Sri Nemai Saha Vs. Acct. Sealdah Charge and ors. - Court Judgment

Excerpt:
1. in this application under section 8 of the west bengal taxation tribunal act, 1987 the petitioner challenges the order dated june 15, 1998 of respondent no. 1 (assistant commissioner, commercial tax, sealdah charge) levying turnover tax on the petitioner-dealer on the sale of indian-made foreign liquor and the appellate order dated may 11, 1999 of respon- dent no. 2, the deputy commissioner, commercial tax, dharmatala circle, and the revisional order dated december 5, 2000 of the west bengal commercial taxes appellate and revisional board affirming the said levying of turnover tax--on the ground that the said levy is not sustainable in law.the case of the petitioner is that the petitioner is one of the partners of partnership firm known as m/s. nayak stores, calcutta-9 and.....

Judgment:
1. In this application Under Section 8 of the West Bengal Taxation Tribunal Act, 1987 the petitioner challenges the order dated June 15, 1998 of respondent No. 1 (Assistant Commissioner, Commercial Tax, Sealdah Charge) levying turnover tax on the petitioner-dealer on the sale of Indian-made foreign liquor and the appellate order dated May 11, 1999 of respon- dent No. 2, the Deputy Commissioner, Commercial Tax, Dharmatala Circle, and the revisional order dated December 5, 2000 of the West Bengal Commercial Taxes Appellate and Revisional Board affirming the said levying of turnover tax--on the ground that the said levy is not sustainable in law.

The case of the petitioner is that the petitioner is one of the partners of partnership firm known as M/s. Nayak Stores, Calcutta-9 and petitioner's business is of reselling Indian-made foreign liquor (IMFL) and the petitioner is registered under the Bengal Finance (Sales Tax) Act, 1941. Sales of such Indian-made foreign liquor (IMFL) as per provisions of the Act are exempt from sales tax Under Section 5(2)(a)(vf) and also from turnover tax as mentioned in 6B(2)(f) of the Act of 1941. In the assessment for the period from April 1, 1995 to April 30, 1995, respondent No. 1, Assistant Commissioner, Commercial Tax, Sealdah Charge, by order of assessment dated June 15, 1998 rightly held that no sales tax on petitioner's sales of IMFL amounting to Rs. 8,62,271 is leviable or payable but quite unlawfully levied turnover tax on the above sale amount at the rate of 1 per cent in terms of Section 6B(2)(f) of the Act. As per law, turn over tax is not payable in such sale of IMFL. Turnover tax is leviable on sale Under Section 5(2)(a)(va), 5(2)(a)(vb), 5(2)(a)(vc), 5(2)(a)(vd), 5(2)(a)(ve) and not on sales Under 5(2)(a)(vf). As no turnover tax is leviable on sales of IMFL Under Section 5(2)(a)(vf) and 5(2)(a)(vg) of the Act of 1941 and as turnover tax was levied unlawfully, the petitioner preferred appeal before respondent No. 2, Deputy Commis-sioner who by order dated May 11, 1999 affirmed the assessment order of respondent No. 1 under misconception of law. Thereafter the petitioner went in revision before the West Bengal Commercial Taxes Appellate and Revisional Board but the Board rejected the same by order dated December 5, 2000 without any legal basis. Hence this application here praying the aforesaid relief.

2. The contention of the respondent as per affidavit-in-opposi- tion is that levy of turnover tax is altogether a separate tax with separate charging section Under Section 6B wherein modalities of deduction for the purpose of determination of gross turnover for levy of turnover tax have been detailed. Section 5(2)(a)(vf), is the taxing section help of which is taken to determine the total taxable turnover which a dealer is liable to pay Under Section 4 and Section 8(3) of the Act of 1941.

So the levy of turnover tax being quite in conformity with the statutory provision, the present petition with the prayer as made is liable to be dismissed.

3. The petitioner used affidavit-in-reply wherein petitioner contends that a conjoined reading of Section 5(2) and Section 6B(2) of the Act of 1941 makes the legal position as submitted earlier clear. The authority not having read both the above sections together or conjointly, it misdirected itself and fell into legal error which requires to be rectified.

4. It is to be considered as to whether the decision of respondent No.2 as well as Board affirming the decision of respondent No. 1 levying turnover tax on the petitioner-dealer is legally sustainable or not.

5. Sri Arun Mukherjee, learned Advocate for the petitioner, takes us through the provisions of Section 5(2)(a) and Section 6B(2) of the Bengal Finance (Sales Tax) Act of 1941 and submits that "sale referred to in Sub-clause (v) of Clause (a) of Sub-section (2) of Section 5 of goods, other than specified in Clauses (a), (b), (c), (d) and A (e)" as appears in Section 6B(2)(f) which has got to be deducted among others mentioned in the Sub-clauses of Section 6B(2) from gross turnover of a dealer for levying turnover tax-means turnover tax as payable on sales Under Section 5(2)(a)(va),'5(2)(a)(vb), 5(2)(a)(vc), 5(2)(a)(vd) and 5(2)(a)(ve) of the Act. He also submits that no turnover tax is leviable Under Section 5(2)(a)(vf) and Under Section 5(2)(a)(vg) of the Act. The logic in his argument is that Clauses (a), (b), (c), (d) and (e) as mentioned in Clause (f) of Sub-section (2) of Section 6B cannot but mean Section 5(2)(a)(va), 5(2)(a)(vb), 5(2)(a)(vc), 5(2)(a)(vd) and 5(2)(a)(ve) of the Act, since there is no Clause (e) since 1987 in Section 6B(2). It is submitted that turnover tax is leviable only on those sales covered by Sub-clauses (va) to (ve) of Section 5(2)(a).

