Nadimane Hotel (Pvt.) Ltd. Vs. Government of Andhra Pradesh - Court Judgment

Excerpt:
sales tax - exemption - andhra pradesh general sales tax act, 1957, section 38 of andhra pradesh general sales tax (amendment) act, 1983, section 6 of constitution (amendment) act, 1982 and sections 41 and 256 (2) of income tax act, 1961 - notification issued by respondent that exemption to be given to small hotels whose turnover is more than two lakhs provided that such hoteliers file an affidavit that they had not collected tax on supplies - assessee had not filed any affidavit in that respect but claimed for exemption under such notification - assessee cannot claim exemption in absence of affidavit - held, assessee need to file affidavit to avail the exemption mentioned in notice assessment to be revised by respondent after filing of such affidavit. - maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter. scientifically or common sense point of view, even though ghee is not directly obtained from milk (which is certainly a product of cow/buffalo), it is certainly a product of a product of livestock i.e., cow or buffalo. it would be rather illogical or irrational to say that ghee is not a milk/dairy product or to say that it is not a product of livestock. section 2(x) and 2(iv) of the act used the plural products of livestock. the legislative intention is very clear that not only a product of livestock like milk (when notified by government), butter etc., are products of livestock but even derivative items (derived from a product of livestock) are intended to be product of livestock for the purpose of the act. thus the term ghee is to be interpreted on the basis of expression products of livestock as defined in section 2(xv) of the act. whatever products are declared as such by the government by notification, they become products of livestock for purpose of the act. consequently it was held that ghee is the product of livestock and by reason of power conferred under section 3(1) read with section 3(3) of the act on them it is competent for the government to declare ghee as product of livestock for the purpose of regulating its purchase and sale, in any notified market area. [per p.s. narayana, j,(dissenting)]if livestock or agricultural produce and the categories thereof had been specified in the statute itself by appending in the schedule or otherwise, that would stand on a different footing from the present provisions of the act which contemplate the issuance of notifications in accordance with the procedure ordained by the provisions specified supra. in view of the clear definition of the livestock and products of livestock, the ghee being derivative of butter or cream, if the language employed in definition to be taken as they stand, the only conclusion would be is that the ghee would not fall within ambit of the definitions aforesaid. sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] declaration of notified area held, it is only under section 3 that government are required to publish draft notification inviting objections and section 3(3) mandates to consider objections and suggestions before issuing declaration order. it is very conspicuous that section 4 does not contemplate any draft notification inviting objections and suggestions before either constituting market committee, establishing notified market area or declaring notified market area for the purpose of levy of market fees. thus, except ordaining government to issue preliminary/draft notification inviting objections at the time of issuing declaration order under section 3(3) of the act nowhere much less under section 4 contemplates issuing a notification inviting objections. when the legislature has chosen to exclude principles of natural justice, the court cannot introduce rule of audi alteram partem and render statutory provisions unworkable. in such a case, maxim, expressum facit cessare tacitum (when there is express mention of certain things, then anything not mentioned is excluded) would apply. section 7: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] levy of market fee element of quid pro quo - held, levying fees and tax are two forms of exercise of sttaes taxing power. there is no quid pro quo between tax payer and public authority as tax is a part of common burden. it is also well settled that fee is charge for special service or a benefit given to a class of individual fee payers and fee collected need not have correlation with actual service in exactitude but if it is shown that substantial portion of the fee is expended or the purpose for which it is levied, it would be justified. expressum facit cessare tacitum sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] meaning when there is express mention of certain things, then anything not mentioned is excluded. - in the circumstances it is perfectly in order for the petitioner to offer the sales tax liability allowed in the assessment for 1983-84 as income under section 41 of the income-tax act. 9. a copy of this order shall be endorsed to the commissioner of income-tax, a.y.v. anjaneyulu, j.1. the petitioner, a private limited company, seeks a declaration that clause (b) of notification ii appended to g.o. ms. no. 1025, revenue department, dated 22nd august, 1986 is ultra vires of the andhra pradesh general sales tax act, 1957 and act 18 of 1985 and section 6 of the constitution (46th amendment) act, 1982 and to strike down the same. the petitioner also seeks the quashing of the order of the third respondent in assessment no. 2068/82-83, dated 31st december, 1986. 2. we have heard the learned counsel for the petitioner, sri j. eswara prasad, and the learned government pleader. 3. for the purpose of disposing of this writ petition it is not necessary to set down the disputes between the hoteliers and the sales tax department with respect to the payment of sales tax on what have come to be popularly called 'parcel restaurant sales'. the commercial tax department claimed that sales tax was liable to be paid on all such sales effected in the hotels while the hoteliers claimed that no sales tax was payable. the disputes were the subject-matter of consideration by the supreme court on more than one occasion. eventually the supreme court by its order dated 25th february, 1986 in slp (civil) no. 2274 of 1986 observed that the government may consider the granting of exemption by amending the laws suitably in the case of small dealers whose annual turnover was less than rs. 1 lakh during the period between 1978 and 1983 (the period between 7th september, 1978 and 2nd february, 1983) in view of the practical difficulties and hardship involved in such cases. 