaction and also the principles of law laid down by the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another reported in 2012 (276) ELT 433 (SC) or would be governed by the later decision of the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others reported in (2020) (1) TMI 800 SC and also judgment of this Court in a case of Commissioner of Sales Tax Maharashtra Vs. M/s Radhasons International [(2019) 64 GSTL 404 (Bom)] ? Whether the levy of tax sought to be recovered from the petitioner amounts to double taxation in view of the respondent Nos. 1 and 2 already having collected at the first point of sale from M/s ASK Agencies or not ? Whether entire situation in the impugned transactions would be revenue neutral and thus respondent Nos. 1 to 3 could not have demanded separate tax from the petitioner, in view of the said M/s ASK Agencies already having paid the tax 'at the first point sale'? Whether levy of Central Sales Tax is contrary to the constitutional scheme of taxation and contrary to the principles laid down by the Supreme Court in a case of M/s Nirmalkumar Parsan Vs. Commissioner Commercial Taxes and others (supra) or not ? Whether levy of tax is contrary to Article 265 and 300A of the Constitution of India ?

Ratio Decidendi: The levy in this case was already crystallized when the judgment of the Hon'ble Supreme Court in a case of Hotel Ashoka (Indian Tourism Development Corporation Ltd.) Vs. Assistant Commissioner of Commercial Taxes and another (supra) was in force. The levy had been already extinguished on account of the payment of VAT made by M/s ASK Agencies. In view of Section 3 and 41 of the MVAT Act read with Notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011, which are applicable to the facts of this case, the tax was required to be paid only in relation to sales of liquor which were purchased from the registered dealer on or after 01st May, 2011. This position is also reflected in the trade circular dated 4T of 2013 dated 26th June, 2013. In our view, since the goods in question were transferred from the petitioner to M/s ASK Agencies suffer a single levy at the point of first sale, the tax in question already having been levied on the goods in question a fresh levy proposed to be made by the assessing officer in the hands of the petitioner is clearly in the teeth of Section 3 of the MVAT Act read with notification No. VAT/1511/C.R.-57/Taxation-1 dated 30th April, 2011 and is beyond scope and jurisdiction of the charging section and other provisions of the MVAT Act.

Final Decision: Writ petition is allowed in terms of prayer clauses (a) to (c). Rule is made absolute in aforesaid terms. There shall be no order as to costs.