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2016 DIGILAW 677 (JK)

Osaka Alloys & Sales Pvt. Ltd. v. State of J&K

2016-12-29

N.PAUL VASANTHAKUMAR, TASHI RABSTAN

body2016
JUDGMENT : TASHI RABSTAN, J. 1. Through the medium of this petition, the petitioner is seeking quashment of Communication dated 04.10.2014 issued on behalf of Respondent No. 2, whereby the demand raised by the petitioner for refund of an amount of Rs. 57,75,387/- has been denied in totality. The petitioner is also seeking quashment of Order dated 17.05.2013 passed by Manager, Finance & Accounts (F&A), Taxation, Respondent No. 3 herein, by virtue of which acceptance of Form-C has been kept in abeyance till further orders. The petitioner is further seeking a writ in the nature of mandamus direction the respondents to accept Form-C for the purpose of allowing concessional rate of tax, with a further direction to Respondents 2 & 3 to refund an amount of Rs. 83,19,304/- along with interest, which, as per petitioner, has been wrongly and illegally collected from the petitioner-Unit under the garb of security amount at the time of sale of the materials as well as collecting higher amount of tax vide letter dated 16.02.2013 under State Government (J&K) Policy vide No. 165-IND of 2005, dated 30.06.2005. The facts-in-brief, as gathered from the writ record, are that the petitioner-Company is a Small Scale Industry registered with Sales Tax Department and District Industries Centre, Samba, and is a dealer, registered under the provisions of J&K Value Added Tax Act, 2005. The petitioner-Company has been engaged in the business of auction of old batteries, for which it is registered as a re-cycler/re-processor with Pollution Department of J&K. Metal Scrap Trading Corporation Ltd., Respondents 2 to 4 herein, is a Government of India Enterprises and authorized Government Auctioneer, who sells the waste of used batteries/lead acid batteries/lead acid cells and lead scrap from various defence locations in the States of Punjab, Uttar Pradesh and Delhi under its VAT/CST registered numbers of respective states and maintain a record of such auctions, to be made available to the State Board for inspection. 2. In response to e-tender auction from 2011 to June 2015 issued by the Metal Scrap Trading Corporation Limited (MSTC) on behalf of Central Government for sale of old batteries (hazardous waste) from various defence locations in the States of Punjab, UP and Delhi, the petitioner-Company was declared to be the highest bidder and accordingly, it submitted the earnest money deposit. 3. 3. The bone of contention of present dispute is that although the transactions-in-question were inter-State Sales from Punjab, UP and Delhi to the State of J&K and not intra-State sales within the States of Punjab, UP and Delhi, therefore tax was required to be charged as per the provisions of Central Sales Tax Act, 1956 and not as per the provisions of Punjab VAT Act, 2005, UP VAT Act and Delhi VAT Act, however, the delivery orders revealed that local sales tax (VAT) amounting to Rs. 83,19,304/- was also erroneously collected/charged/levied by the MSTC taking the same as intrastate sales, in addition to the Central Sales Tax. 4. Further, case of petitioner-Company is that Goods Receiptability, receipts of Toll Post and form VAT 65 in respect of purchases outside State clearly show that the movement of goods occasioned from Punjab to J&K State were inter-State sales, not eligible to local sales tax (VAT). It is the specific case of petitioner-Company that Respondents 2 to 4 had sold/supplied the material with the understanding to refund the VAT amount so collected after assessment, as against acceptance of Form-C. Accordingly, petitioner-Company submitted Form-C for the period October-December 2011 to April-June 2015 and other relevant documents to show that the goods so purchased were actually inter-State sales and not intra-State sales and even had given an undertaking that in case of non-acceptance of concessional rate of tax by taxation authorities, the interest and penalty charged thereon would also be borne by it, however, Respondents 2 & 3 vide Communication dated 17.05.2013, impugned herein, have kept the acceptance of Form-C in abeyance till further order. It is averred that the petitioner-Company thereafter sent legal notices on 25.09.2013 and 30.07.2014, but of no avail. Hence, the present writ petition. 5. The contention of learned counsel for petitioner-Company is that for the years 2012-13, 2013-14 and 2014-15 the petitioner-Company had also purchased old battery scrap from Bharat Sanchar Nigam Limited, Pathankot, Budaun (U.P.) and Jhunjhunu (Rajasthan) pursuant to auction held by Respondents 2 & 3 herein, which were transported to the factory premises of petitioner-Company in the State of J&K and in the said transaction the delivery orders reveal that no VAT was levied/charged, only CST @ 2% was charged from the petitioner-Company. 6. 