Code of Civil Procedure, 1908 – s.11, Explanation IV – Respondent-State enacted the 2007 Act after the High Court declared the 2000 Act to be ultra vires inter alia holding that Entry Tax levied on crude oil does not fulfil the requirements of compensatory tax – Challenged by the appellant before the High Court – Supreme Court in Jaiprakash Associates Limited case referred the issue of levy of Entry Tax in various States enactments including U.P. for determination by nine Judges Bench – High Court held that the State did not lack legislative competence in enacting the 2007 Act – SLP filed by the appellant – Supreme Court passed interim order staying the operation of the judgment of the High Court inter alia subject to the appellants in each case depositing 50% of the accrued tax liability under the 2007 Act – Determination of interest, payable by the appellant was to be determined subsequently – Nine Judges Bench decided the reference in Jindal Stainless Limited case – Thereafter, the matter was taken by the Regular Bench and by judgment dtd. 21.03.17 Supreme Court granted liberty to the appellant to question the levy of Entry Tax under the 2007 Act, on the issues left open in the order of the Nine Judges Bench, before High Court by way of fresh writ petition – Appellant filed Writ Petition No.25730 of 17 before the High Court, where assessment orders were also assailed – Dismissed vide judgment dtd.04.05.18 upholding the validity of the 2007 Act– Demand notices issued– Challenged by the appellant in so far as demand towards interest was concerned – Respondents raised preliminary objection that the writ petition is second writ petition on the same and consequential cause of action– Dismissed – On appeal, held: Writ Petition No.25730 of 17 was filed by the appellant in pursuant to the liberty dtd. 21.03.17 challenging the vires of 2007 Act – s.11, Explanation IV provides that a plea which might and ought to have been taken in the earlier suit, shall be deemed to have been taken and decided against person raising the plea in the subsequent suit – Present is a case where the plea questioning the leviability of the interest was specifically raised by the appellant in the Writ Petition No.25730 however, the Division Bench took the view that it was to deal with the challenge on the grounds as reflected in the judgment dtd.
21.03.17 and thus did not permit the consideration of any other questions including the question of interest – Issue which was not expressly permitted to be decided cannot operate as res judicata in subsequent writ petition where the challenge was to the leviability of the interest – Further, the High Court de-tagged the writ petition from the the main bunch where the challenge to levy of interest was made – High Court committed error in upholding the preliminary objection of the respondent – Matter remitted to High Court inter alia for determining the liability of interest – U.P. Tax on Entry of Goods Ordinance, 2000 – U.P. Tax on Entry of Goods into Local Areas Act, 2000 – U.P. Tax on Entry of Goods into Local Areas Act, 2007 – ss.4, 9, 10, 12 and 13 – Constitution of India – Arts. 301 and 304.
U.P. Tax on Entry of Goods into Local Areas Act, 2007 – s.13 – Held: Application of provisions of VAT Act is provided by s.13 of the 2007 Act with certain changes – s.13 mutatis mutandis applies s.33 of the VAT Act – s.33 has to be applied with respect to payment and recovery of tax – Thus, the payment of interest which is contemplated u/s.33 on the amount of tax has to be applied with regard to the payment of Entry Tax and the interest thereon – Even if provision of s.33 of VAT Act is to be treated as machinery provision which is to be applied by virtue of s.13 of 2007 Act, the machinery provision has to be interpreted in a manner so as to make the liability effective and treated to be substantive law – Submission of the appellant that 2007 Act does not contain any substantive law for levy of the interest, rejected – U.P. Value Added Tax Act, 2008 – s.33 – Machinery provision when treated as substantive law. Words & Phrases – ‘mutatis mutandis’ – Meaning of – Discussed.
