Cto, Cir.-B,Ct., Bikaner Vs M/S Nokha Cotton Industries

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR.

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JUDGMENT

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S.B. CIVIL SALES TAX REVISION PETITION NO.741/2003 (Commercial Taxes Officer, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner)

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S.B. CIVIL SALES TAX REVISION PETITION NO.687/2003 (Commercial Taxes Officer, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner)

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S.B. CIVIL SALES TAX REVISION PETITION NO.689/2003 (Commercial Taxes Officer, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner)

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Date of Judgment : 9^th March, 2010

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PRESENT

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HON'BLE DR. JUSTICE VINEET KOTHARI

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Mr. V.K. Mathur with Mr. Lokesh Mathur for petitioner-Revenue Mr. J.L. Purohit for the respondent-assessee.

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REPORTABLE

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BY THE COURT:

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These revision petitions have been filed by the revenue against the order of the Tax Board dated 15.5.2002 whereby upholding the order of the learned Dy. Commissioner (Appeals), the learned Tax Board dismissed the appeals of the Revenue and held in favour of the respondent-assessee that for the relevant assessment years 1994-95, 1995-96 and 1996-97, the assessee was entitled to claim set off of excess tax paid by him on purchase of raw materials

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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like diesel and raw cotton for manufacture of surgical cotton by him as per clause 4(C) of the Rajasthan Sales Tax Incentive Scheme, 1989 notwithstanding clause 4(C) of the said Scheme.

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Learned counsel for the Revenue, Mr. Mathur urged

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that :-

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(i) Clause 4(C) of the Incentive Scheme under which the assessee is exempted from payment of Tax on the basis of eligibility certificate granted to it under the said scheme of 1989 on the basis of investment made by it for manufacturing goods within the State of Rajasthan cannot be given any set off of such excess tax in view of the specific prohibition in clause 4(C) of the Incentive Scheme which reads as under:-

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“4(c) An industrial unit claiming exemption from tax under this notification shall not be entitled to claim any deduction, draw back, set off, partial exemption or refund in respect of purchases made by it, but different concessions in any form available under any section of the Act shall not be denied to such unit.”

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(ii) He further submitted that the judgment of this Court in the case of CTO, Bhilwara Vs. M/s Nitin Spinners Ltd., Bhilwara

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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(S.B. Civil Sales Tax Revision No.768/2002) decided on March 19, 2007 in favour of the assessee in similar circumstances, does not lay down correct law and in view of the provisions of clause 4(C) of the Incentive Scheme, 1989 where akin provisions in clause 4(C) with its explanation in the Incentive Scheme of 1987 were discussed by the Court in the case of M/s Nitin Spinners (supra) and the two parts of the provisions have to be read as two separate provisions. In other words, he submitted that the right to avail concession under different provisions of the Act is not denied notwithstanding the fact the assessee is availing the benefit of Incentive Scheme but under no circumstances that right of availing concessional rate can lead to grant of set off of such excess tax paid on the purchase of materials in view of the specific prohibition in the first part of clause 4(C).

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(iii) He also urged that in pursuance of the order of the Tax Board which remanded the case back to the assessing authority for giving such benefit of set off notwithstanding the fact that the assessing authority has passed such remand order giving benefit of such set off, subject to final decision of this Court in the present revision petitions, the present revision petitions cannot be said to have become infructuous. For this he relied upon the decision of Allahabad High Court in U.P. Brick Field Mavi Kalan Vs. Commissioner, Sales Tax – 1998(4) AWC 513 and decision of

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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Hon'ble Supreme Court in case of Shiromani Gurdwara Parbandhak Committee, Amritsar & Ors. Vs. Raja Shiv Rattan Dev Sigh & Ors. - AIR 1955 SC. 576 para 13.

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On the other hand, Mr. J.L. Purohit, learned counsel for the respondent-assessee heavily relied upon the decision of this Court in case of M/s Nitin Spinners (supra) and he submitted that since the right of respondent assessee to avail the benefit of concessional rate in respect of purchases made by it of raw materials like diesel and raw cotton under Section 5(C) and 5(CC) of the Act cannot be denied admittedly in view of exception part of clause 4(C) of the Incentive Scheme or Explanation in the earlier scheme of 1987 discussed in the case of M/s Nitin Spinners (supra), the revenue is bound to give set off to the extent of such excess tax suffered by the respondent assessee on the purchase of such raw materials in excess of concessional rate applicable to him under Section 5 (C) and 5(CC) of the Act and to this extent the set off has to be given to the respondentassessee and he submitted that this controversy has been settled by this Court in the case of M/s Nitin Spinners (supra). He further submitted that the revenue is denying the benefit of set off and contending to deny the set off in the present case to the respondent assessee only on the ground of prohibition contained in first part of clause 4(C) of the Incentive Scheme, 1989 by ignoring the second

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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part or the exception part of clause 4(C) of the Incentive Scheme reproduced above. The Revenue has not denied the benefit to the assessee in the present case for alleged non-compliance with the mandatory condition of Section 5(C) / 5(CC) of the Act for not furnishing the declaration form ST 17 but the sole ground is because of availing of the benefit under the Incentive Scheme, 1989. He, therefore, contended that the benefit already given to the respondent assessee by the appellate authorities below and even in the remand order passed in pursuance thereof does not deserve to be taken back at this stage.

