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2012 DIGILAW 216 (SC)

ZUNAID ENTERPRISES v. STATE OF MADHYA PRADESH

2012-02-23

ANIL R.DAVE, H.L.DATTU

body2012
JUDGMENT : 1. Leave granted. Since we intend to direct the appellant assessees in these matters to subject themselves for appropriate adjudication before the assessing authority, we have taken up these appeals for early hearing. 2. The appellants are dealers, registered both under the provisions of the I Madhya Pradesh Commercial Taxes Act/VAT Act and the Central Sales Tax Act, 1956 (for short "the Act"). They have also been registered as the exporters of tendu leaves (tendu pattas) and bamboos. Some of the asses sees are dealers in tendu leaves and some of them are dealers in bamboo. 3. The Madhya Pradesh State Minor Forest Product (Trading and Development) Cooperative Federation Ltd. ("the Federation", for short) had initiated the tender process for sale of tendu leaves and the bamboos, which are minor forest produce. One of the conditions that was stipulated in the tender documents was that the highest bidder whose bid is accepted, has to remit the taxes under the VAT Act to the State Government. 4. The appellants herein are successful bidders. Immediately after their tender documents were accepted, the appellants had approached the High Court by filing a petition under Article 226 of the Constitution, inter alia, seeking a writ in the nature of mandamus to the respondent Revenue to treat the sales, made by the Federation in favour of the appellants, as purely inter-State sale and, therefore, not exigible for the levy of tax under the VAT Act. They had also sought for incidental and ancillary prayers in the writ petition. 5. The High Court, after hearing the learned counsel for the parties to the lis, merely relying upon certain clauses in the tender documents, has proceeded to hold that the purchase of tendu leaves and bamboos by the appellants is pursuant to the tender process initiated by the Federation and in view of a particular clause in the tender documents, the assessees are liable for payment of tax under the VAT Act. The reasoning and the conclusions reached by the High Court is flawed by the appellants in these civil appeals. 6. We have heard Shri Ravindra Shrivastava, learned Senior Counsel appearing for the appellants and other learned counsel appearing for the other appellants in these appeals and also Shri Vivek Tankha, learned Additional Solicitor General for the State of Madhya Pradesh and other learned counsel appearing for the authorities under the VAT Act. 7. 6. We have heard Shri Ravindra Shrivastava, learned Senior Counsel appearing for the appellants and other learned counsel appearing for the other appellants in these appeals and also Shri Vivek Tankha, learned Additional Solicitor General for the State of Madhya Pradesh and other learned counsel appearing for the authorities under the VAT Act. 7. At the outset, we intend to note that in these types of cases, the High Court ought not to have entertained the writ petitions filed under Article 226 of the Constitution. We say so for the reason, that, whether a sale originating in a State is an inter-State sale or not is essentially a question of fact to be determined by the authorities under the Act, since it involves the application of the provisions of Sections 3, 5, 6 and 9 (1) of the Act to the facts established and hence, it will be a mixed question of law and fact. The facts are required to be brought to the notice of the assessing authority by the appellants and it is for the assessing authority to come to a conclusion, based on those facts whether a particular transaction is intra-State sales which is exigible to the taxes under the VAT Act or inter-State sales, as envisaged under Section 3 of the Act read with Section 6 of the charging provisions therein. It is after 'such adjudication, the matter can travel from one stage to the other as provided under the Act. 8. In the instant case, as we have already stated, the relevant facts were not before the Court nor the finding of the assessing authority to decide whether the transactions in question are intra-State sales or inter-State which are exigible to taxes under the VAT Act or taxes under the provisions of the Central Sales Tax Act. 9. Merely based on certain clauses in the agreement, in our opinion, the High Court ought not to have decided and declared that the transactions in question would be purely and simply intra-State sales and not inter-State sales. In our view, whenever a question arises as to whether a sale is inter-State sale or not, it has to be answered with reference to Section 3 and Section 3 alone. See the Constitution Bench judgment in TISCO Ltd. v. S.R. Sarkar. 10. In our view, whenever a question arises as to whether a sale is inter-State sale or not, it has to be answered with reference to Section 3 and Section 3 alone. See the Constitution Bench judgment in TISCO Ltd. v. S.R. Sarkar. 10. Similarly, when the question arises, in which State is the tax leviable, one must look to and apply the test in Section 9(1); no other provision is relevant on this question. (See BHEL v. Union of India.) In that view of the matter, we cannot sustain the orders passed by the High Court. 11. In view of the above, we set aside the orders passed by the High Court and direct the appellant assessees in these cases to file their monthly/annual returns before the assessing authority within a month's time from today, if not already filed. We also direct the assessing authority to adjudicate upon the returns so filed in accordance with law after affording opportunity of hearing to the appellant assessees within two months' time from the date of filing of the returns by the assessees, uninfluenced by the observations made by the High Court. Till such proceedings are completed, the assessing authority(ies) are restrained from issuing further demand notices to the appellant assessees for recovery of taxes either under the VAT Act or under the Central Sales Tax Act. We also make it clear that the amounts deposited by the appellant assessees, during the pendency of the writ petitions before the High Court or during the pendency of the special leave petitions before this Court, shall not be demanded to be refunded to them. 12. The appeals are disposed of accordingly, with no order as to costs. Ordered accordingly. ORDER DELIVERED ON 23-2-2012 SLPs (C) Nos. 13206-30 of 2011 13. Respondents 