Madras High Court
M/S.M.U.Mohamed Sultan & Co vs Assistant Commissioner(St) on 8 October, 2021
W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 08.10.2021
CORAM
THE HON'BLE MR.JUSTICE R.SURESH KUMAR
W.P.(MD)Nos.18440 and 18446 of 2021
and
W.M.P.(MD)Nos.15221, 15222, 15226 and 15228 of 2021
M/s.M.U.Mohamed Sultan & Co.
Represented by its Managing Partner
Mr.Ubayathullah .. Petitioner
in W.P.(MD)No.18440 of 2021
M/s. Omega Traders,
Represented by its partner
Mr.J.Mohamed Yoosuff .. Petitioner
in W.P.(MD)No.18446 of 2021
Vs.
1. Assistant Commissioner(ST),
Pudukottai-I Circle.
Pudukottai.
2. The State Bank of India,
Represented by its Branch Manager,
T.S.No:2664, East Street,
Pudukottai-622001. .. Respondents
in W.P.(MD)No.18440 of 2021
1. Assistant Commissioner(ST)
Pudukottai-I Circle,
https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
Pudukottai.
2. Central Bank of India,
Represented by its Branch Manager,
No. 833, East Main Road,
Pudukottai. .. Respondents
in W.P.(MD)No.18446 of 2021
Prayer in W.P.(MD)No.18440 of 2021: Writ Petition is filed under
Article 226 of Constitution of India, to issue a Writ of Certiorarified
Mandamus, to quash the impugned order passed by the first respondent
in TIN No:3334103969/2021/A3, dated 26.07.2021 and to quash the
consequent bank attachment, dated 28.07.2021 of State Bank of India
account bearing DD No.542-827123 made by the second respondent
with respect to the above mentioned account and to dispose of the
Rectification Petition, dated 19.07.2021 of the petitioner.
Prayer in W.P.(MD)No.18446 of 2021: Writ Petition is filed under
Article 226 of Constitution of India, to issue a Writ of Certiorarified
Mandamus, to quash impugned order in TIN No.33194100371/2021/A3
passed by the first respondent, dated 26.07.2021 and to dispose of the
Rectification Petition, dated 15.07.2021 of the petitioner.
In both cases:
For Petitioners : Mr.R.Sivaraman
For R1 : Mr.R.Sureshkumar
Government Advocate
For R2 : Mr.N.Dilipkumar
Standing Counsel
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
COMMON ORDER
Since the issue raised in both the writ petitioners is one and the
same, with the consent of the learned counsel appearing for the parties,
these writ petitions were heard together and are disposed of by this
common order.
2.The petitioners are the manufacturers of Tobacco products.
Though, prior to the 2006-2007 Assessment Year, they involved in
manufacturing of some other Tobacco product, only from the
Assessment year 2006-2007, they claimed to have started producing the
product called “Chewing Tobacco”. The said product 'Chewing Tobacco'
has not been included in the schedule appended to the Tamil Nadu Value
Added Tax Act, 2006 (in short, 'the TNVAT Act'), thereby, the said
product is not a taxable item.
3.Accordingly, insofar as the Assessment Year 2007-2008 is
concerned, the Assessment has been made in respect of these two
petitioners.
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
4.Subsequently, by amendment made to the TNVAT Act, 2006, by
Act 30 of 2011 in Section 3, the following has been inserted :
“3.In the Second Schedule to the principal Act,
after Serial number 12 and the entries relating thereto,
the following Serial Number and entries shall be
inserted, namely:
“13.(i) Unmanufactured tobacco, tobacco refuse;
(ii) Gutkha, Pan masala;
(iii)Cigars and Cheroots and Cigarettes,
Cigarillous of tobacco or of tobacco
substitutes;
(iv) Hooka/ hoodku tobacco;
(v)Smoking mixtures for pipes and cigarettes;
(vi) Homogenised or reconstituted tobacco;
(vii) Chewing tobacco;
(viii)Preparations containing chewing
tobacco;
(ix) Jarda, Scented tobacco;
(x) Snuff of tobacco and preparations
containing snuff;
(xi) Tobacco extracts and essence;
(xii) Cut tobacco;
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
(xiii) Any other tobacco product, not specified
in any of the Schedules.”
5.By virtue of this amendment in the second schedule to the
TNVAT Act, after Serial No.12, the Serial No.13 with various products
as enumerated herein above had been inserted, wherein, in Serial No.
(vii), the product 'Chewing Tobacco' is found placed.
6.Therefore, the 'Chewing Tobacco' also has been inserted in one
of the product in the second Schedule to the TNVAT Act, at Serial
No.13, thereby, the product also has become liable to be taxed. In this
regard, a Government Order has been issued, whereby, the applicability
of the amended provision, is made from the date 12.07.2011, by
G.O.Ms.No.76, dated 11.07.2011.
