The High Court held that the appellant could not avail of a notification exemption because it separately collected 1% tax in violation of notification conditions. The Court further held the Revenue has no statutory power to forfeit such excess tax and grant exemption alternatively.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX APPLICATION NO. 67 OF 2009 IN REFERENCE APPLICATION NO. 247 OF 2008
M/s. Hyundai Motors (India) Ltd. Vasundhara Building, Ground Floor, Bhalubhai Desai Road, Mumbai 400 026
... Applicant
Versus
The Maharashtra State, Mumbai ... Respondent
Mr. V.P. Patankar with Mr. M.M. Vaidya for the Applicant.
Mr. Milind More, A.G.P. for Respondent.
CORAM : FERDINO I. REBELLO & D.G. KARNIK, JJ.
DATED : JULY 17 2009
ORAL JUDGMENT (Per Ferdino I. Rebello,J.):
By consent of the parties the application taken up for hearing and heard forthwith. The following two questions have been framed for consideration :
of the case, the Tribunal was justified in holding that the applicant had separately collected tax and therefore,
he was not entitled to the exemption claimed under
Entry 1 of Gro0up H of the Notification issued under
section 41 of the Bombay Sales Tax Act, 1959?
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(2) Whether the Tribunal was justified in rejecting the alternative contention to forfeit the tax @1% and to allow the exemption under Entry 1 of Group H of the Notification issued under section 41 of the Bombay
Sales Tax Act, 1959?”
(1) The learned Assistant Commissioner of Sales Tax has erred in observing that the appellant has sold the goods directly to the army personnel and not to the canteen stores department?
(2) The A.O. had erred in observing that the appellant had collected tax separately. Hence, the claim of sales being subjected to sales tax @ 12%.
The first appellate authority after considering various contentions and the documents on record came to the conclusion that the appellant had effected sales to
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canteen stores department and not to individuals. However, as regards the claim of the appellant of sales being exempted under Entry I of Group H of the Notification the first appellate authority observed that the appellant had collected tax separately
and contravened the condition. The applicant therefore, was not entitled to the benefit of the notification issued under section 41 of the B.S.T. Act. Accordingly the appeal was dismissed against which the second appeal was preferred.
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collected separately. The documents on record would show that the Appellant had in fact collected 1% of the tax. The question therefore, is whether inspite of having collected the tax of 1% the applicants, can avail of the benefit of notification. The relevant entry in the notification reads as under :
| Sr.No | 2 | 3 | 4 |
|---|---|---|---|
| GROUP H Sales to the Canteen Stores Department or the Indian Naval Canteen Service of goods listed in the price list published periodically by the Chairman, Board of Administration, Canteen Stores Department or the General Manager, Indian Naval Canteen Service except those specified in the Appendix hereto, certified by an officer not below the rank of Commanding officer, that the goods purchased will be resold directly or through canteens anywhere within the territory of India to the members of the armed forces of India at the price fixed by the Government of India. Explanation : For the purpose of Sales of general stores specified sections A,D,E,F,G,H and J of the Retain Price List published by the General Manager, Indian Naval Canteen service the Expression “members of the Armed Forces of India”, wherever it occurs in entries 1,2,3,4,5 and 6 of Group G shall include ex-servicemen and also the families of the deceased personnel of armed forces on production of the identity cards issued by the respective service Headquarters. |
Whole of tax in case of sales of potable alcohol and in any other case in excess of one percent. |
(i) The selling Registered dealer shall not separately collect tax. (ii) The purchasing officer in -charge furnishes to the selling dealer a declaration in Form “H”. (iii) The goods purchased are for resale directly or through Canteens anywhere within the territory of India to the members of the Armed forces of India at the prices fixed, by the Government of India. |
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From the notification it is clear that one of the conditions is that the selling
registered dealer shall not separately collect tax. In the instant case admittedly the Petitioner has collected tax of 1%. We are dealing with an exemption provided by the notification. It is true that the Petitioner after collecting tax may have paid the sales tax. That is no answer considering the express terms of the notification. Once the applicant has violated the condition in the notification, the conditions necessary for claiming the benefit does not arise. In that light of the matter, first question as raised is devoid of merits and consequently has to be rejected.
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judgment is of no assistance to the applicants. The question there was whether the freight price would form part of the sales price. In the instant case there is no dispute that 1% of sales tax was included in the sales price which provided by the notification. The selling registered dealer could not have collected the same. Reliance was also placed in the judgment of the Supreme Court in Arun Electrics, Bombay Vs. Commissioner of Sales Tax, 1966 STC 576 to contend that the invoice is insufficient as evidence of the terms of the contract. In the instant case invoice clearly shows the claim of 1% sales tax is charged of the price at which the goods were sold.
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forfeit tax and to allow exemption under Entry No. 1 of Group H of the notification issued under section 41 of the B.S.T. Act. For the purpose of exercising the power of forfeiture, there must be a power in the authority. If there is no power to forfeit, the question of forfeiture would not arise. The second question therefore, will have to be answered in the affirmative in favour of the revenue and against the assessee.
(D.G. KARNIK,J.) (F.I. REBELLO,J.)
3 issues framed by the court
Whether separation of tax collection by the appellant disentitled them from an exemption under the Sales Tax Notification.
Whether the Revenue has the power to forfeit tax collected in contravention of the notification and grant the exemption alternatively.
Whether the Tribunal was correct in holding that the appellant was not entitled to exemption and that the second question arose in favour of the revenue.
Colour shows how this judgement treated each authority
Hyderabad Asbestos Cement Products Ltd. Versus State of Andhra PradeshDistinguished¶40
1969 STC 487
Arun Electrics, Bombay Vs. Commissioner of Sales TaxReferred¶41
1966 STC 576
4 provisions across 2 enactments
M/s. Hyundai Motors (India) Ltd.
The Maharashtra State
Ferdino I. Rebello
D.G. Karnik
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