10-12 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 13721-39 of 2011 14. Respondents 10-12 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 13837-39 of 2011 15. Respondent 5 is deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 13848-68 of 2011 16. Respondents 13 and 17 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 23669-98 of 2011 17. Respondents 5-13 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 13848-68 of 2011 16. Respondents 13 and 17 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 23669-98 of 2011 17. Respondents 5-13 are deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 23631-53 of 2011 18. Respondent 4 is deleted from the array of parties, at the risk of the petitioner(s). SLPs (C) Nos. 28156-65 of 2011 19. Respondent 3 takes notice through the learned counsel. Respondents 11, 12, 13, 16, 17, 19, 24, 27 to 30 and 36 are deleted from the array of parties, at the risk of the petitioner(s). SLP (C) No. 27388 of 2011 20. The learned counsel appears and accepts notice on behalf of Respondents 1 to 3. SLPs (C) Nos. 29189-97 of 2011 21. The learned counsel appears and accepts notice on behalf of Respondent 3. Respondents 4 and 5 are deleted from the array of parties, at the risk of the petitioner(s). 22. Delay condoned in SLPs (C) Nos. 6980-83 of 2012. Leave granted in all the special leave petitions. 23. The Chhattisgarh State Minor Forest Product (Trading and Development) Cooperative Federation Ltd. ("the Federation", for short) had initiated the tender process for sale of tendu leaves, which are minor forest produce. One of the conditions that was stipulated in the tender documents was that the highest bidder whose bid is accepted, has to remit the taxes under the VAT Act to the State Government. 24. The appellants herein are successful bidders. When they were demanded to pay the taxes under the VAT Act, they thought it fit to approach the High Court by filing a petition/appeal under Article 226 of the Constitution, inter alia, seeking a writ in the nature 'of mandamus to the respondent Revenue to treat the sales made by the Federation in favour of the appellants as purely inter-State sale and, therefore, not exigible for the levy of tax under the VAT Act. They had also sought for incidental and ancillary prayers in the writ petition. 25. They had also sought for incidental and ancillary prayers in the writ petition. 25. The High Court, after hearing the learned counsel for the parties to the lis, merely relying upon certain clauses in the tender documents, has proceeded to hold that the purchase of tendu leaves by the appellants is pursuant to the tender process initiated by the Federation and in view of a particular clause in the tender documents, the assessees are liable to be taxed under the VAT Act. The reasoning and the conclusions reached by the High Court is flawed by the appellants in these civil appeals. 26. We have heard Shri Ravindra Shrivastava, learned Senior Counsel appearing for the appellants and other learned counsel appearing for the other appellants in these appeals and the learned counsel for the State of Chhattisgarh. 27. At the outset, we intend to remark that in these type of cases, the High Court ought not to have entertained the writ petition(s)/writ appea1(s) filed under Articles 226/227 of the Constitution. We say so for the reason, that, particularly a transaction is under the Central Sales Act, intra-State sales or inter-State sales are mixed questions of fact and law. Those facts require to be brought to the notice of the assessing authority by the appellants and it is for the assessing authority to come to a conclusion, based on those facts whether a particular transaction is intra-State sales which is exigible to the, taxes under the VAT Act or inter-State sales, as envisaged under Section 3 of the Central Sales Tax Act read with Section 6 of the charging provisions therein. It is after such adjudication, the matter can travel from one stage to the other as provided under the Act. 28. In the instant case, as we have already stated, the relevant factors were not before the Court nor the finding of the assessing authority to decide I whether the transactions in question are intra-State sales or inter-State which are exigible to taxes under the VAT Act or taxes under the provisions of the Central Sales Tax Act. 29. Merely based on certain clauses in the agreement, in our opinion, the High Court ought not to have decided that the transactions in question would I be purely and simply inter-State sales and not intra-State sales, as contended by the appellants, who are dealers in tendu leaves. 29. Merely based on certain clauses in the agreement, in our opinion, the High Court ought not to have decided that the transactions in question would I be purely and simply inter-State sales and not intra-State sales, as contended by the appellants, who are dealers in tendu leaves. In that view of the matter, we cannot sustain the orders passed by the High Court. 30. In view of the above, we set aside the orders passed by the High Court and now we direct the appellant assessees in these cases to file their monthly/annual returns before the assessing authority within a month's time c from today. We also direct the assessing authority to adjudicate upon the returns so filed in accordance with law after affording opportunity of hearing to the appellant assessees. Till such proceedings are completed, the assessing authority(ies) are restrained from issuing further demand notices to the appellant assessees. We also make it clear that the amounts deposited by the appellant assessees, during the pendency of other writ petitions/writ appeals I before the High Court or during the pendency of the special leave petitions before this Court, shall not be demanded to be refunded to them. The assessing authority(s) shall decide the issue and shall complete the adjudication process within two months' time from the date of filing of the returns by the assessees, uninfluenced by the observations made by the High Court. 31. In such of those cases where the assessees have already filed their monthly/annual returns, the assessing authority is directed to complete the assessments, if not already done. Liberty is also reserved to the appellant assessees to file the appeal(s) before the appellate authority within the time prescribed under the statute. 32. The appeals are disposed of accordingly, with no order as to costs. Ordered accordingly.