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2000 DIGILAW 168 (RAJ)

Ashapura Oil Centre v. State of Rajasthan

2000-02-10

BHAGWATI PRASAD, SHIVARAJ V.PATIL

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JUDGMENT 1. - This bunch of special appeals arise out of a common judgment of the learned Single Judge of this Court. Some of these special appeals have been filed by the assessees and remaining appeals have been filed by the Sales Tax Department. They involve common question of law and facts, therefore, they are being disposed of by this common judgment. 2. The controversy raised before the learned Single Judge by the assessee appellants was that they have been saddled with liability under the Rajasthan Tax on Entry of Motor Vehicles into Local Areas Act, 1988 (for short 'the Act'). The liability has been fastened for additional entry tax, penalty and interest. 3. According to the assesse appellants the incidence of tax was not applicable to them and since the incidence of tax was not attracted, the question of levy of penalty and interest did not arise. Alternatively, it was urged by the assessees that if the tax is held liable to be paid by the assessees then too they are not liable to pay penalty. They also contended that there is no substantive charging provision in the Act to levy interest on such payment of tax. 4. The learned Single Judge in his judgment has held that the Act as it stands fastens the liability on the head of the petitioners for the incidence of entry tax. The learned Single Judge also held that the assessees are liable to pay penalty. However, the learned Single Judge came to the conclusion that the interest charged on the levy on the petitioners cannot be charged. 5. Argument of the petitioners before the learned Single Judge regarding reduction of tax was repelled. It was held that incidence of tax is applicable to the petitioners with reduction. In view of the provisions of Section 4(2) of the Act, the petitioners were not held entitled to reduction. Rule 3 which was challenged before the learned Single Judge has been held to be valid. Since, provision of rule has not been followed the assessees, they cannot claim any reduction. 6. The assesses in their appeals have contended that the provisions of the Act say that the incidence of tax is attracted on the date of entry of the motor vehicle in the local area. Since the tax was not paid or recovered then the incidence of levy has got lost. 6. The assesses in their appeals have contended that the provisions of the Act say that the incidence of tax is attracted on the date of entry of the motor vehicle in the local area. Since the tax was not paid or recovered then the incidence of levy has got lost. The subsequent-proceedings initiated by the department for the recovery of levy are, thus, without jurisdiction. The emphasis of the assessee appellants counsel was that in view of Section 3(2)(b) the tax could be charged on the date of entry and not subsequent thereto. Since it was not charged on the day of entry, subsequently it cannot be charged. 7. Learned counsel for the appellants has placed reliance on a Full Bench decision of the Orissa High Court in the Puri Fish Merchants Association and another v. Puri Municipal Council and Ors 1988 70 STC 65 and have canvassed that in this case the fish and prawns were brought into the municipal area and were not charged at the point of entry. Subsequently the court declined to grant any indulgence to the Municipality for the recovery of octroi. This judgment was assailed by the Municipal Council in the Hon'ble Supreme Court and the Hon'ble Supreme Court vide its judgment in Puri Municipal Council and Ors v. Indian Tobacco Co. Ltd., 1996 (1) SCC 293 has upheld the decision. 8. Another argument raised by the learned Counsel for the appellant assessees is that the interest is not provided in the charging section. The charging section is Section 6(1) wherein only penalty has been provided. By Section 7 only recovery machinery has been provided and, thus, no interest can be charged. 9. Learned counsel for the assessee appellants has further urged that at the time when the motor vehicles were brought in the local area, the assessee had no knowledge that they will be required to pay entry tax and, therefore, it was a bona fide mistake and in this back-ground no penalty should be levied on them. 10. Learned counsel for the assessee appellants has further urged that the department had not given its logical meaning to Section 4(2) of the Act. The department was required to give that much of the rebate to the assessee to the extent it was paid by the purchaser in the State from where they purchased the motor vehicles. 10. Learned counsel for the assessee appellants has further urged that the department had not given its logical meaning to Section 4(2) of the Act. The department was required to give that much of the rebate to the assessee to the extent it was paid by the purchaser in the State from where they purchased the motor vehicles. The department has not done so in view of Rule 4 of the Rajasthan Tax on entry of Motor Vehicles into Local Areas Rules, 1992 (for short 'the Rules'). Under Rule 4 of the Rules, the assessee is required to furnish a declaration Form ET-1 which the assessee was required to take from the Commercial Taxes Officer concerned. The ET-1 form was required to be deposited at the check post. Such check posts have been absolished by the State of Rajasthan. This, after abolition of check posts in the State, there was no occasion where the assessee could deposit the ET-1 form. If the ET-1 form could not be deposited by the assessee as required under Rule 4 of the Rules then this condition of not following Rule 4 of the Rules cannot be put against him for taking benefits of Section 4(2) of the Act. 11. As regards interest, it has been submitted that the learned Single Judge has rightly denied the incidence of interest to the department because the interest is not chargeable as it not mentioned in the charging section. 12. Findings of learned Single Judge regarding interest are supported by assesses appellants as that are based on a pronouncement of the Hon'ble Supreme Court in the case of India Carbon Ltd. v. State of Assam 1997 106 STC 460 . 