4. taking note of the aforesaid observations of the supreme court, the government had decided to exempt small hotels whose annual turnover was rs. 2 lakhs and below from the payment of sales tax for the period prior to 2nd february, 1983 waiving the condition of discharge of burden of proving non-collection of tax on their supplied under section 38 of the validation and exemption of the andhra pradesh general sales tax (amendment) act, 1985. the government had also decided that the aforesaid exemption should be extended to hotels whose annual turnover was above rs. 2 lakhs; provided that such hoteliers file an affidavit to the effect that they had not collected tax on supplies during the period prior to 2nd february, 1983 and had not also claimed the sales tax payable as a deduction in the relevant income-tax proceedings, whether at the assessment stage by making a provision in the books of account or otherwise at the appellate stage. two notifications, incorporating the aforesaid decision of the government, were published in the gazette dated 23rd august, 1986. the petitioner herein, being a hotelier with an annual turnover of more than rs. 2 lakhs, is governed by the second notification. 5. pursuant to the aforesaid notification, the petitioner filed an affidavit dated 3rd january, 1987 stating that it had not collected any tax on its sales during the period 1st april, 1982 to 2nd february, 1983 which corresponds to the assessment year 1982-83. the affidavit did not, however, include testification to the effect that no claim for deduction of sales tax liability was made in its income-tax assessments by making a provision either at the assessment stage or by making claims at the appellate stage. as the affidavit did not contain the aforesaid certification, the commercial tax officer, respondent no. 3 herein, made the assessment for the assessment year 1982-83 without granting exemption of payment of sales tax in respect of sales during the period 1st april, 1982 to 2nd february, 1983. the assessment thus made by respondent no. 3 is questioned in the present writ proceedings. 6. the petitioner's contention is that in view of the commercial tax department asserting its claim for payment of sales tax in respect of restaurant sales a provision was made in the books in respect of sales during the period 1st april, 1982 to 30th september, 1982 and deduction of rs. 2,42,411 was claimed in the petitioner's income-tax assessment for the year 1983-84. it is stated that the claim for deduction was rejected by the income-tax department, but eventually it was allowed in appeal by the tribunal. it is pointed out that the matter was carried by the commissioner of income-tax under section 256(2) of the income-tax act to this court in i.t.c. no. 9 of 1984 wherein the petitioner's claim for deduction of sales tax liability on mercantile system of accounting was upheld with the observation that if eventually it is held that the assessee is not bound to pay the whole or any part of the above sales tax provided in its accounts, it would be open to the authorities to tax the extent of sales tax ceasing as a liability under section 41 of the income-tax act, 1961. our attention has been invited to the decision of this court in the above regard in i.t.c. no. 9 of 1984, dated 15th june, 1984 in the petitioner's own case. learned counsel for the petitioner stated that in view of the uncertainty prevailing at the relevant time the petitioner had no alternative but to make a provision and claim the liability as a deduction for income-tax purposes. it is pointed out that the government had decided to grant exemption only after the supreme court's observations dated 25th february, 1986 and the petitioner could not, therefore, be expected to file an affidavit on the lines specified in notification no. ii appended to the g.o. dated 22nd august, 1986. it is further submitted that the petitioner is willing to offer for assessment the sum allowed as deduction in its income-tax assessment for the year 1983-84 in view of the provisions contained in section 41 of the income-tax act. 7. we find considerable force in the submission of the learned counsel for the petitioner. there is statutory safeguard that any liability ceasing shall be deemed to be the income of the assessee under section 41 of the income-tax act. in the circumstances it is perfectly in order for the petitioner to offer the sales tax liability allowed in the assessment for 1983-84 as income under section 41 of the income-tax act. once that is done the requirements of g.o. dated 22nd august, 1986 and the notifications appended thereto are fully complied with. 8. in view of the above, we direct the petitioner to file an affidavit before respondent no. 3 stating that whatever liability is allowed in the petitioner's income-tax assessment for the year 1983-84 will be offered for assessment under section 41 of the income-tax act as liability ceasing pursuant to the grant of exemption by the commercial tax department. on the filing of such affidavit by the petitioner, respondent no. 3 is directed to revise the assessment already made by exempting the relevant sales during the period 1st april, 1982 to 2nd february, 1983. the petitioner's liability to sales tax for the assessment year 1982-83 may be revised on the aforementioned basis. 9. a copy of this order shall be endorsed to the commissioner of income-tax, a.p., hyderabad, who will communicate the same to the concerned income-tax officer for the purpose of ensuring the assessment of the sum under section 41 of the income-tax act in the relevant assessment. 10. the writ petition is disposed of with the aforesaid directions. no costs. government pleader's fee rs. 250. writ petition disposed of accordingly.