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2015 DIGILAW 564 (ORI)

STATE OF ODISHA v. AURO PLASTICS, BHUBANESWAR

2015-09-25

D.P.CHOUDHURY, I.MAHANTY

body2015
JUDGMENT : Dr. Durga Prasanna Choudhury, J. - The petitioner assails the impugned order dtd. 12.11.2013 U/s. 24 of the Orissa Sales Tax Act (hereinafter called the Act) passed by Orissa Sales Tax Tribunal, Cuttack in S.A. No. 706 of 2008-09. 2. Succinctly, the case of the petitioner is that the opposite party being a registered dealer carries on business in manufacturing and sale of Linear Low Density Polythene Bags (in short L.L.D.P.E) during the year 2002 to 2003. It is alleged inter alia that the opposite party filed Sales Tax return U/s. 12(4) of the Act showing said material vide Entry No. 129 of list "C". The learned Assessing Authority by observing in its Assessment Order that such commodity being fallen to Entry No. 136 under list 'C' is exigible to sale tax at the rate of 8% under Entry No. 136 of the Act instead of Entry No. 129 of the Act. 3. It is further alleged by the petitioner that opposite party preferred 1st Appeal before the Assistant Commissioner of Sales Tax (Appeal) (in short A.C.S.T). The First Appellate Authority confirmed the Assessment Order ex-parte on 25.11.2008. Against the order of the First Appellate Authority the opposite party filed Second Appeal before the Orissa Sales Tax Tribunal. The learned Tribunal did not interpret the entry in question and wrongly decided by setting aside the order of the Assessing Authority. It is the case of the petitioner that the Second Appellate Authority has no authority to issue direction to the Assessing Authority to assess de novo the entry of the material after expert opinion obtained. 4. The further case of the petitioner that Entry No. 129 spells about packing material, i.e., to say gunny bags, H.D.P.E. bags, charade bags, containers and glass bottles. But entry No. 136 contains polythene, polyethylene, High density polyethylene, woven fabric, (PP) HDPE woven sacks, PVC bags and other plastic goods except those specified elsewhere in the notification. It is the case of the petitioner that since L.L.D.P.E. the manufactured commodity of the petitioner is a component of polythene, is covered by entry No. 136 but not entry No. 129 of sale tax list "C". It is the case of the petitioner that since L.L.D.P.E. the manufactured commodity of the petitioner is a component of polythene, is covered by entry No. 136 but not entry No. 129 of sale tax list "C". So petitioner alleges that the commodity of the opposite party is assessable to 8% of Sales Tax list but not to 4% of sales tax list for which the opposite party is liable to pay the sales tax @ 8% on sales. It is also the case of the petitioner that the Tribunal has mis-directed itself and came to the wrong conclusion for which the said impugned order should be set aside and the order of the Assessing Authority should be restored. 5. The case of the opposite party is that they are manufacturers of LLDPE bags. According to them H.D.P.E. and LLDPE bags are the same. They are used as packing materials. It is the further case of the opposite party that during the relevant year such commodity being under entry No. 129 of the Schedule of the Sales Tax Act is not assessable @ 8% on sales under Entry No. 136 but at the rate of 4% on sales. For this the Assessing Authority should have made assessment on the goods by making it taxable at the rate of 4% under Entry No. 129. Opposite party submits that order of the Tribunal being legal, proper and correct should be upheld. SUBMISSIONS:-- 6. Learned Senior Standing Counsel for the Revenue submitted that the interpretation made by the learned Tribunal is beyond the purview of the power conferred inasmuch as the notification has to be interpreted on its original words and no words used in the notification can be substituted. He relied on the decision reported in Commissioner of Central Excise, Hyderabad Vs. Sunder Steels Ltd.. It is further submitted that the commodity, namely, "LLDPE" being not specifically mentioned in taxable list, learned Tribunal ought not to have interfered with the adjudication made by the Authorities below. He further submitted that the word, "that is to say" in entry No. 129 should be interpreted to the goods given in list but not otherwise. According to him, entry No. 129 does not contain LLDPE bag although other kinds of bags are included. He further submitted that the word, "that is to say" in entry No. 129 should be interpreted to the goods given in list but not otherwise. According to him, entry No. 129 does not contain LLDPE bag although other kinds of bags are included. Learned Tribunal has erred in law by not accepting the entry No. 136 and misdirected itself by remanding the matter to the learned Assessing Authority for fresh opinion to be obtained with regard to correct identification of the commodity manufactured by the opposite party. Learned Tribunal has failed to appreciate that on bare perusal of entry No. 136 of the taxable list without any confusion leads to the conclusion that commodity in question, i.e., LLDPE falls within the scope of "plastic groups" as per judgment rendered in Soosree Plastic Industry Pvt. Ltd. Vrs. Union of India, O.J.C.2755 of 1988 disposed of by this court on 28.8.1992. He submitted to set aside the judgment of the learned Tribunal and to allow the revision by restoring order of the Assessing Authority. 