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2020 DIGILAW 535 (GAU)

Kishlay Foods Pvt. Ltd. v. State of Assam

2020-06-01

SOUMITRA SAIKIA

body2020
ORDER : Soumitra Saikia, J. 1. The Court proceedings have been conducted by means of creating a Virtual Court with the help of technology, so as to maintain distance between the staff, Advocates and the Presiding Judge. Heard Ms. N. Hawelia, learned counsel for the petitioner. Also heard Mr. B. Choudhury, learned standing counsel for the Finance and Taxation Department. 2. The petitioner is engaged in manufacturing and sale of biscuits and rusks in various packets and variety under the brand name of Kishlay, Kamooz, Bisk Baker. 3. The writ petitioner is aggrieved by the levy of entry tax on the packaging materials comprising of BOPP, Laminated Rolls and HDPE bags which are used for packing of finished goods manufactured by the petitioner. 4. The packing materials purchased by the petitioner and brought into the State of Assam for the purpose of using the same as packing materials for sale of its finished products was subjected to levy of entry tax under the erstwhile Assam Entry Tax Act, 2001 by the respondent authorities for the financial years 2004-05, 2005-06, 2006-07, 2007-08, and under the Assam Entry Tax Act, 2003 for the financial years 2008-09, 2009-2010, 2010-2011, 2011-12, 2012-13, 2013-14 and 2014-15. 5. The petitioner paid entry tax to the tune of Rs. 53,876/-, Rs. 4,73,328/-, Rs. 7,24,769/-, Rs. 8,88,741/-, Rs. 7,06,802/-, Rs. 7,73,411/-, Rs. 3,42,348/-, Rs. 1,34,185/-, Rs. 2,01,541/- and Rs. 2,99,877/- respectively for the respective financial years. According to the petitioner they have paid a total tax of Rs. 45,98,858/- from 2004-05 to 2014-15. 6. The petitioner relies on the judgment of this Court rendered in case of Tata Tea and Anr. v. State of Assam and Ors. (WP (C) 3939/2009). A Division Bench of this Court vide order dated 04.03.2015 held as under: "The petitioner imports packing material, namely, lamination pouch, a specified good under Entry 45 of the Schedule. The tea is put in the packing material, lamination pouch, and sold in the Assam and the same packets are also sold outside the state in the course of interstate sale. The provision of section 10 (2) of the VAT reads thus. "10 Levy of tax on sales, 1. **************** *************** ***************** 2. The tea is put in the packing material, lamination pouch, and sold in the Assam and the same packets are also sold outside the state in the course of interstate sale. The provision of section 10 (2) of the VAT reads thus. "10 Levy of tax on sales, 1. **************** *************** ***************** 2. Notwithstanding anything contained in this section, where goods packed in any container or packing materials are sold, the containers or materials in which the goods are packed shall be deemed to have been sold along with goods and the tax shall be leviable on such sale of the container and packing materials at the rate of tax, if any, as applicable to the sales of the goods themselves PROVIDED that where the goods contained in the container or packing materials are tax free, the sale of such container or packing materials shall also be exempt from tax. Whenever a product is sold with a packing material VAT is collected on the sale price, which inferably includes the cost of packing material and the contents and the product is sold in a packing condition VAT is collected on the sale price; therefore, when the VAT is paid on such product, which includes the packing material and the packing material being the one of the specified goods as Entry 45, question of levy of entry tax on the packing material does not appear to be correct under the Entry Tax Act. Accordingly the petition is allowed. The impugned order are passed are quashed." 7. In terms of the judgment referred above the petitioner contends that the packing materials which are covered under Entry 15, Entry 45 and Entry 68 (pursuant to notification dated 02.09.2014) of the Assam Entry Tax Act, 2008 are exempted from levy of Entry Tax in terms of Section 10(2) of the Assam VAT Act, 2003. 8. According to the petitioner, the levy of entry tax on the packing materials is contrary to the judgment rendered in the case of Tata Tea and Anr. v. State of Assam and Ors. (supra). 9. The petitioner has therefore claimed refund of the amount paid as Entry Tax on the strength of the judgement rendered by this Court in the Tata Tea and Anr. v. State of Assam and Ors. (supra). 10. The respondent Finance and Taxation Department had filed their affidavit-in-opposition on 05.05.2018. v. State of Assam and Ors. (supra). 9. The petitioner has therefore claimed refund of the amount paid as Entry Tax on the strength of the judgement rendered by this Court in the Tata Tea and Anr. v. State of Assam and Ors. (supra). 10. The respondent Finance and Taxation Department had filed their affidavit-in-opposition on 05.05.2018. In para 4, respondent admits that the present case is covered by the judgment rendered in Tata Tea and Anr. v. State of Assam and Ors. (supra). 