Allowed

Seervi Ginning v. Commissioner Cccommercial Taxes

Rajasthan HC1 Nov 2023CR/422/2006

Case brief

AI extract

What is this about?

Revision petition filed by a woman entrepreneur challenging the dismissal of her refund claim for purchase tax under a zone-3 exemption order. The High Court allowed the petition, setting aside the Tax Board's order relying on surmises of tax incidence and restoring the appellate order.

What did the court decide?

Order dated 27.10.2005 by Member, Rajasthan Tax Board set aside; order dated 24.01.2004 by Deputy Commissioner restored.

Seervi Ginning Vs Commissioner Cccommercial Taxes — Writ and Judicial Review | Rajasthan HC (2023)

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[2023:RJ-JD:38001]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Civil Revision Petition No. 422/2006

Seervi Ginning

----Petitioner

Versus

Commissioner Cccommercial Taxes

¶8

----Respondent

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For Petitioner(s)	: Mr. Sharad Kothari
For Respondent(s)	: Mr. Hemant Dutt

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HON'BLE MS. JUSTICE REKHA BORANA

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Order

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01/11/2023

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The present revision petition has been filed against the order dated 27.10.2005 passed by the Member, Rajasthan Tax Board in Appeal No.1030/2004/Jodhpur whereby the order dated 24.01.2004 passed by the Deputy Commissioner (Appeals), Commercial Taxes, Jodhpur has been set aside and order dated 21.12.1999 passed by the Assessing Authority has been affirmed. Vide order dated 21.12.1999, the Assessing Authority rejected the claim for refund of the amount qua purchase tax to the petitionerfirm.

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The facts of the case are that a notification dated 07.03.1994 was issued by the State Government whereby the women entrepreneurs working in tiny sector were exempted from tax on certain conditions. The petitioner being a proprietorship concern owned and run by a woman entrepreneur and being entitled for exemption of tax in terms of the notification dated 07.03.1994, was granted an Exemption Certificate dated 31.03.1998 for the

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period from 27.03.1997 to 26.03.2000. However, the said certificate was received by the petitioner belatedly. Meanwhile, the petitioner paid the applicable purchase tax on the purchase affected by it for the period from 01.04.1997 to 31.03.1998 amounting to Rs.2,27,850/-.

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Being entitled for exemption w.e.f. 27.03.1997, the petitioner applied for refund of the purchase tax so deposited by her vide application dated 20.12.1999. The representation dated 20.12.1999 as moved by the petitioner was declined vide order dated 21.12.1999 by the Assessing Authority with the finding that although no tax has been recovered vide the bills but evidently, the same included the tax component also and hence, the same can be deemed to have been recovered by the petitioner-firm from the purchasers.

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Appeal against the order dated 21.12.1999 as preferred by the petitioner came to be allowed and vide order dated 24.01.2004, the Appellate Authority reached to a specific finding that the total tax amount of Rs.2,27,850.67/- had been paid by the petitioner to the registered traders and hence, it was entitled for exemption in terms of the notification dated 07.03.1994. The said order of the Appellate Authority was again reversed by the Rajasthan Tax Board against which the present revision petition has been preferred.

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Learned counsel for the petitioner submits that order passed by the Rajasthan Tax Board is totally erroneous in so far as it concluded that the incidence of tax passed to the customers in the present matter. Admittedly, the petitioner-firm which is a manufacturer of cotton ginning, purchased the raw material, the

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cotton, from the registered traders. On such purchase, the firm was liable to pay the purchase tax which it did and the said fact was clearly proved on record. The notification dated 07.03.1994 specifically provided that the women entrepreneurs in the tiny sector shall be exempted from the tax. The eligibility of petitioner for exemption under the said notification is not under dispute and further, the exemption for the period qua which the refund has been claimed was effective is also not under dispute. Finding of the Assessing Authority is erroneous on the face of it wherein it was observed that although no tax has been recovered in the bills but it seems that the same includes the component of tax. The said finding being totally contrary to the record was rightly set aside by the Appellate Authority and the order dated 24.01.2004 as passed by the Appellate Authority deserves to be affirmed.

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In support of his arguments, learned counsel for the petitioner has relied upon the following judgments:

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Deputy Commissioner of Commercial Taxes vs. Hindustan Lever Limited, (2016) 13 SCC 28.

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Delhi Cloth and General Mills Co. Ltd. and Ors. vs. The Commissioner of Sales Tax, Indore, (1971) 2 SC 559.

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Per contra, learned counsel for the respondent submits that as found by the Assessing Authority, it was clear on record that the incidence of tax passed to the customers and hence the petitioner could not have been entitled for refund of the purchase tax amount as the same would result in an unjust enrichment which in light of the judgment passed in the case of M/s.

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Mafatlal Industries Ltd. & Ors. vs. Union of India & Ors.,

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(1997) 5 SCC 536 cannot be granted.

(4 of 6)

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Heard learned counsel for the parties and perused the material available on record.