7. None appeared for opposite party. However, it was submitted on behalf of the opposite party before the Learned Tribunal as appearing from the impugned order that neither the Assessing Authority nor the First Appellant Authority have got expertise in recognizing the commodity in question. Moreover, LLDPE bag is similar to H.D.P.E. bag under Entry No. 129 of the taxable list for which it is taxable at the rate of 4% of gross sales and under no circumstances LLDPE bag is coming under the taxable list under entry No. 136 of the Act. POINTS FOR DETERMINATION:-- 8. The main point for consideration is whether the commodity of the opposite party, i.e., Linear Low Density Polyethylene (L.L.D.P.E.) bags are taxable @ 4% under Entry No. 129 or taxable to 8% of sales vide Entry No. 136 under the Act. DISCUSSION:-- 9. We have heard both the counsels. Perused the documents filed before us. It is not disputed that petitioner is a dealer in manufacturing and sale of Linear Low Density Polyethylene (in short called L.L.D.P.E.) bags and sheets. After examining the books of account the Assessing Authority revealed that the opposite party has collected Orissa Sales Tax @ 4% on the sale price of L.L.D.P.E. bags produced out of raw materials, i.e., L.D.P.E. and L.L.D.P.E. granules. After examining the books of account the Assessing Authority revealed that the opposite party has collected Orissa Sales Tax @ 4% on the sale price of L.L.D.P.E. bags produced out of raw materials, i.e., L.D.P.E. and L.L.D.P.E. granules. Learned Assessing Authority observed that the words, "that is to say" used in Entry No. 129 confined to only gunny bags, H.D.P.E. bags, charade bags, tin containers and glass bottles but not the L.L.D.P.E. materials. At the same time he observed that the L.L.D.P.E. manufactured by the O.P. is assessable at the rate of 8% of sales under Entry No. 136. He has not assigned the reason in the Assessment Order why this material will be assessable @ 8% tax rate when the said material also does not find place in Entry No. 136. 10. The Assistant Commissioner of Sales Tax (Appeal) (A.C.S.T.) found that the O.P. did not appear and he was set ex-parte. His observation was equally on the line of the learned Assessing Authority. Without assigning any reason why the entry No. 136 will be accepted, learned First Appellate Authority gave decision that the commodity of the O.P. is coming under Entry No. 136. 11. Learned Tribunal framed the issue whether the packing materials as notified in Entry 129 the H.D.P.E. bags include L.L.D.P.E. bags; It noted that L.L.D.P.E. and H.D.P.E. may belong to same family for which he set aside the order of both the authorities below and remanded the case to the Assessing Authority for fresh assessment after collecting opinion of Expert with a direction to complete the assessment within 3 months from date of receipt of the order. Here also learned Tribunal without expressing any definite opinion sent back to the learned Assessing Officer for de novo assessment within 3 months. 12. At Chapter-III under rate of sales tax list 'C' Entry No. 129 says that 4% Sales Tax should be payable in the event of sale of packing materials, "that is to say" gunny bags, H.D.P.E. bags, charade bags, tin containers and glass bottles. Similarly Entry No. 136 therein speaks that Polythene, polypropylene (P.P.) High density polyethylene (H.D.P.E.) woven fabrics, woven sacks, PVC products and other plastic goods except those specified elsewhere in the notification. It thus does not include L.L.D.P.E. and it has to be interpreted properly so as to bring the same under either of the category. Similarly Entry No. 136 therein speaks that Polythene, polypropylene (P.P.) High density polyethylene (H.D.P.E.) woven fabrics, woven sacks, PVC products and other plastic goods except those specified elsewhere in the notification. It thus does not include L.L.D.P.E. and it has to be interpreted properly so as to bring the same under either of the category. At the same time the Assessing Authority and First Appellate Authority have not assigned any reason as to why L.L.D.P.E. bags and sheets will come under Entry No. 136 being assessable to 8% of sales tax on the sales by repelling the contention of the opposite party. The learned Tribunal simply noted the arguments of both the sides and found the authorities below without applying expert opinion have disposed of the manufactured commodity of the opposite party by making same assessable under Entry No. 136 of the Orissa Sales Tax Act. So, learned Tribunal remanded the matter to the Assessing Authority to make fresh assessment on the basis of the expert opinion obtained. Learned Tribunal should have applied judicial mind and given the decision instead of remanding the matter for de novo assessment. 