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I have heard learned counsels at length and perused the relevant provisions and the judgments cited at the Bar.

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In the opinion of this Court, the matter stands concluded in favour of the respondent-assessee by a coordinate Bench by this Court in case of M/s Nitin Spinners. The relevant part of the said judgment is quoted below for ready reference:-

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“So far as question of law is concerned, this can be decided in this manner that the dealer claiming benefit under the Scheme of 1987 and who is held eligible to claim benefit and is granted benefit under the Scheme of 1987 of tax exemption, may not claim the set off as per sub clause (c) of clause 4 of the

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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Scheme of 1987 if it has paid the tax in accordance with law against its liability created under the Act of 1954 but exception to it is provided under the explanation which clearly provides that the benefit for which such assessee is entitled to under Sections 5C and 5CC of the RST Act 1954 on sale or purchase of the goods on concessional rate of tax, then that benefit will continue. Clause 4(c) and its Explanation as well as Section 5C abd 5CC of the Act of 1954 are absolutely clear and that there is no ambiguity. The ambiguity is because of the reason that the facts are not mentioned in the order by the Assessing Authority or by the Deputy Commissioner (Appeals) or by the Tax Board with respect to the claim of the assessee. It is not clear whether the assessee is claiming set off of the amount which he might have paid beyond the taxable limit as provided under Section 5C of the Act of 1954. If the assessee has paid the amount beyond the taxable limit as provided under Section 5C under assumption that it since has been granted benefit of tax exemption of Scheme of 1987, therefore, is not entitled to claim benefit of payment of tax at concessional rate of tax under Section 5C of the Act of 1954. Then for the excess amount paid by it, the assessee could have claimed the benefit of set off despite the fact that the assessee has availed the benefit of tax exemption under the Incentive Scheme of 1987. The question of law is decided as mentioned above .”

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It is true that clause 4(C) in specific terms denies the benefit of deduction, drawback, set off, partial exemption or refund in

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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respect of purchases made by it but one cannot ignore the specific exception made by the legislature itself in second part of definition in clause 4(C) which says; “but different concessions in any form available under any section of the Act shall not be denied to such unit”. The question of denying the benefit can arise only after the question of entitlement to avail such concession is firmly determined in favour of the assessee. There is no dispute from the side of Revenue and possibly could not be then that the assessee in the present case was entitled to purchase raw materials like diesel and raw cotton on the concessional rate given in Section 5(C)/5(CC) of the Act. It is not the case of the revenue that the said concession is being sought to be denied to the respondent-assessee on the ground of non-compliance with any condition of availing the concession in Section 5(C) and 5(CC) of the Act. On the other hand, the contention is that the set off cannot be allowed as per clause 4(C) and, therefore, the same deserves to be denied to the assessee only on the ground of prohibition contained in clause 4(C) of the Incentive Scheme. It is further not the case of the Revenue that the set off has been allowed by the appellate court below in the impugned order only to the extent of rate of tax suffered by the respondent-assessee on the purchase of these raw materials in excess over concessional rates applicable to him under Section 5(C)/5(CC) of the Act.

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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The contention of the learned counsel for the Revenue

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that these two parts of clause 4(C) operate in different fields and, therefore, while the right to avail concessional is protected in clause 4 (C) notwithstanding the assessee availing the benefit of exemption under Incentive Scheme under eligibility certificate granted to it continues however no set off can be allowed, renders such entitlement of the assessee itself nugatory. Once the entitlement of assessee to avail concessional rate is not in dispute, the only way to allow him to avail such concession logically and properly is to allow him the set off of such excess tax suffered by him on the purchase of such raw material. This is what was decided by this Court in case of M/s Nitin Spinners (supra) when the Court said, “Then for the excess amount paid by it, the assessee could have claimed the benefit of set off despite the fact that the assessee has availed the benefit of tax exemption under the Incentive Scheme of 1987.” It is not even contended and rightly so by the Revenue that the provisions of Scheme of 1989 in this regard are pari materia with 1987 Scheme and not different.

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Therefore, in the considered opinion of this Court, this court does not have any reason to take any different view of the matter than one taken by the coordinate Bench of this Court in case of M/s Nitin Spinners (supra). Consequently, the learned Tax Board was justified in rejecting the appeals of the Revenue and allowing the

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1. CR-741/03-(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner), 2.CR-687/03 -(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) & 3.CR-689/03(CTO, Circle-B, Commercial Taxes, Bikaner Vs. M/s Nokha Cotton Industries, Nokha, Bikaner) Judgment dt.9.3.10

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benefit of concessional rate to the respondent-assessee by allowing him the benefit of set off in the present case.

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The revision petition filed by the Revenue are thus found to be devoid of merit. The same are, therefore, dismissed. No costs.

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[ DR. VINEET KOTHARI ], J.

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item No.2 to 4 babulal/

Cto, Cir.-B,Ct., Bikaner v. M/S Nokha Cotton Industries

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