6. In the objections filed on behalf of Respondents 2 to 5, it is averred that since MSTC has been registered with the concerned taxation departments of respective states, it collected sales tax under relevant Punjab VAT Act on the sales made through it from the petitioner being intra-state sales/local sales, as the delivery of goods sold was made only in Punjab, and on realization the same was deposited with the concerned Sales Tax Authorities. Further, it is ordered that since MSTC is the auctioneer and agent of the sellers, it is unable to issue/endorse transport documents for inter-State sales; and in absence of such documents, the respective VAT authorities do not accept C-Forms. It is further averred that the present dispute is covered under arbitration in terms of the arbitration clause of General Terms & Conditions of e-Auction. 7. In the objections filed on behalf Respondent No. 1, it is averred that it neither the necessary or proper party nor any relief has been claimed against it, rather the controversy projected in the writ petition relates to Respondents 2 to 5. 8. We have heard learned counsel appearing for the parties and also gone through the appeal as well as the writ record. 9. Although the petitioner-Company has claimed refund of an amount of Rs. 83,19,304/-, which it claims to have charged erroneously by the MSTC on account of provisions of Punjab VAT Act, 2005; U.P. VAT Act and Delhi VAT Act taking the transactions-in-question to be intra-State sales, whereas, as per the claim of petitioner-Company, only CST as per the provisions of Central Sales Tax Act was liable to be charged taking the transactions-in-question to be inter-State sales. Although, Respondent 2 to 5 in their objections have tried to justify levy of VAT being the local sales tax taking the transactions-in-question to be intra-State sales within the meaning of Punjab VAT Act, 2005; U.P. VAT Act and Delhi VAT Act, they, however, pleaded that the writ petition is not maintainable in view of arbitration clause in the General Terms & Conditions of e-Auction. 10. 10. We have also gone through the said arbitration clause, which is at paragraph-12 of the General Terms & Conditions of e-Auction, and a plain reading whereof clearly reveals that all questions arising out of any contract resulting in acceptance of any e-auction terms not expressly provided for in the preceding clauses would be referred to the sole arbitrator who will be an officer of Ministry of Law to be nominated by the Secretary, Ministry of Law and appointed by the President. Thus, this very clause of General Terms & Conditions of e-Auction provided for arbitration by a sole arbitrator in case any dispute is arisen between the parties. 11. Admittedly, in the present case the petitioner without availing such a remedy has directly approached this Court for redressal of its grievance. Therefore, it is to be seen whether the present writ petition is maintainable in view of the aforesaid clause of arbitration. 12. What is held by the Apex Court in a case, reported as, (2007) 14 SCC 680 (Empire Jute Company Limited v. Jute Corporation of India Limited), is reproduced hereunder: "18. The power of judicial review vested in the superior courts undoubtedly has wide amplitude but the same should not be exercised when there exists an arbitration clause. The Division Bench of the High Court took recourse to the arbitration agreement in regard to one part of the dispute but proceeded to determine the other part itself. It could have refused to exercise its jurisdiction leaving the parties to avail their own remedies under the agreement but if it was of the opinion that the dispute between the parties being covered by the arbitration clause should be referred to arbitration, it should not have proceeded to determine a part of the dispute itself." 13. Further, Hon'ble the Supreme Court in the decision reported in 2008 AIR SCW 6820 (M/s. Unissi (India) Pvt. Ltd. v. P.G. Institute of Medical Education & Research) considered as to whether execution of formal agreement is mandatory for referring the matter for arbitration. In the said judgment it is held that the term "agreement in writing" shall include an arbitral clause in a contract of an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. In the said judgment it is held that the term "agreement in writing" shall include an arbitral clause in a contract of an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. In the said case also the tender of the applicant was accepted and the tender agreement itself contained an arbitration clause and by reason of the explanation of the tender it must be held that there was an arbitration clause between the parties. The contra decision rendered by the High Court was set aside and direction was issued to the Chief Justice to appoint an arbitrator in accordance with law to resolve the dispute between the parties. 14. Even one of the members of this Bench while sitting single has held on the same lines in a case, titled as Satya Paul Sharma v. Bharat Sanchar Nigam Limited, decided on 13.03.2015. 15. Thus, in view of the above case law, the judgments relied upon by the learned counsel for petitioner are not applicable to the facts of present case. Therefore, in view of arbitration clause in the General Terms & Conditions of e-Auction as also in view of above law position, we, without touching the merits of the case, deem it proper to dispose of the writ petition with liberty to the petitioner herein to first seek remedy as available under the arbitration clause. Ordered accordingly. Connected miscellaneous petition(s), if any, accordingly stands disposed of.