Whether Additional Tax and/or Turnover Tax is payable for transactions effected during the period from 1-4-1995 to 30-9-1995, even though turnover exceeded prescribed limits after 1-10-1995?

Section 9 and 15.A.I of the B.S.T. Act, provided for levy of turnover tax and additional tax. These were deleted with effect from 1-10-1995. At the time of assessment, the assessing authorities had computed turnover of the year and levied tax under these sections on the transactions of sales and purchases effected prior to 1-10-1995 even though turnover exceeded prescribed turnover limits after 1-10-1995. The appellants had taken a stand that turnover after 1-10-1995 should not be taken into account for the purpose of computation of turnover as anticipated in Sections 9 and 15.A.I of the Act. The first appellate authorities, however, confirmed the assessing authorities stand.

One of the dealers whose turnover of sales/purchases exceeded the limit of Rs. 10 lakhs/12 lakhs on 4-11-1995 and 30-11-1995, applied for determination u/s 52. The Commissioner held that the liability to pay additional tax and turnover tax accrues on sales and purchases effected up to 30-9-1995 only. Aggrieved by this order, appeal was filed before this Tribunal.

All the second appeals (referred above) and first appeal against determination were taken up for common hearing.

The arguments favoured by the appellants were as under:

  1. Tax can be levied on the basis of law, which is in existence and not on the basis of law already deleted. Sections 9 and 15.A.I of the Act having been deleted from 1-10-1995, will not be applicable for the turnover after 1-10-1995.
      

  2. The terms “Turnover Tax” and “Additional Tax” are deleted from Section 6 of the BST Act after 1-10-1995. Section 6 being a charging Section, no TOT and Additional Tax can be levied after 1-10-1995.
     

  3. The term “any year” in the Section should be read as ” in a given period” in view of repeal of Sections 9 and 15.A.I of the Act. Referring to General Clauses Act it was stated that all the proceedings relating to these sections get terminated “ipso facto”, in view of the fact that there is no savings provision in 1995 Act.
      

  4. Provisions of Sections 8 and 9 were differentiated. It was pointed that scope of levy of TOT u/s 9 is limited to every year and whereas in Section 8, the liability is continuous. The incidence of turnover tax is qua the turnover.
      

  5. Charging Sections 9 and 15 A.I. were deleted on 1-10-1995. If turnover is not more than the prescribed limit on or before 30-9-1995, it cannot be said that liability is accrued. As there is no accrual of liability, if turnover exceeds after 1-10-1995, no turnover tax and additional tax can be levied.

    From the revenue side, arguments were made on following lines:

    1. General principle for interpretation of any statute is that, if the provision is clear and there is no ambiguity, then the provision has to be applied as it is.
        

    2. The Scheme of the Act as to charge, levy and recovery was harped on. It was stated that event of tax and levy of tax are two different stages.

    The Tribunal considered cases cited threadbare, analysed them. Section 6 of the General Clauses Act was dealt with. The term “any year” was interpreted on the lines of decision of M/s Indian Chain Pvt. Ltd. vs. CTO (WBTT) (117 STC 252)

    In Para 35, the Tribunal has observed that the Sections specifically provide to take into account the turnover of “year”, to classify the dealers and then specify the turnover of sales, which is liable to tax. In view of this specific legal position, one has to calculate the turnover of the year while determining the class of dealers. The next part of the section speaks of the turnover on which turnover tax is payable. In view of this specific provision, spelt out in the sections, the hypothetical calculation provided for in the Act, is mandatory.

    Further the case of M/s J.K. Engg. vs. CST (Bombay) (99 STC 209) was relied upon. Certain observations from CST vs. Steel Supplier Pvt. Ltd (Bombay) (98 STC 448) and Ashapura Mineral Co. vs. State of Gujarat (Guj) (89 STC 289) were referred to.

    Ultimately, the actions of assessing authorities and answer given by the Commissioner in his DDQ were confirmed.

    [M/s Saraswati Saw Mills, S.A. 688 of 1999 with 6 other cases dated 23-10-2000. S/Shri P. C. Joshi, V. N. Mehta, P. V. Surte, B. K. Sharma, N. T. Nirale appeared for the appellants. The judgment is delivered by Shri A. S. Patil, Member, Third Bench.]

Written by ntnirale on September 20th, 2009 with comments disabled.
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