State Of Jharkhand & Ors vs Tata Steel Ltd & Ors


  • Whether the payment of tax-deferred tax was made within the prescribed period? 


  • The High Court, as is manifest, while quashing the notification nos. 201 and 202 had directed the State to grant deferment of tax to the 1st respondent under Section 95(3) (ii) of the JVAT Act. The court mentioned that the exemption was claimed and not granted, the 1st respondent had preferred an appeal by special leave but the same has already been disposed of. It has been fairly stated at the Bar that the issue that is seminal to the present lis is the benefit of deferment and the period of repayment.
  • It was the admitted position that the assessee had collected the tax from the consumers for the period 01.04.2006 to 31.07.2008 and stopped collecting tax after 31.07.2008. It is pertinent to note here that on 12.07.2013, in IA No. 1 of 2013, the following order came to be passed the court had directed the payment of Rs. 186.70 cr in small amounts to the appellant applicant.
  • The singular issue for consideration was the interpretation of the deferment policy in the context of provisions enumerated under the JVAT Act. Section 95(3) (ii) envisages that a registered dealer who was enjoying the benefit of exemption of tax is allowed to convert the facility of exemption from payment of tax under the JVAT Act into the facility of deferment of payment of tax for the unexpired period. The assessee-company had availed the deferment and paid the amount of tax and the issue was that the assessee had failed to make the payment of deferred tax under the prescribed period.
  • The court examined the relevant parts of S.O No. 480 dated 22.12.1995 and referring the case of Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat and Two ors relied upon by the respondent the court observed that that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter was governed wholly by the language of the notification.
  • It had also been held by the Constitution Bench, if the tax-payer is within the plain terms of the exemption, it cannot be denied its benefits by calling in aid any supposed intention of the exempting authority. The court relied upon Maunsell v. Olins; Utkal Contractors and Joinery Pvt. Ltd. and others v. State of Orissa and others and M/s Doypack Systems Pvt. Ltd. v. Union of India & others wherein it were laid down that Not infrequently one ‘rule’ points in one direction, another in a different direction. In each case we must look at all relevant circumstances and decide as a matter of judgment what weight to attach to any particular ‘rule’.”
  • In this regard, a reference to Mahadeo Prasad Bais (Dead) vs. Income-Tax Officer ‘A’ Ward, Gorakhpur, and another was made. In the said case, it was held that an interpretation that will result in an anomaly or absurdity should be avoided and where literal construction creates an anomaly, absurdity, and discrimination, the statute should be liberally construed even slightly straining the language so as to avoid the meaningless anomaly.
  • The first part of sub-para (1) of para 5 stipulates that the repayment of deferred tax amount shall have to be done after the completion of eligibility period of deferment or the prescribed percentage limit of fixed capital investment, whichever reaches earlier. In the case at hand, the period of exemption was converted to a period of deferment of tax. It is for 8 years. There is no dispute that the assessee had availed the exemption for a period of 6 years and he is entitled to deferment of tax for the rest of the period which commenced in 2006. The notification lays a clear postulate that repayment of total deferred amount shall have to be done in ten equal six monthly installments in such a manner so as to be completed within 13 years from the date of start of deferment.
  • The court observed that the words “from the date of start of deferment” have to have nexus with the policy stated in the beginning. The policy would apply if the unit has commenced between 01.09.1995 and 31.08.2000; that it has a registration certification from the prescribed authority and that, most importantly, it has been given an eligibility certificate for the said purpose. The policy would come into play only if these conditions are satisfied and then the assessee will be allowed to have the benefit of deferment of sales tax on the sale of manufactured finished goods for a prescribed period. Therefore, the authority has been given the power to lay down the prescribed period for grant of deferment.
  • The concept of exemption is distinct from the concept of deferment of tax. After the JVAT Act came into force, under the statutory provisions, there was no exemption, and beneficiaries were entitled to convert to the scheme of deferment. The period remains intact, that is, 8 years. The repayment has to be done in equal six monthly installments and that period is 5 years. The prescribed authority can grant an eligibility certificate but he has to keep in view the terms and conditions stipulated in the notification.
  • Thus analyzed, the irresistible conclusion is that the repayment schedule has to end on 31.08.2013 within a span of 5 years from the expiration of the eligibility period.
  • The court also made it clear that the question of levy of penalty as envisaged under Rule 66 of the Rules should not be made applicable to the case at hand.

The assessee-1st respondent had already deposited the amount in pursuance of the order of this Court and regard being had to the nature of litigation, we direct that the 1st respondent-assessee shall pay 12% interest per annum and the said amount shall be deposited with the competent authority of the revenue within three months hence.   Source: