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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SALES TAX APPLICATION NO. 31 OF 2008
IN
REFERENCE NO. 127 OF 2007
ALONG WITH
SALES TAX APPLICATION NOS.32 OF 2008 AND 34 OF 2008
SALES TAX APPLICATION NO. 31 OF 2008
IN
REFERNCE NO. 127 OF 2007
The Commissioner of Sales Tax )
Maharastra State, 8th Floor, Vikrikar Bhavan )
Balwant Singh Dhodi Marg, Mazgaon )
Mumbai 400 010 ).. APPLICANT
VERSUS
M/s Ghatge Patil Industries Ltd. )
At & Post : Uchagaon, Tal.: Karveer )
Dist.: Kolhapur 416 005 ).. RESPONDENT
SALES TAX APPLICATION NO. 32 OF 2008
IN
REFERNCE NO. 120 OF 2007
The Commissioner of Sales Tax )
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Maharastra State, 8th Floor, Vikrikar Bhavan )
Balwant Singh Dhodi Marg, Mazgaon )
Mumbai 400 010 ).. APPLICANT
VERSUS
M/s Ghatge Patil Industries Ltd. )
At & Post : Uchagaon, Tal.: Karveer )
Dist.: Kolhapur 416 005 ).. RESPONDENT
SALES TAX APPLICATION NO. 34 OF 2008
IN
REFERNCE NO. 126 OF 2007
The Commissioner of Sales Tax )
Maharastra State, 8th Floor, Vikrikar Bhavan )
Balwant Singh Dhodi Marg, Mazgaon )
Mumbai 400 010 ).. APPLICANT
VERSUS
M/s Ghatge Patil Industries Ltd. )
Uchagaon, Taluka : Karveer )
Dist.: Kolhapur 416 005 ).. RESPONDENT
Mr V A Sonpal, Assistant Government Pleader, for the
Applicant.
Mr P V Surte a/w Mr S P Surte for the Respondent.
CORAM : SWATANTER KUMAR, C.J. AND
A.P. DESHPANDE, J.
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JUDGMENT RESERVED ON : 22ND AUGUST 2008
JUDGMENT PRONOUNCED ON : 27TH NOVEMBER 2008
JUDGMENT (PER SWATANTER KUMAR, C.J.)
By this common judgment, we will dispose of the above
three Sales Tax Applications preferred by the Revenue under Section
61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as “the
Bombay Act”).
2. The facts falling in narrow compass are that and which are
common to all these Applications, though they relate to different
assessment years, are that the Respondent in these Applications,
M/s.Ghatge Patil Industries Ltd. (hereinafter referred to as “the
Company”) is carrying on business of manufacture and sale of cast
iron castings, engineering goods, automobiles parts at Uchagaon,
Taluka Karveer, District Kolhapur. The Company is also registered
under the State as well as the Central Sales Tax Act, 1956
(hereinafter referred to as “the Central Act”). The Company received
an order from M/s Bharat Earth Movers Limited of Kolar Gold Field, a
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Government of India undertaking, which in turn is selling the
bulldozers and earth movers. M/s Bharat Earth Movers Limited had
placed an order with the Company for supply of clutch assembly and
various other assemblies. They had agreed to supply certain
imported parts, such as discs and bearings imported by them and
requested the assessee to insert the same in the assembly during the
process of manufacture. These parts were referred as “assistance
material” which were supplied free of cost. The Commissioner of
Central Excise, Pune-II, came to the opinion that insertion in the
assembly by the assessee company before delivery of the assembly
should form part of assessment value. Thus he concluded that there
was evasion of excise duty and accordingly issued a show cause
notice on 2nd December 1997 for the purpose of levy of excise duty.
The assessee denied its liability which ultimately resulted in the
passing of the order of assessment for the period 1994-95
determining a sum of Rs.3,57,919/- as refundable on merits but
simultaneously raising demand under the Central Act demanding
Rs.84,94,093/- by way of tax including interest under Section 36(3)(b)
of the Bombay Act read with Section 9(2) of the Central Act.