Allowing the appeals, the Court
HELD: 1.1 Writ Petition No.25730 of 2017 was filed by the appellant in pursuant to the liberty dated 21.03.2017. The main pleadings and the grounds raised in the writ petition relate to challenge to vires of U.P. Tax on Entry of Goods into Local Areas Act, 2007. In the writ petition direction sought was declaring the Act, 2007 as invalid, void and unconstitutional in so far as purports to levy entry tax on crude oil imported into India for Mathura Refinery. Further reliefs were claimed in the writ petition including prayer for quashing the assessment orders 1999-2000 to 20112012. In the writ petition there was challenge to interest also. The Division Bench took the view that it is to deal with the challenge on the grounds as reflected in the judgment of the Regular Bench dated 21.03.2017. The Division Bench, thus, confined the consideration limited to the grounds reflected in the questions framed by the regular Bench of the Supreme Court. The Division Bench, thus, consciously confined the consideration to only three questions from the judgment of Supreme Court dated 21.03.2017. The Division Bench clearly did not permit the consideration of any other questions including the question of interest which is clear from the judgment dated 04.05.2018. When the judgment was reserved on 09.11.2017 in Bunch of writ petitions including W.P.No.25730 of 2017, in the writ petitions where challenge to levy of interest was separately made were de-tagged. [Paras 24-26][623-D-E; 624-F-G]
1.2 Present is a case where the Division Bench while deciding Writ Petition No.25730 of 2017 consciously restricted the consideration to three questions as noted in the judgment of Supreme Court dated 21.03.2017 and did not permit to raise any submission other than three questions as noted above or proceed to consider any other questions. The issue which was not expressly permitted to be decided by judgment dated 04.05.2018 cannot operate as res judicata in subsequent writ petition filed by the appellant where the challenge to the leviability of the interest has been raised. Explanation IV to s.11, CPC provides that a plea which might and ought to have been taken in the earlier suit, shall be deemed to have been taken and decided against person raising the plea in the subsequent suit. Present is a case where the plea of questioning the leviability of the interest was specifically raised by the appellant in the writ petition. The Division Bench of the High Court did not entertain such pleas due to the Court having restricted the consideration to the three questions. Subsequent writ petition where plea of leviability of the interest was raised could not have been thrown on the ground of res judicata. The sequence of the events and the fact of detagging the writ petition with the main Bunch where challenge to interest was made separately clearly indicate that the Division Bench which reserved the judgment on 09.11.2017 clearly intended not to entertain the question of liability to pay interest in the Bunch which was reserved on 09.11.2017. When the High Court expressly restricted the consideration to three issues, the plea of constructive res judicata cannot be pressed in service against the appellant to preclude him from raising the question which was not expressly permitted to be argued in Writ Petition No.25730 of 2017. From the facts of the case, it is apparent that in the order of this Court passed on 06.12.2013 while modifying the interim order passed in C.A. No. 3413 of 2012 (arising out of SLP(C)No.2757-2758 of 2004), this Court observed “in the event of appellant failing in this appeal, the appellant will be liable to pay the arrears of tax along with interest, as may be determined by this Court under the provisions of the Uttar Pradesh Entry Tax Act, 2007, at the time of final disposal of the appeal.” When Appeal No.3413 of 2012 was ultimately decided on 21.03.2017 by this Court, this Court granted liberty to the appellant to file fresh writ petition raising the issues mentioned therein for consideration of the High Court. In the order dated 21.03.2017 there was no determination by this Court regarding interest to be paid by the appellant under the provisions of the Entry Tax Act, 2007. However, when the liberty was granted by this Court to the appellant to raise above noted three issues on the necessary factual background or any other constitutional/statutory issues, which arise for consideration, the High Court was free to consider the question of liability of interest to be satisfied by the appellant under Act, 2007. [Paras 28-30][625-C-E; 626-A-H]
1.3 The question relating to nature and extent of liability to pay interest on Entry Tax under the scheme of Act, 2007 need to be examined by this Court in these appeals. The High Court in the impugned judgment committed error in upholding the preliminary objection of the respondent. [Para 32][627-D-E]