13. It is the contention of learned Senior Standing Counsel for Revenue that the issue has already been decided by this Court in the decision reported in Soosree Plastic Industry (P) Ltd. Vrs. Union of India, OJC 2755 of 1988, disposed of on 28.8.1992 where this Court held that H.D.P.E. woven sacks/fabrics are plastic goods, the order of the Tribunal suffers from vice of illegality and non application of mind. It is also admitted by learned counsel for Revenue that the material under Entry No. 136 came to be substituted on 1.3.2002 and the present case relates to the assessment year 2002-03. Thus this decision being prior to 2002 cannot be applicable in the present case. At the same time it is submitted on behalf of the petitioner that the commodity plastic goods have been subjected to payment of sales tax under Entry No. 136 during the relevant period and the commodity of the opposite party being under the family of plastic goods should be assessable to such entry No. 136. On the other hand, learned counsel for opposite party submitted that the plastic goods as enumerated in Entry No. 136 relates to High Density Polyethylene (H.D.P.E.) woven fabric and woven sacks but not to the materials of opposite party. On the other hand, learned counsel for opposite party submitted that the plastic goods as enumerated in Entry No. 136 relates to High Density Polyethylene (H.D.P.E.) woven fabric and woven sacks but not to the materials of opposite party. From the Assessment Order it appears that the commodity in question is L.L.D.P.E. bags produced out of raw materials, i.e., H.D.P.E. and L.L.D.P.E. granules. There is nothing found from the Assessment Order that the L.L.D.P.E. bags are plastic goods and they are also the woven fabric or woven sacks as detailed in Entry No. 136. 14. Entry No. 129 also does not contain L.L.D.P.E. bags but said entry being substituted w.e.f. 1.3.2002 contains the packing materials of course confining to gunny bags, H.D.P.E. bags, charade bags, tin containers and glass bottles. In both the entries H.D.P.E. materials has been used but the entry No. 136 contains H.D.P.E. woven fabrics and H.D.P.E. woven sacks. But the entry No. 129 contains H.D.P.E. bags. So, definitely there is difference between bags on one hand and woven fabrics and woven sacks on the other. Even if the L.L.D.P.E. is not included in any of the entries but the category or container prepared out of such materials is the crucial question to decide the issue in question. As per Webster's Encyclopedic Unabridged Dictionary "bag" means container or receptacle of leather, cloth, paper, etc capable of being closed at the mouth. According to such dictionary "fabric" means the structure of a woven, knitted or felted material. Similarly, according to the above dictionary "sacks" means a large bag of strong, coarsely woven material, as for grain, coals, etc. From the above description it appears bags can neither be fabrics nor be sacks. So, High density polyethylene (H.D.P.E.) bag is different from H.D.P.E. woven fabrics and H.D.P.E. woven sacks. Moreover the books of accounts under Assessing Order revealed that the dealer had collected Orissa Sales Tax by selling the L.L.D.P.E. bags being produced from raw materials L.D.P.E. and L.L.D.P.E granules. The fact remains apparently that High density polyethylene (H.D.P.E.) bag is in the Entry No. 129 whereas H.D.P.E. woven fabrics and H.D.P.E. woven sacks are purportedly under Entry No. 136. On analogy, it is considered that Polyethylene is family in both entry Nos. 129 and 136 of Sales Tax List 'C' under Chapter-III of the Act. The fact remains apparently that High density polyethylene (H.D.P.E.) bag is in the Entry No. 129 whereas H.D.P.E. woven fabrics and H.D.P.E. woven sacks are purportedly under Entry No. 136. On analogy, it is considered that Polyethylene is family in both entry Nos. 129 and 136 of Sales Tax List 'C' under Chapter-III of the Act. Under Polyethylene family density is being considered as genus with High or Linear Low as subdivision under such genus. But bag or fabric or sacks are