11. However, in so far the claim for refund made by the petitioner is concerned, their stand is that the refund of entry tax paid cannot be permitted as it will amount to undue enrichment to the petitioner on account of reasons mentioned in their affidavit. The relevant paragraph is extracted herein below: "5. That regarding the prayer for refund of the entry tax paid for purchase of packing materials, the deponent begs to state that refund of entry tax already paid shall be undue enrichment for the petitioner on account of the following reason:- i. That the petitioner paid entry tax on packing materials and the packing materials are already used in the manufacturing process. ii. That the petitioner paid entry tax and such cost already accounted for and taken into account/consideration while estimation cost of finished goods and fixed price of the finished goods accordingly. iii. That such prices are collected from consumers, hence burden has already been shifted to consumer of the finished product. Thus, in view of the above stated facts and circumstances, the claim of the petitioner for refund of the entry tax paid is not tenable and sustainable and is liable to be rejected." 12. However, it is seen that the Department seems to have applied the Doctrine of unjust Enrichment without due reference to the materials required to be first submitted by the petitioner, that the burden of the Entry Tax paid by the petitioner has not been ultimately passed upon to the consumers. 13. On perusal of the pleadings filed by the parties along with the judgement of this Court rendered in the case of Tata Tea and Anr. v. State of Assam and Ors. (supra), it is evident that this Court by judgment of Tata Tea and Anr. v. State of Assam and Ors. 13. On perusal of the pleadings filed by the parties along with the judgement of this Court rendered in the case of Tata Tea and Anr. v. State of Assam and Ors. (supra), it is evident that this Court by judgment of Tata Tea and Anr. v. State of Assam and Ors. (supra) has rendered a categorical finding that whenever a product is sold with a packing material VAT is collected on the sale price, which inferably includes the cost of packing material and the contents and the product is sold in a packing condition, VAT is collected on the sale price. Therefore, when the VAT is paid on such product, which includes the packing material and the packing material being the one of the specified goods as Entry 45, question of levy of entry tax on the packing material does not appear to be correct under the Entry Tax Act. 14. On a pointed query, the State counsel submitted that no appeal/review has been filed against the judgment rendered in the case of Tata Tea and Anr. v. State of Assam and Ors. (supra), and as such the same has attained finality. 15. However, upon careful perusal of the said judgment, it is seen that the judgment rendered above does not deal with the question of refund. The petitioner has also not pleaded a case that on the materials presented in support its claim for refund, it can be demonstrated that the burden of Entry Tax paid by the petitioner has not shifted to the consumers and therefore the Doctrine of Unjust Enrichment is not applicable on facts. The petitioner has not even included in its pleadings the claims of refund submitted before the respondent authorities in respect of relevant Financial Years. 16. Accordingly, after hearing the counsel for the parties and upon the perusal of the materials on records, I am of the considered view that the petition can be disposed of with the direction to the respondents more particularly, respondent No. 2 - Commissioner of Taxes, to consider the claims of the petitioner regarding the refund sought for of the entry taxes paid by the petitioner for the period from 2004-05 to 2014-15, in the light of the judgement by this Court in the case of Tata Tea and Anr. v. State of Assam and Ors. (supra). 17. v. State of Assam and Ors. (supra). 17. Although, in the affidavit filed by the State the question of unjust enrichment has been raised for not considering the claims of refund, we direct the authorities concerned to consider the applicability of the doctrine on the basis of the materials that may be presented by the petitioner to support their contention that the burden of the Entry Tax levied upon the petitioner, had not been passed on to the consumers of the goods manufactured by the petitioner. The Respondent authorities will thereafter, pass the appropriate orders in terms of the provisions of law. 18. The petitioner will be at liberty to furnish the relevant details of transaction goods/accounts to substantiate its claims for refund before the authorities concerned and the authorities upon due verification will consider whether the claims made by the petitioner should be considered and allowed as per the provisions of law. 19. The entire exercise shall be completed within a period of three (3) months from the date of receipt of the certified copy of this order. 20. Both the counsels are at liberty to furnish a certified copy of this order before authorities to carry-out the directions as per the above. 21. Writ petition is according disposed of. 22. No order as to cost. 23. WP(C) 647/2015 which was directed to be listed along with this matter vide order dated 23.03.2018 passed in WP(C) 632/2016 do not appear to be connected at all to the present matter i.e. WP(C) 632/2016. It is also noticed that WP(C) 647/2015 has already been dismissed as infructuous on 02.02.2017. Accordingly, Registry is also directed to disconnect the same from the present matter i.e. WP(C) 632/2016.