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Aggrieved from this order, Appeals were preferred before the Deputy
Commissioner of Sales Tax, Pune, which Appellate Authority
remanded the matter. In the meanwhile, order for the year 1995-96
demanding a sum of Rs.86,52,176/- on the same basis was passed.
Aggrieved from the order dated 30thy January 1999, an Appeal was
filed by the assessee which also ultimately was remanded by the
Appellate Authority.
3.
In the meantime, the Assessing Officer issued a show
cause notice dated 12th October 2000 for the period 1994-95 calling
upon the assessee to show cause why the value of assistance
material received from the Company should not be included in the
final sale amount along with the amount of additional excise duty
payable on the said amount and taxed at 10 per cent as declaration in
Form “C” does not include the cost of said material. The said notice
also contained a proposal to charge penalty under Section 36(2)(c)
and interest under Section 36(3)(d) of the Bombay Act. This notice
was replied to and the Senior Assistant Commissioner of Sales Tax
passed an order of reassessment on 13th December 2000 by rejecting
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all the submissions and the Appeals were dismissed. Against the said
order, Second Appeals were also filed by the assessee. These
Appeals relating to assessbility to tax of the assistance material
supplied free of cost by M/s Bharat Earth Movers Limited to the
assessee company was decided in favour of the assessee in Second
Appeal Nos.320 to 327 of 2002 and it was held as under :-
“1. Second Appeal Nos. 320 to 327 of 2002 in the
case of M/s Ghatge Patil Industries Limited are
allowed. The orders passed by the first appellateauthority are hereby set aside. It is held that the
return of assistance material supplied free of cost
by BEML to the appellant M/s Ghatge Patil
Industries Limited does not amount to sale. The
matters are remanded to the assessing authority torecompute the liability as to the levy of tax as well
as consequential interest and penalty. The
assessing authority is directed to refund the
amount, if any, to the appellant as per the
provisions of law.”
4. Aggrieved by the above order, the Revenue Department,
Commissioner of Sales Tax filed Applications under Section 61(1) of
the Bombay Act requiring the Tribunal to submit the Statement of
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Case and refer the question of law to the High Court in terms of the
said provisions. This request, in all the Appeals, was rejected by the
Maharashtra Sales Tax Tribunal, Mumbai vide its order dated 28th
September 2007 which has been impugned in the present Appeals.
Aggrieved by the said order, the Commissioner of Sales Tax, Mumbai
has filed the present Sales Tax Application Nos.31, 32 and 34 of 2008
under Section 61(2) of the Bombay Act for a direction to the Tribunal
for submission of statement of case and reference of question of law.
5. The short question that was contended was that case of
the assessee is not covered by the judgment in State of Madras vs M/s
Gannon Dunkerley & Company (Madras) Limited, 9 STC 353 and the
findings recorded by the Tribunal are erroneous and the Tribunal
should have referred the question of law framed in paragraph 7 of the
Application before this Court. The assistance material which was
supplied by M/s Bharat Earth Movers Limited to the assessee
company according to the assessee was not liable to tax as they
were supplied free of cost and the finished goods qua the company
were not open to liability. The contention as already noticed by the
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Deputy Commissioner of Sales Tax was that the raw material used in
manufacture of the finished goods was liable to be considered for the
entire value of the finished goods and tax ought to have been
determined on that basis. Reliance have been placed on various
judgments.
6. Having heard the learned Counsel appearing for the
parties and keeping in view the various judgments relied upon by the
respective Counsel, we are of the considered view that the
Application filed under Section 61(2) of the Bombay Sales Tax Act,
1959 by the Commissioner of Sales Tax, Maharashtra, deserves to be
allowed. Consequently, we direct the Maharashtra Sales Tax
Tribunal to submit the statement of case and refer the question of law
in the above Sales Tax Applications to this Court expeditiously.
7. Sales Tax Applications disposed of accordingly. No order
as to costs.
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CHIEF JUSTICE
A.P. DESHPANDE, J.
july08/judgment/sta31-08draft.sxw
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