13. Learned counsel for the department asserted that the incidence of tax has been provided in Section 3 of the Act. Sub-section (1) of Section 3 of the Act provides that tax should be levied and collected on the purchase value of a motor vehicle, an entry of which is effected into a local area, for use or sale therein. Learned counsel for the department has submitted that it is the entry which is relevant to determine the incidence of tax not the date of entry. It cannot be said that tax having not been charged on the date of entry, no tax can be charged thereafter. Learned counsel for the department has submitted that it is the entry which is relevant to determine the incidence of tax not the date of entry. It cannot be said that tax having not been charged on the date of entry, no tax can be charged thereafter. The tax was not charged on the day when the vehicle was entered into the State of Rajasthan. This contingency has been taken care of under Clause (b) of Sub-section (2) of Section 3 of the Act. In this provision it has been provided that as and when the tax is not charged by the incharge of the entry check post, the same can be paid to the Commercial Taxes Officer of the area where the purchaser ordinarily resides or carries on any business or provides any service. Thus, the legislature has taken care of by providing that the tax can be charged even after the motor vehicle having entered into the State on a latter day. The argument of the assessee is, thus, misconceived. The assessees are, thus, arguing against the provisions of law. 14. Learned counsel for the department has further urged that the levy of penalty is provided under Section 6(1) of the Act and there is no ambiguity in the words used as far as the charging of penalty is concerned Under Section 6(2) a provision has been made that the Rajasthan Sales Tax Act, 1954 shall mutatis mutandis apply in relation to penalties, including interest, of the RST Act, 1954. (Act No. 29 of 1954), assessment, reassessment, collection and enforcement of payment of tax required to be collected under this Act. 15. Learned counsel for the assesses have wrongly relied upon the ratio laid down in the case of India Carbon Ltd. (supra). In India Carbon Ltd. the Hon'ble Supreme Court has held that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. In Section 6 of the Act there is a substantive provision for levy of tax also. In view of the provisions of the Rajasthan Sales Tax Act, 1954 and, therefore, if the interest has been charges then no fault can be found with the action of the department. 16. In Section 6 of the Act there is a substantive provision for levy of tax also. In view of the provisions of the Rajasthan Sales Tax Act, 1954 and, therefore, if the interest has been charges then no fault can be found with the action of the department. 16. Learned counsel for the department has further urged that when the Incidence of tax is clearly attracted, penalty and interest can be charged in terms of Section 6 of the Act. It, cannot be said that the department has acted in any manner which can be termed to be illegal. 17. Learned counsel for the department then submitted that the assessee cannot ask for the reduction in the tax liability. The reduction in tax liability can be claimed if the assessee has fulfilled the conditions to which action under Section 4(2) of the Act has been subjected to. The conditions are prescribed in the Rules. The assessee having not complied with the requirement of Rule 4(2) of the Rules, cannot ask for reduction. Under Rule 4(3) of the Rules it is clearly stated that any one who claims the reduced rates of tax under Section 4(2) of the Act shall furnish a declaration in Form ET-1 appended to the Rules together with the copy of the purchase bill of the said motor vehicle at the entry check post in the State. The argument of the assessee that check posts have been abolished, cannot dilute the rigour of this rule. It cannot be said that the check posts having been abolished they could not furnish the Form ET-1. Form ET-1 can be obtained by the person importing a motor vehicle into a local area in the State for personal use. If he applies on simple paper to the Commercial Taxes Officer. As and when an application is made to the Commercial Taxes Officer for Form ET-1, he makes an adjudication on the application. It is not for the asking that the Form ET-1 is made available. The Rules provide under Sub-rule (4) of Rule 4 that the application for Form ET-1 can be rejected if bonafide personal need of the applicant is not established. In this back-ground, the assessee cannot say that having not obtained Form ET-1 they should be granted benefit of Section 4(2) of the Act. The claim of the assessee is clearly misconceived. 18. In this back-ground, the assessee cannot say that having not obtained Form ET-1 they should be granted benefit of Section 4(2) of the Act. The claim of the assessee is clearly misconceived. 18. We have given our thoughtful consideration to the arguments raised by the parties and have perused the record. 19. These appeals arise out of the writ petitions which were filed against the notices to the assesses/assessment orders The department has an hierarchy of officers who deal with such proceedings. The notice was required to be resulted into assessment orders There is a regular appellate forum against such assessment orders The assessee have in hot haste come to this Court. Since the learned Single Judge of this Court has entertained the writ petitions and he has also heard them on law, therefore, we are pursuaded to decide the legal position. 20. The argument of the learned Counsel for the assesses that the incidence of tax is not attracted after the date of entry is to be Judged in the light of the observations made in the case law relied upon by the learned Counsel for the assessees. The Hon'ble Supreme Court in the case of Puri Municipal Council (supra) has held as under: A person merely in possession of such goods within a municipal area cannot be brought within the ambit of Bye-law 11(2) raising a presumption that he is an evader because he may not have caused the entry and hence be not an evader. These findings of the Hon'ble Supreme Court were in the back-ground wherein the Orissa High Court in its Full Bench decision has held that no enquiry has been made by the Municipal authorities on the question whether octroi had already been paid on the fish and prawns. Thus, on factual aspect the Orissa High Court and the Hon'ble Supreme Court have held that mere possession is not sufficient to hold that the tax is leviable. 