7.Thereby, the product called 'Chewing Tobacco' has become a
taxable item, only with effect from 12.07.2011.
8.It is to be noted that as against the insertion of the said product,
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
the Association of the Tamil Nadu Scented & Chewing Manufacturers
Association and others, filed writ petitions in W.P.(MD)No.21237 of
2011 etc., batch, where from 15.09.2011, there has been an interim order
of stay and those writ petitions were pending up to 2019, as those writ
petitions were finally disposed of only on 03.10.2019, by a common
order passed by a learned Judge of this Court in the matter of
Tvl.Makkal Stores v. The State of Tamil Nadu represented by the
Secretary, Commercial Taxes and Registration Department,
Chennai-09 and others. In the said Judgment, ultimately, the impugned
amendment was held to be valid, thereby the stay granted by the Court
earlier was vacated.
9.Therefore, the said product namely, 'Chewing Tobacco', has
become a taxable item from 12.07.2011 and it is further to be noted that,
after sometime in the year 2012, the Government banned the production
of the said item itself.
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
10.Only with the aforesaid background of the case, it is the case
of the petitioner that, insofar as the Assessment Year 2007-2008 is
concerned, though the petitioners manufactured the said product
'Chewing Tobacco', that was not one of the item to be taxed under the
provisions of the TNVAT Act, as admittedly, the said product has been
introduced or inserted in the Schedule as mentioned above only with
effect from 12.07.2011. Therefore, if at all, any tax to be levied on the
petitioners for the said product, the same should have been levied only
from 12.07.2011 and not for the Assessment Year 2007-2008, it is the
question herein.
11.In this context, it is a further case of the petitioner, that the
petitioners have filed rectification petitions under Section 84 of the
TNVAT Act on 19.07.2021 and 15.07.2021 respectively, explaining the
afore-stated factual as well as legal position, and therefore, stated that
the issue has to be rectified, where the petitioners are not liable to pay
tax for the said product 'Chewing Tobacco' for the relevant Assessment
Year 2007-2008, as this was pursuant to the notice of demand issued by
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
the respondents, dated 08.07.2021, where, the respondents had stated
that, by virtue of the disposal of the writ petitions as referred to above,
by order, dated 03.10.2019, these petitioners and other similarly placed
person should be liable to pay tax for the said product 'Chewing
Tobacco' even for the Assessment Year 2007-2008.
12.However, the said rectification petitions, dated 19.07.2021 and
15.07.2021, filed by the petitioners have been kept pending and not
disposed of. Unmindful of the same, now, a communication has been
issued by the Assistant Commissioner, who is the first respondent herein
on 26.07.2021 to the concerned Bank, where the petitioners having
account to draw the money to the extent of their alleged arrears payable
by them for the Assessment Year 2007-2008 in the form of Demand
Draft drawn in favour of the first respondent for adjusting against the
alleged arrears of tax due.
13.Felt aggrieved over the said communication, dated 26.07.2021,
issued by the first respondent to the concerned Bank, with a copy
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
marked to the petitioners, as the same has been issued without even
considering and disposing the rectification petitions filed by the
petitioners, they have approached this Court by filing the present writ
petitions.
14.Heard Mr.R.Sivaraman, learned counsel for the petitioner, who
having reiterated the aforesaid, would contend that the legal position is
very clear and unambiguous, where the respondents cannot impose tax
on the particular product, namely, 'Chewing Tobacco' manufactured by
the petitioners during the relevant Assessment Year 2007-2008, as the
said product has become taxable item only with effect from 12.07.2011,
and when this position has been made clear in the rectification petitions,
dated 19.07.2021 and 15.07.2021, made under Section 84 of the TNVAT
Act, without considering the same and keeping it pending, the first
respondent has proceeded to recover the money by giving notice to the
bank authorities, that is, impugned herein, therefore, the said impugned
action on the part of the respondent is liable to be interfered with and
consequently, a direction can be given to the first respondent to decide
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
and dispose the petitioners' rectification petitions.
15.I have heard Mr.R.Suresh Kumar, learned Government
Advocate appearing for the first respondent, who on instructions, would
submit that, the tax due in respect of each of the petitioners for the
Assessment Year 2007-2008 was calculated, based on the assessment
made for the particular year, that has been made out of the records
available with the first respondent office. Moreover, insofar as the said
product is concerned, admittedly, the petitioners manufactured that
product even in the relevant Assessment Year and therefore, insofar as
the closed Assessment Year 2007-2008, if any tax due is there on the
part of the petitioners, to pay the same, can at any time be demanded, as
for all these years, since the writ petitions filed by the Association,
where the petitioners were members, were pending before the High
Court and in those cases, there has been interim order of stay granted,
such a recovery proceedings could not be initiated immediately, hence,
there is every justification on the part of the first respondent to issue the
present order, which is impugned herein requiring the Bank authorities
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
to get the money and take a Demand Draft in favour of the first
respondent.
