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IN THE HIGH COURT OF CALCUTTA
Harish Tandon, J.
Reckitt Benckiser (India) Ltd. & Anr. - Petitioners
Versus
The Commissioner of Commercial Taxes & Ors. - Respondents
W.P. No. 24883 (w) of 2013
Decided On : 03-09-2013
For the Petitioners:Sudipta Sarkar, Moshumi Bhatt, J. Pal, Partha Basu, N. Roy, Advocates
For the Respondents:Abhratosh Majumder and Soumitra Mukherjee, Advocates
The audit report and computation sheet under section 43 of the West Bengal Value Added Tax Act, 2003, which are deemed to be an order of assessment in default of payment within a specified period, are amenable to challenge before the tribunal under sections 5 & 6 of the West Bengal Taxation Tribunal Act, 1987.
Headnote:
TAXATION TRIBUNAL ACT - MAINTAINABILITY OF WRIT PETITION - LEVY AND ASSESSMENT - DISTINCTION - AUDIT REPORT AND COMPUTATION SHEET UNDER SECTION 43 OF THE WEST BENGAL VALUE ADDED TAX ACT, 2003 - DEEMED TO BE AN ORDER OF ASSESSMENT - CHALLENGED BEFORE THE TRIBUNAL.
Fact of the Case:
The petitioner, a dealer in medicines, soap, and other household items, classified mosquito repellent under the brand name 'Motrin' and toilet cleaner under the brand name 'Harpic' under Entry 22 of Part-1 to Schedule-C of the West Bengal Value Added Tax Act (VAT Act). The petitioner was served with a notice for audit under section 43 of the VAT Act, and the audit report suggested that the classification adopted by the petitioner did not fall within Entry 22 and computed the tax payable by the petitioner. The petitioner challenged the audit report and the demand notice in a writ petition before the High Court.
Finding of the Court:
The High Court held that the writ petition was not maintainable because the matters under the specified Act and defined under section 5 of the Taxation Tribunal Act could not be assailed directly before the High Court before approaching the tribunal. The High Court further held that the audit made under section 43 and the computation of tax, penalty, and late fees were deemed to be an order of assessment in default of payment within one month from the date of service of the report and the computation sheet and were amenable to be challenged before the tribunal under sections 5 & 6 of the Taxation Tribunal Act.
Issues: 1. Whether the writ petition is maintainable in light of the provisions of the West Bengal Taxation Tribunal Act, 1987? 2. Whether the audit report and computation sheet under section 43 of the West Bengal Value Added Tax Act, 2003, are amenable to challenge before the tribunal?
Ratio Decidendi: 1. The High Court's jurisdiction is not expressly excluded under section 6 of the Taxation Tribunal Act but can be invoked under Articles 226 or 227 of the Constitution of India before the Division Bench. 2. The matters under the specified Act and defined under section 5 of the Taxation Tribunal Act cannot be assailed directly before the High Court before approaching the tribunal. 3. The audit made under section 43 and the computation of tax, penalty, and late fees are deemed to be an order of assessment in default of payment within one month from the date of service of the report and the computation sheet.
Final Decision: The High Court dismissed the writ petition as not maintainable.
Harish Tandon, J.
A preliminary objection is taken by the respondents as to the maintainability of the writ petition because of the interdiction of section 5 & 6 of the West Bengal Taxation Tribunal Act, 1987.
2. The salient facts of the case are required to be narrated to address the point taken by way of demurrer. The petitioner imports and resells the medicine, soap, dettol, mosquito repellents, floor cleaner, toilet cleaner, utensil cleaner barley etc. The petitioner was classifying the mosquito repellent under the brand name `motrin' and the toilet cleaner under the brand name `harpic' under Entry 22 of Part-1 to Schedule-C to the West Bengal Value Added Tax Act. According to the petitioner, the classification of the `motrin' should be considered as insecticide and harpic' as pesticide and have been assessed at such between the period from 2005-2006 to 2009-2010. The petitioner was served with a notice dated 30.05.2012 issued by the respondent no.2 i.e. Deputy Commissioner Central Audit Unit, Office of Commissioner, Commercial Taxes informing that the books of accounts in respect of the returns for the assessment year 2010-2011 have been selected for audit under section 43 of the West Bengal Value Added Tax Act (Vat Act). The Audit reported dated 30.04.2013 suggest the classification adopted by the petitioner does not fall within Entry 22 of Part-1 of Schedule-C of the Vat Act as they are neither the insecticide nor the pesticide. The report also contains the computation of the tax payable by the petitioner and the demand of the even date in Form 27 was also prepared. Both the report and the demand were duly served on the petitioner which are assailed in this writ petition.
3. The petitioner relies upon a judgment of the Supreme Court in case of Sonic Electrochem & Another v. Sales Tax Officer & Others reported in (1998) 6 SCC 397, in support of his contention that the mosquito repellent is an insecticide and should be classified as such. Further reliance is placed upon a judgment of the Allahabad High Court in case of M/s Knight Queen Industries (P) Ltd., v. State of U.P. reported in STI 2006 Allahabad High Court 109 wherein it is held that in absence of any specific entry relating to mosquito repellent, it can reasonably be said that it would ordinarily come within the entry mentioning insecticides and the levy thereupon would be attracted.
4. The respondent, however, took a preliminary objection that the writ petition is not maintainable because of the specific provision contained under section 5 & 6 of the West Bengal Taxation Tribunal Act, 1987 (Taxation Tribunal Act) which excludes the jurisdiction of the High Court to entertain the writ petition. In support of the above contention, reliance is placed upon a judgment of the Supreme Court rendered in case of L. Chandra Kumar v. Union of India & Ors., reported in (1997)3 SCC 261. The learned Advocate appearing for the respondent submits that section 43 of the Vat. Act empowers the Commissioner to select on random basis or upon information or otherwise, such class or classes of dealer as may be prescribed, for audit of the accounts, registers or documents maintained or kept by such dealer for any year or part thereof not being a period which has ended five years previous to the date of selection. It is further contended that sub-section 3 of section 43 permits the petitioner to prepare a report stating the observations and findings relating to the correctness of the returns and the admissibility of various claims of the dealer of the period of audit and shall also compute the quantification of tax interest or late fees payable by the dealer. According to the petitioner, the order assailed in this writ petition is passed upon invocation of the provisions contained under Section 43 and, therefore, can only be assailed before the tribunal constituted under the Taxation Tribunal Act.
5. In reply the petitioner submits that a different meaning should be attributable to