Respondent No. 1 as per Sri Mukherjee rightly allowed petitioner's sales of Indian-made foreign liquor Under Section 5(2)(a)(va) as attracting no tax on turnover. So no turnover tax was leviable on such sale of IMFL in terms of Section 6B(2)(f) of the Act. Levying of such tax Under Section 6B(2) as ordered as such is illegal as per him. His further submission is that respondent No. 2 in his appellate order fell into error by holding that Clauses (a), (b), (c), (d) and (e) in Section 6B(2)(f) refers to (a), (b), (c), (d) and (e) of Sub-section (2) of Section 6B. Learned lawyer also mentions that the Board went wrong as it relied upon a previous assessment order dated June 9, 1997 where no question of levy of turnover tax was involved. The dealer was held there liable to pay tax on sale even if the sale took place after April 10, 1994 arising out of liquor held in stock as on April 10, 1994. There the point was whether sales tax was leviable on the relevant sales of a different period. No such matter is involved in the instant assessment order dated June 15, 1998. So Sri Mukherjee submits that error has crept in the order requiring interference here.

6. Sri B.N. Basu, learned State Representative, submits that Section 5 of the 1941 Act is not a charging section. It merely relates to payability of tax. Deductions which are allowed for the purpose of turnover tax are to be found in Sub-section (2) of Section 6B. No other deduction can be availed of there for the purpose of levy of turnover tax. He submits that even though by enjoying the benefit of deduction Under Section 5(2) of the Act of 1941, sales tax may not have to be paid on a dealer's turnover on the charging section, the turnover can be validly considered for the purpose of turnover tax Under Section 6B.By introducing Sub-clauses (vf) and (vg) to Section 5(2) by way of subsequent amendment, additional deductions were allowed for the purpose of sales tax Under Section 4 and Under Section 8(3) of the Act of 1941. He further submits that exemption from turnover tax for the purpose of sales tax Under Section 4 and Section 8(3) of the Act-after allowable deductions from the taxable turnover, does not cease the liability to pay turnover tax Under Section 6B(2) of the Act of 1941.

He therefore submits that there is no illegality in the impugned order which should be sustained.

7. To understand the real controversy involved as well as to come to a decision over the controversy raised, we are required to go through some of the provisions of the Act of 1941 as stated below. The term "turnover" has been defined in Section 2(i). Turnover in C relation to any period means the aggregate of the sale prices received or receivable by the dealer during such period after deducting the amounts, if any, refunded by the dealer against return of goods purchased during such period and separately charged as turnover tax payable Under Section 6B during such period.

8. The taxes payable under the provisions of the Act of 1941 may be classified as follows: (1) Sales tax, (2) additional sales tax, (3) purchase tax, (4) turnover tax and (5) tax payable by contractors.

Sales tax is leviable on the taxable turnover of a dealer. In arriving at the taxable turnover, following deductions are to be made from the gross turnover as mentioned in Sections 2(h), 2(i), 5(2)(a)(i), 5(2)(a)(ii), 5(2)(a)(v), 5(2)(a)(va), 5(2)(a)(vb), 5(2)(a)(vc), 5(2)(a)(vd), 5(2)(a)(ve), 5(2)(a)(vf), 5(2)(a)(vg) and 5(2)(a)(vi) and 5(2)(b). The provisions for levy of turnover tax have been amended with effect from April 11, 1994. A dealer is made liable to pay turnover tax if the aggregate of gross turnover of the dealer in any accounting year exceeds Rs. 25 lakhs. We know that when a dealer acquires liability to pay turnover tax he shall remain liable to pay the same unless and until aggregate of gross turnover in the accounting year falls below the quantum fixed for the purpose. The rate of turnover tax is given in the very Section 6B. How the said turnover is to be computed is also given in Section 6B(2). In computing the turnover on which turnover tax is leviable, following deductions as detailed in Section 6B(2) shall be made from the gross turnover under the Act of 1941: (i) sales of declared goods other than those on which tax is levied at the rate of 2 per cent or less, (ii) sales of electrical energy or newspapers, (iii) sales of motor spirit, (v) sales made in the course of inter-State trade or commerce or in the course of import of goods into or export of goods out of the territory of India or sales which have not taken place in West Bengal [Section 6B(2)(f)] (vi) sales prescribed Under Rule 3(2A). Up to April 10, 1994 a dealer could not recover turnover tax from his purchasers but with effect from April 11, 1994 he may realise the turnover tax payable by him from his customers. We may now reproduce Section 6B(l)(a) of the Act to clarify the nature of the turnover tax and to mark its difference from the tax levied on a dealer's taxable turnover as mentioned in Section 5 of the Act and which a dealer is required to pay Under Section 4 or Section 8(3) of the Act of 1941. Section 6B(l)(a) is as follows: (a) every dealer, whose aggregate of the gross turnover under this Act and the gross turnover under the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954) during the last year ending on or before the 31st day of May, 1987, exceeds rupees twenty-five lakhs shall, in addition to the tax payable by him Under Section 5, and Section 6D, if any, be liable to pay from the first day of June, 1987, a turnover tax at the rate specified in Sub-section (3) of such part of his turnover as specified in Sub-section (2).