21. What is required is that the vehicle on which the levy is to be imposed should be the vehicle imported. In the instant case, the motor vehicles in question which is the subject matter of levy were admittedly imported by the assessees. Therefore, the case law relied upon by the assessees is of no assistance to them and the incidence of tax as provided in Section 3 of the Act is attracted towards the assessees. 22. In the instant case, the motor vehicles in question which is the subject matter of levy were admittedly imported by the assessees. Therefore, the case law relied upon by the assessees is of no assistance to them and the incidence of tax as provided in Section 3 of the Act is attracted towards the assessees. 22. Coming to the question of implication of Section 4 of the Act which deals with the reduction of tax liability, it can be observed that Section 4(2) is attracted only when the conditions, as prescribed, have been followed by the persons claiming reduction. In the instant case, the conditions have been prescribed under the Rules of 1992. The conditions having been prescribed the assessee cannot say that he was not bound by those conditions. No refuse can be taken by the assessees that the checkposts are not there. The assessees could have submitted the Form ET-1 to the Commercial Taxes Officer. In any case, the assessees could have at least obtained it as provided under the Rules. Having not applied and obtained it cannot be said that the assessees were right in claiming that they have fulfilled the prescribed conditions. That being the position, the reduction claimed by the assessees in the writ petition under Section 4(2) of the Act is not applicable to them. Another aspect regarding reduction is that it could be made available if applied. Admittedly, the Commercial Taxes Officer was not moved for it. If the petitioners have not asked for reduction from the Commercial Taxes Officer, then raising a plea in writ petition is an attempt of over reaching. The argument of the learned Counsel for the assesses that the Rules have come into being in the year 1992, therefore, the Rules cannot be held mandatory is groundless. Suffice it to say that the language of the Rules and the Act does not make it directory and, therefore, we are not prepared to agree with the argument raised by the learned Counsel for the assessees. 23. Then, comes the question of penalty and interest. Both the parties have relied upon Khemka & Co. (Agencies) Put. Ltd. v. State of Maharashtra 1975 35 S.T.C. 571 . To appreciate the contention of the parties, we reproduce Section 6 of the Act: "6. 23. Then, comes the question of penalty and interest. Both the parties have relied upon Khemka & Co. (Agencies) Put. Ltd. v. State of Maharashtra 1975 35 S.T.C. 571 . To appreciate the contention of the parties, we reproduce Section 6 of the Act: "6. Offences and penalties: (1) Where any person liable to pay tax under this Act fails to comply with any of the provisions of the Act or rules made thereunder, then the assessing authority may, after giving such person a reasonable opportunity of being heard, by order in writing impose on him in addition to any tax payable, a sum by way of penalty not exceeding fifty per cent of the amount of tax. (2) Subject to the provisions of this Act, all the provisions relating to offences and penalties including interest, of the RST Act, 1954 (Act No. 29 of 1854) shall mutatis mutandis, apply in relation to the assessment, reassessment, collection and enforcement of payment of tax required to be collected under this Act or in relation to any process connected with such assessment, reassessment, collection or enforcement of payment as if the tax under this Act were a tax under the said Act." Penalty is clearly provided directly under Section 6(1) of the Act. Under Section 6(2) of the Act, interest has been provided by substitution of the Rajasthan Sales Tax Act. When one Statute makes a reference to another Act, then it cannot be said that provision of that Act cannot be read into it. When provision of Rajasthan Sales Tax Act are read, we find that the liability of interest is provided for. The ratio of Khemka & Co. (Agencies) Put. Ltd.'s case (supra) supports our finding. 24. The only relief granted to the assesses was to the extent of interest. We do not think that the judgment of the learned Single Judge can be sustained. Consequently, on the question of chargeability of interest from the Assessees, the judgment of the learned Single Judge is to be set aside. It is observed that the respondent-Department had a right to claim interest from the assessees. We have already found out that the assessees are liable to pay tax. No reduction can be claimed by them. They are liable to pay penalty and interest. These findings result into the total negation of relief to the assessees in the writ petition. 25. It is observed that the respondent-Department had a right to claim interest from the assessees. We have already found out that the assessees are liable to pay tax. No reduction can be claimed by them. They are liable to pay penalty and interest. These findings result into the total negation of relief to the assessees in the writ petition. 25. Since, the factual matrix has to be gone into by the Department, we are not going into the details of the extent of the liability. Such question may be decided by the Department Authorities when the assessees file their reply to the notice of assessment. 26. In the result, the appeals of the Department are allowed. The appeals of the Assessees are rejected. This results in dismissing the writ petition of the petitioners before the learned Single Judge.Special appeals dismissed. *******