1.4 Section 4 of the U.P. Tax on Entry of Goods into Local Areas Act, 2007 provides for levy of tax. Section 4(1) provides that for the purpose of development of trade, commerce and industry in the State, there shall be levied and collected a tax on entry of goods specified in the Schedule into a local area for consumption, use or sale therein, from any place outside that local area, at such rate not exceeding five per cent of the value of the goods as may be specified by the State Government by notification. Section 9 deals with submission of returns and assessment of tax. Section 10 deals with provisional assessment of tax. Section 12 deals with realisation of tax through manufacturer. Section 12 deals with only one incident of realisation of Entry Tax, i.e., through manufacturer. Section 12(1) makes it clear that any person who intends to bring into a local area from any manufacturer within the State, such goods specified in the Schedule as may be notified by the State Government, shall, at the time of taking delivery of the goods from the manufacturer, pay to the manufacturer the tax payable on entry of such goods into the local area and the manufacturer shall receive the tax so paid. Section 12(2) creates liability on person who intends to bring into a local area from any manufacturer any goods specified in the Schedule and the time of payment is statutorily laid down that is at the time of taking goods. Section 12(3) contemplates a situation where although manufacturer received the tax under Section 12(1) but failed to pay tax as required by Section 12(2) then he shall be liable to pay tax along with the interest. Thus, liability of the interest under Section 12(3) is confined to one particular situation and does not provide for any universal application for payment of interest. Requirement of payment of interest under Section 12 (3), thus, is for a particular situation and has no application with regard to any other instance of liability to pay tax. Present is a case where appellant is not receiving any goods from any manufacturer, hence, in the present case Section 12 has no applicability. Section 13 mutatis mutandis applies Section 33 of U.P. Value Added Tax Act, 2008. [Paras 33, 34, 36 and 39][628-A-C; H; 630-A-D; 631-C-D]
1.5 Thus, application of provisions of VAT Act, 2008 is provided by Section 13 of Act, 2007 with certain changes in points of details. Section 33 of the VAT Act, 2008 which has been mentioned to apply under Section 13 has to be applied with respect to payment and recovery of tax. Thus, the payment of interest which is contemplated under Section 33 on the amount of tax has to be applied with regard to the payment of Entry Tax and the interest thereon. Even if provision of Section 33 of VAT Act, 2008 to be treated as machinery provision which is to be applied by virtue of Section 13 of Act, 2007, the machinery provision has to be interpreted in a manner so as to make the liability effective and treated to be substantive law. The submission of the counsel for the appellant that Act, 2007 does not contain any substantive law for levy of the interest, rejected. [Paras 43 and 48][634-E-F; 636-H; 637-A]
1.6 The questions for determining the liability of interest and various aspects including factual aspects need to be examined and considered by the High Court. For instance, what shall be the effect of deposit of Entry Tax in separate interest-bearing account in pursuance of the interim order of this Court dated 09.02.2004 in Civil Appeal Nos.997-998 of 2004 needs to be considered. There may be few other issues, questions of facts which need to be decided by the High Court for determining the liability of interest of the appellant. It shall also be open for the High Court to frame any other question or issue which may be required to be considered and answered. The impugned judgment of the High Court is set aside. The Writs are revived before the High Court to be considered and decided on merits. [Paras 49, 50][637-B-D]
J.K. Synthetics Limited v. Commercial Taxes Officers (1994) 4 SCC 276 ; V.V.S Sugars v. Govt. of A.P. and others (1999) 4 SCC 192 : [1999] 2 SCR 925
– followed.
M/s. Ashok Service Centre and others v. State of Orissa (1983) 2 SCC 82 : [1983] 2 SCR 363 ; Rajasthan State Industrial Development and Investment Corporation and another v. Diamond & Gem Development
Corporation Limited and another 2013 (5) SCC 470 : [2013] 4 SCR 331 – relied on.
Jindal Stainless Ltd. (2) and Another v. State of Haryana and Others (2006) 7 SCC 241 : [2006] 3 SCR 1095 ; Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC
232 : [1961] SCR 809 ; Automobile Transport
(Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406 : 1963 SCR 491 ; State of U.P. & Ors. v. M/s. Indian Oil Corporation Ltd. & Etc. 2017(6)
SCALE 540 ; Jaiprakash Associates Limited v. State of Madhya Pradesh & Ors. (2009) 7 SCC 339 : [2008]
17 SCR 1282 ; ITC Limited v. State of U.P. and Others. Decision of Allahabad High Court in Writ Tax No. 1484 of 2007; Jindal Stainless Limited & Anr. v. State of Haryana & Ors. (2017) 12 SCC 1 : [2016] 1 SCR 1 ; M/s. Birla Corporation Limited vs. State of U.P Decision of Allahabad High Court in Writ Tax No. 474 of 2017; VST Industries Limited v. The State of Uttar Pradesh & Ors. S.L.P. No. 2691 of 2018; Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise and another (2016) 3 SCC 643 : [2015] 12 SCR 332 ; India Carbon Ltd. and others v. State of Assam (1997) 6 SCC
479 : [1997] 3 Suppl. SCR 1 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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