Section 6B thus does not lay down that the turnover tax will be levied on the "taxable turnover" defined in Section 5(2). Section 6B(2) contains a self-contained list of deductible turnover for the purpose of turnover tax. It cannot be claimed as such that a dealer who is ultimately required to pay no tax Under Section 4 or 8(3) on account of deduction allowed Under Section 5(2) has no "turnover" at all for the purpose of levy of turnover tax Under Section 6B. The dealer's liability of payment of turnover tax is determined by Section 6B. The expression--"in addition to" appearing in Section 6B(l)(a) indicates that turnover tax is an additional tax, i.e., a tax in addition to the tax payable Under Section 5 or Section 6D of the Act of 1941. The tax payable Under Section 5 is nothing but tax leviable Under Section 4 and Section 8(3). So turnover tax is payable even when tax payable Under Section 5 or Section 6D is nil. By no stretch of imagination it can be held that turnover tax is payable only when taxes Under Section 5 is actually payable. That being the clear position of law, the argument of learned Advocate for the petitioner as made and as referred to earlier has no leg to stand.

9. We may mention that the argument of the learned Advocate for the petitioner to the effect that "other than those specified in Clauses (a), (b), (c), (d) and (e)" appearing in Clause (f) of Sub-section (2) of Section 6B--refers obviously to Section 5(2)(a)(va), 5(2)(a)(vb), 5(2)(a)(vc), 5(2)(a)(yd) and 5(2)(a)(ve)--also has no force. careful reading and analysis of the various clauses of Sub-section (2) of Section 6B and various clauses and Sub-clauses of Section 5 of the Act of 1941, makes the matter clear. We do not fail to notice that Clause (f) of Sub-section (2) of Section 6B refers to "clauses" (a), (b), (c), (d) and (e) and not to any "Sub-clause" (va), (vb), (vc), (vd) and (ve) are merely Sub-clauses of Clause (a) of Sub-section (2) of Section 5.

So Clauses (a), (b), (c), (d) and (e) mentioned in Clause "f" above obviously refers to Clauses (a), (b), (c), (d) and (e) of Sub-section (2) of Section 6B. Had the Legislature intended to mean (va) to (ve) as contended by Sri Mukherjee, instead of the word "clauses", "Sub-clauses" would have been mentioned in Section 6B(2)(f). In the impugned appellate order dated May 11, 1999 of the Deputy Commissioner, Dharmatala Circle, it has been interpreted and rightly so in our opinion that, "other than those specified in Clauses (a), (b), (c), (d) and (e) means Sub-clauses (a), (b), (c), (d) and (e) of Sub-section (2) of Section 6B", though of course appropriate reason for arriving at such an interpretation is lacking there. We also concur accordingly with the ultimate finding in the impugned order dated June 15, 1998 of the Assistant Commissioner, Sealdah Charge, to the effect that though the petitioner-dealer's claim Under Section 5(2)(a)(vf) is allowed for Rs. 8,62,291 the dealer is still liable to pay turnover tax Under Section 6B. There is no illegality in the order dated June 15, 1998 and the appellate order dated May 11, 1999 affirming the order dated June 15, 1998 of the Assistant Commissioner. But we cannot but mention that we are not in agreement with the method of reasoning adopted by the revisional authority that is, the West Bengal Commercial Taxes Appellate and Revisional Board as well as its conclusion that "the dealer is liable to pay tax on sale of liquor, even if the sale took place after April 10, 1994, arising not of liquor held in stock as on April 1, 1994"--since extraneous and irrelevant matters--not connected with the instant case--have been taken into consideration by it.

Instead of remanding the matter back to the Board for a decision afresh upon the materials on record, we like to strike down the aforesaid finding which we do so hereby. Only because we hold that the ultimate order dismissing the revision petition is an appropriate order which does not require interference, we uphold only that part of the order of the Board. We have already held that we do not find any fault with the order of respondent Nos. 1 and 2--those being in conformity with the provisions of law. As such we find no reason to interfere with the same.

10. The application therefore fails. We hold that the decision of the Board dismissing the revision against the appellate order and the decision of respondent No. 2 affirming the decision of respondent No. 1 levying turnover tax on the petitioner-dealer is legally sustainable.

The application as such is liable to be dismissed and is dismissed.