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In the present matter, it is not in dispute that the petitioner being a female entrepreneur was entitled to the exemption of purchase tax in terms of notification dated 07.03.1994. The period of exemption from 27.03.1997 to 26.03.2000 is also not in dispute. The factum of purchase of the raw material and the payment of the purchase tax by the petitioner amounting to Rs.2,27,850/- for the period from 01.04.1997 to 31.03.1998 is also not in dispute. The only ground for rejection of the representation of the petitioner for refund of the purchase tax by the Assessing Authority has been that the incidence of tax had passed to the customers. The said finding of the Assessing Authority has been affirmed by the Tax Board with the finding that in terms of Section 56 of the Rajasthan Sales Tax Act, 1994, the refund can be allowed only in favour of a person who has actually suffered the incidence of tax whereas in the present matter, the same had been transferred to the customers and hence, the petitioner cannot be held entitled for the refund.

¶37

In the opinion of this Court, the said finding of the Assessing Authority does not hold good as the same is based only on surmises. The Assessing Authority held as under:

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“ ;|fi fcyksa esa dj olwy ugha fd;k x;k gSa] ijUrq ijks{k :i ls eky dh ykxr dk fgLlk gSA vr% bu rF;ksa ds e/; utj is”k fd;s x;s tcko dks larks’kizn ugha ekurs gq, Ø; dj ykSVk;k tkuk U;k;laxr ugha ekurs gq, vuqjks/k dks vLohdkj fd;k x;kA ”

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A bare perusal of the above finding makes it clear that the Assessing Authority itself found that the bills did not reflect the

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imposition of tax. Further, the learned first Appellate Authority after considering the documentary evidence available before him specifically recorded his finding as under:

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“ vihy dh lquokbZ ds le; vihykFkhZ }kjk o’kZ 97&98 dh vof/k esa jkT; ds iathdr O;olkbZ;ksa ls [kjhn fd;s x;s eky dh lwph is”k dh xbZ gSaA is”k dh xbZ lwph dk voyksdu fd;k x;k rFkk bl lwph ds lanHkZ esa is”k fd;s x;s [kjhn fcyks dk Hkh voyksdu fd;k x;kA is”k dh lwph ds voyksdu ls Li’V gksrk gS fd vihykFkhZ }kjk 3 izfr”kr ls :- 210326-91 rFkk 4 izfr”kr dh nj ls :- 17523-76 dqy :i;s 2]27]850@& 6 izfr”kr dh jkf”k Ø; dj ds :i esa jkT; ds iathdr O;olkbZ;ks dks vnk dh gSA vr% mijksDrkuqlkj foosfpr rF;kRed ,oa fof/kd fLFkfr ds e/; utj vihykFkhZ dks Ø; dj ykSVk;k tkuk fof/klEer gksus ls ;g vihy Lohdkj dh tkrh gS rFkk dj fu0 iz0 dks funsZ”k fn;s tkrs gS fd mijksDrkuqlkj :i ls foosfpr rF;ksa ,oa fof/kd fLFkfr ds e/; utj rFkk vihy dh lquokbZ ds le; jkT; dh iathd`r O;olkb;ksa ls xbZ [kjhn dh lwph dks /;ku esa j[krs gq, vihykFkhZ }kjk Ø; dj ds :i esa fjQ.M Dyse dh xbZ jkf”k ykSVkbZ tkosA ”

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The only conclusion that can be drawn from the findings of the Assessing Authority as well as the first Appellate Authority is that the plaintiff did pay purchase tax of an amount of Rs.2,27,850/- qua the purchase of the raw material to the registered traders. The exemption granted vide the notification dated 07.03.1994 was qua the purchase tax only. Therefore, the factum of the said tax having become component of cost price, would even otherwise be of no relevance or consequence. Even if it is assumed that the tax component formed a part of the sale price, as held by the Hon’ble Apex Court in the case of Hindustan Lever Limited (supra), the same cannot be treated to be a separate component. While dealing with a similar issue of an exemption notification in the said matter, the Hon’ble Apex Court held as under:

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“23. In the case at hand, when the Respondent was not liable to pay tax and had not passed on the tax liability, we do not think, sale consideration received should be bifurcated and divided on the basis of any assumption that the sale price received must have included the tax. This fiction has no application in the present case. There is neither such principle nor any percept in law. In any case the finding of fact is to the contrary.”

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The present issue would clearly be governed by the above mentioned ratio as laid down by the Hon’ble Apex Court. Admittedly, the petitioner firm was not liable to pay the purchase tax and hence, it cannot be assumed that the sale price received must have included the tax. The same could only be considered as a valuable consideration of the goods sold.

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In view of the above observations, the present revision petition is allowed. The order dated 27.10.2005 passed by the Member, Rajasthan Tax Board is hereby set aside. The order dated 24.01.2004 passed by the Deputy Commissioner (Appeals), Commercial Taxes, Jodhpur is hereby restored.

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All pending applications, if any, also stand disposed of.

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(REKHA BORANA),J

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7-T.Singh/-

Seervi Ginning v. Commissioner Cccommercial Taxes

Case brief

What is this about?

What did the court decide?

Seervi Ginning v. Commissioner Cccommercial Taxes

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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