16.He would also submit that, insofar as the provision at
Section 84 of the TNVAT Act is concerned, there is a limitation period
of five years, under which, within five years period from the date of any
order passed by the Assessing authority, such an application to rectify
the error apparently on the face of the record, if any, shall be filed.
17.Quoting this provision, the learned Government Advocate
would submit that, first of all, there is no apparent error on the face of
the record, consequently, as against the order passed in the year
sometime in 2009, where the five years period is over, the Section 84
applications or petitions for rectification cannot be entertained at this
late hour. Since it was admittedly filed in July 2021, the impugned
communication issued to the bank is very much sustainable and
therefore, no interference is called for, he contended.
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
18.I have considered the said rival submissions made by the
learned counsel appearing for the parties and have perused the materials
placed before this Court.
19.It is a fact remains that, the product called 'Chewing Tobacco',
admittedly manufactured by these petitioners from 2006-07 was not at
all included as one of the item scheduled in TNVAT Act as a taxable
item. Realising this omission or lacuna or with the wisdom of the
legislature, Act 30 of 2011 was brought in, under which, the TNVAT
Act, 2006 underwent amendment, wherein as per Section 3 of the
Amending Act, after Serial No.12 to second schedule Serial No.13 was
inserted, whereas, one of the item in Serial No.(vii)-'Chewing Tobacco'
also has been mentioned. Admittedly, the said amendment has come
into the effect only from 12.07.2011, therefore, the product 'Chewing
Tobacco' has become a taxable item only from 12.07.2011.
20.In this context, it is a definite case of the petitioners that
because of the said product, namely, 'Chewing Tobacco', which they
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
manufactured in the year 2007-2008, excess tax had been calculated by
the first respondent, as if that, it is a taxable item, however, the fact
remains that the product has become a taxable item only from
12.07.2011 and therefore, these apparent mistake available on the face
of the record has to be rectified, that is the reason why, they filed the
rectification applications, which are admittedly pending before the first
respondent.
21.Insofar as the five years limitation, as pointed out by the
learned Government Advocate, is concerned, the five years limitation
period is no doubt starts from the order passed by the authorities, which
was passed sometime in 2009, however, from October 2011, there has
been a stay, which was in operation for all these years up to 03.10.2019,
the date on which, those writ petitions were disposed of. Therefore, the
period between 15.09.2011, the date on which originally interim stay
was granted till the disposal of the writ petition, that is, dated
03.10.2019 has to be excluded. If that period is excluded, certainly the
present rectification petitions, dated 19.07.2021 and 15.07.2021, filed
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
by the petitioners would be within the time of five years limitation
period, as contemplated under Section 84 of the TNVAT Act. Therefore,
that objection raised by the learned Government Advocate cannot be
countenanced.
22.In that view of the matter, this Court feel that, unless the
rectification petitions filed by the petitioners is decided by taking into
account the aforesaid factual as well as the legal aspects projected by
the petitioners, the first respondent cannot proceed further pursuant to
the alleged due for the Assessment Year 2007-2008. In that view of the
matter, the impugned orders requiring the bank authorities to recover the
amount and to pay it in favour of the first respondent may not be
justifiable and accordingly, those orders are liable to be interfered with.
23.In the result, the following orders are passed in these writ
petitions:
“that the impugned orders are quashed and
the matters are remitted back to the first respondent,
where the rectification petitions filed by the
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
petitioners, dated 19.07.2021 and 15.07.2021, shall
be considered first and orders shall be passed.
While considering the rectification petitions, the
afore-stated legal as well as factual position shall be
borne-in-mind and after passing the order in the
rectification petitions, depending upon the outcome
of the same, the further course of action, if any
needed, can be taken by the first respondent in
accordance with law.”
24.With these observations and directions, these writ petitions are
disposed of. However, there shall be no order as to costs. Consequently,
connected miscellaneous petitions are closed.
08.10.2021
Index: Yes/No
Internet: Yes
PJL
Note: In view of the present lock down owing to
COVID-19 pandemic, a web copy of the order may
be utilized for official purposes, but, ensuring that
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W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
the copy of the order that is presented is the
correct copy, shall be the responsibility of the
advocate/litigant concerned.
To
1. The Assistant Commissioner(ST)
Pudukottai-I Circle, Pudukottai.
2. The Branch Manager,
The State Bank of India
T.S.No:2664, East Street,
Pudukottai-622001.
3. The Branch Manager,
Central Bank of India,
No. 833, East Main Road,
Pudukottai.
https://www.mhc.tn.gov.in/judis
W.P.(MD) Nos.18440 & 18446 of 2021
M/s. M.U.Mohamed Sultan & Co., v. Asst Commissioner (ST), Pudukottai
R.SURESH KUMAR, J.
PJL
W.P.(MD)Nos.18440 & 18446
of 2021
08.10.2021
https://www.mhc.tn.gov.in/judis
