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2008 DIGILAW 178 (JK)

S. S. Trading Co. v. State

2008-05-09

J.P.Singh

body2008
Petitioner’s writ petition seeks issuance of appropriate directions for quashing Commissioner, Sales Tax Jammu and Kashmir Government, Jammu’s order of February 26, 2004 whereby he had quashed Deputy Commissioner Sales Tax Appeals (Appellate Authority) Jammu’s order under Section 11 of the Jammu and Kashmir General Sales Tax Act, 1962 and Assessing Authority Sales Tax Circle "E" Jammu’s order dated February 15, 2002 under Section 7 (8) read with Section 7 (15) of the Act and restored Assessing Authority’s order of November 30, 1996 passed under Section 7 (11) of the Jammu and Kashmir General Sales Tax Act, 1962. 2. A demand of Rs. 11,974.41 on account of tax, and interest of Rs.7723.50 had been raised on the petitioner, a dealer in edible oils, on sales of edible oil made w.e.f. July 28, 1994 to August 5, 1994 on the ground that tax was leviable @ 8% in terms of SRO 124 of 1994. This order had been passed by the Assessing Authority on noticing that the petitioner had been under assessed @ 4% instead of 8% on the sales of edible oil made by him w.e.f July 28, 1994 to August 5, 1994. Initial order passed by the Assessing Authority on 19.01.1996 had thus been modified. The reassessment order was however set aside in appeal by the appellate authority vide its order of October 30, 1999 directing the Assessing Authority to impose tax on the sales in question considering the operation of SRO 120 of 1997 pertaining to the rate of tax on edible oil and after verifying the sale invoices for the period under question and if the tax had been collected by the dealer @ 4%, he would be charged tax on that rate and if he had charged tax @ 8%, the dealer would be liable to pay tax @ 8% on the value of the sales. The Assessing Authority accordingly after verifying the original sales invoices found that the petitioner had charged tax @ 4% so no tax was found payable by the dealer. The petitioner’s case was accordingly processed for refund of an amount of Rs. 19,697.91. 3. The Assessing Authority accordingly after verifying the original sales invoices found that the petitioner had charged tax @ 4% so no tax was found payable by the dealer. The petitioner’s case was accordingly processed for refund of an amount of Rs. 19,697.91. 3. Commissioner Sales Tax Jammu and Kashmir Government, Jammu after examining the records, had however issued notice to the petitioner to file objections as to why order dated October 30, 1999 passed by the appellate authority under Section 11 of the Jammu and Kashmir Sales Act, 1962 along with Order of 15.02.2002 of the Assessing Authority Sales Tax Circle "E" Jammu be not quashed and that of Assessing Authority passed on November 30, 1996, restored. 4. Learned Commissioner had thereafter quashed Appellate `Authority’s order of October 30, 1999, Assessing Authority’s order of February 15, 2002 and restored Assessing Authority’s order of November 30, 1996. 5. Petitioner’s learned counsel Mr. M.M. Gupta submits that tax leviable on sales of edible oil was governed by SRO 120 of March 31, 1997 and no exception, as carved out by the learned Commissioner in case of only those who had approached the High Court and obtained stay therefrom, was warranted regarding application of SRO 120 of 1997. 6. According to the learned counsel, Section 114 of the Constitution of Jammu and Kashmir does not permit levy and collection of tax except by authority of law and in that view of the Constitutional provision, Commissioner’s order holding petitioner’s liability to collect tax @ 8% and deposit that with the Sales Tax Authorities was unjustified in view of the conscious decision of the Government in issuing SRO 120 providing for levy of sales tax @ 4% for the period implementation of SRO 124 dated 27th of June, 1994 stood stayed by the High Court. 7. Learned Advocate General, appearing for the respondents, on the other hand, submitted that SRO 120 would apply only to those who had gone in litigation in the High Court and would have no application to the case of the petitioner. Alternatively, he submitted that even if the petitioner had to be held liable to collect and pay sales tax @ 4% rather than @ 8%, the tax deposited by the petitioner, though under protest, cannot be ordered to be refunded, because such a course would amount to petitioner’s unjust enrichment which may not be otherwise permissible. 8. Alternatively, he submitted that even if the petitioner had to be held liable to collect and pay sales tax @ 4% rather than @ 8%, the tax deposited by the petitioner, though under protest, cannot be ordered to be refunded, because such a course would amount to petitioner’s unjust enrichment which may not be otherwise permissible. 8. I have considered the submissions of learned counsel for the parties. 9. In order to decide the issue which has arisen in this writ petition regard needs to be had to SRO 120 notified on March 31, 1997, which reads thus:- "SRO 120: In exercise of the powers conferred by sub-section (1) of Section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (Act No: XX of 1962), the Government hereby direct that the rate of sales tax on almonds and kernel thereof, spices and edible oil shall be charged at the rate fixed earlier to issuance of SRO 124 dated 27.6.1994 for the period the implementation of SRO 124 dated 27.6.1994 was stayed by the Hon’ble High Court. By order of the Government of Jammu & Kashmir. Sd/- Director Finance." Perusal of SRO 120 indicates that it had been issued by the Government in terms of the powers vested in it under Section 4 of the Jammu and Kashmir General Sales Tax Act, 1962, which permits levy and collection of tax at such rate as is notified by the State Government. There is nothing in this SRO on the basis whereof it may be said that it had limited application to only those dealers who had approached the High Court. The plain and unambiguous language employed in the SRO leaves no manner of doubt that it had general application to all the dealers and the tax payable for edible oil during the period the stay order issued by the High Court remained operational was 4% and not 8% as urged by learned Advocate General. 10. Judgment relied upon by learned Commissioner in his order of February 26, 2004 is not applicable to petitioner’s case because in the case relied upon by the learned Commissioner, there was no stay order issued by any Court, indicating that the dealers were not required to collect and pay tax @ 8%. 10. Judgment relied upon by learned Commissioner in his order of February 26, 2004 is not applicable to petitioner’s case because in the case relied upon by the learned Commissioner, there was no stay order issued by any Court, indicating that the dealers were not required to collect and pay tax @ 8%. I further do not find any justification in Commissioner’s raising the presumption that the Government had issued SRO 120 only to regularize the payments made by those dealers who had gone to the High Court and in whose favour there was Court direction that they may collect tax @ 4% only. No such intention, as has been attributed by the Commissioner to the Government in issuing the SRO, appears from the phraseology employed in the SRO which needs to be given its plain meaning. 11. Plea of unjust enrichment raised by learned Advocate General, too is found to be unsustainable because of the categoric finding recorded by the Assessing Authority after verifying the sales invoices of the petitioner, that it had collected tax only @ 4%. 12. For all what has been said above, I am of the view that Commissioner’s Order of February 26, 2004 is illegal and unwarranted and the petitioner was entitled to the refund of tax which had been deposited by him under protest, when his sales had been erroneously assessed @ 8% for imposition of tax, under rules. 13. Allowing this writ petition, Commissioner’s Order of February 26, 2004 quashing Appellate Authority’s order of October 30, 1999 and Assessing Authority’s order of February 15, 2002 and restoring Assessing Authority’s order of November 30, 1996, is accordingly quashed with a direction to the respondents to refund the tax deposited by the petitioner under protest, in accordance with Rules pertaining to the refund of tax.