considered as species being different from each other items. So, Linear Low Density Polyethylene (L.L.D.P.E.) bag is absolutely different from H.D.P.E. fabrics or sacks being under species 'bag', resultantly under Entry No. 129. We are, therefore of considered view that L.L.D.P.E. is under entry No. 129 but not under Entry No. 136 of the taxable list 'C' under the Act. 15. Assuming that the L.L.D.P.E. is not covered under Entry No. 129 and 136 creating a doubt in the mind of the Assessing Authority but the fact remains that L.L.D.P.E. bag is nothing but Linear Low Density Polyethylene (L.L.D.P.E.) bags sold by the opposite party. It is settled by catena of decisions of Hon'ble Apex Court that in interpreting a fiscal statute the Court can not proceed to make good the deficiencies, if there be any, in the statute. It shall interpret the statute as it stands and in case of doubt it shall interpret it in a manner favourable to the tax payer. In considering a taxing Act, the Court is not justified in straining the language in order to hold a subject liable to tax. (See "17 S.T.C. 326 SC The State of Punjab v. Jullundur Vegetables Syndicate" and Alladi Venkateswarlu and Others Vs. Govt. of Andhra Pradesh and Another. It is also settled that even if two views are possible the view which is favourable to the assessee must be accepted, while construing the provisions of a taxing statute. (See Commissioner of Income Tax, Punjab Vs. Kulu Valley Transport Co. P. Ltd., and M/s Mysore Minerals Limited, M.G. Road, Bangalore Vs. The Commissioners of Income Tax, Karnataka, Bangalore, . 16. (See Commissioner of Income Tax, Punjab Vs. Kulu Valley Transport Co. P. Ltd., and M/s Mysore Minerals Limited, M.G. Road, Bangalore Vs. The Commissioners of Income Tax, Karnataka, Bangalore, . 16. Thus, It is well settled law that a commodity not being coming under any of the entry but creating a doubt in the mind about rate of tax, as to its entry under the Act, the benefit of such doubt will go to the dealer by assessing the same under the entry assessable of low rate of tax as he has submitted the return on such rate on which statute has given authority to Department Revenue to assess same under the Statute. The creature of fiscal statute can neither add a word nor delete a word from statute as held in decision reported vide Commissioner of Central Excise, Hyderabad Vs. Sunder Steels Ltd.. Be that as it may, we hold in either of the way that the L.L.D.P.E. bags sold by the opposite party is undoubtedly coming under Entry No. 129 of the Act. The conclusion of the learned Tribunal that the material should be decided by the Assessing Authority after obtaining expert opinion is untenable. Similarly, it is not necessary to remand the matter to the Assessing Authority for final opinion. At the same time the order of learned Assessing Authority and the First Appellate Authority being not reasoned order and sans to the provision of law, they are equally not countenanced. Thus the commodity manufactured by the opposite party is assessable at the rate of 4% sales tax instead of 8% rate of tax. This point is answered accordingly. CONCLUSION:-- 17. Thus, it is the contention of learned counsel for Revenue that L.L.D.P.E. bag being not under any entry should be left open to the Department to evaluate the same for the purpose of its assessibility. On the other hand the learned counsel for opposite party submitted that the sales tax being paid on such material, the Court is competent to decide the matter in question. It is reiterated that under no circumstances the learned Tribunal should have given the finding on the material available before it and they should have obtained the opinion of the expert in the second appeal as the appeal is continuous of proceeding and being an appellate authority they can seek expert opinion to reach any conclusion. It is reiterated that under no circumstances the learned Tribunal should have given the finding on the material available before it and they should have obtained the opinion of the expert in the second appeal as the appeal is continuous of proceeding and being an appellate authority they can seek expert opinion to reach any conclusion. Thus we are of the considered view that the impugned order suffers from inadequacy and having failed to exercise the jurisdiction vested on them are liable to be modified. We, therefore, of the view that the commodity of the opposite party being assessable at the rate of 4% of sales tax under Entry No. 129 of the Act, we, hereby, direct learned Assessing Authority to assess the tax liability after considering the commodity of the opposite party under entry No. 129, exigible at the rate of 4% of sales tax. Revision petition is disposed of accordingly. I. Mahanty, J. I agree.