M/s.PRATHISTA INDUSTRIES LIMITED, V. Commercial Tax Officer,

WP/35359/2012

AI Insights

The case involves M/s. Prathista Industries Limited, which sought an advance ruling on the classification of its products under the A.P. VAT Act, 2005. The Authority for Clarification and Advance Ruling (ARA) issued a ruling that the products were taxable under a different entry than the one claimed by the petitioner. Aggrieved by this ruling, the petitioner filed appeals and challenged the assessments made under the Central Sales Tax Act (CST Act) and the A.P. VAT Act during the period the advance ruling was pending. The core legal issue was whether the provisions relating to advance rulings under the A.P. VAT Act automatically apply to assessments under the CST Act, given that the CST Act incorporates the machinery provisions of the VAT Act but lacks specific provisions for advance rulings.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 733011 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 23-01-2013
• Assessment Year: misc
• Other Referred Cases: Sushil Kumar Mehta v. Gobindram Bohra, Sabitri Devi v. Saratchandra Rout, State of Rajastan v. Jeev Raj, Govind Saran Ganga Saran v. CCT, Tirupati Chemicals, Vijayawada v. Dcto, State of Madras v. N.K.Nataraja Mudaliar, Mysore Electrical Industries Ltd v. Commercial Tax Officer, IFCI Ltd v. Commercial Tax Officer, Commissioner of Income Tax v. K.Srinivasan, Wallace Flour Mills v. Collector of Central Excise, Bombay, State Of Mysore v. Yaddalam Lakshminarasimhaiah Setty, CB Basappa v. State of Mysore, State of Tamilnadu v. K.A. Ramudu Chettiar, Tek Chand Daulat Rai v. Excise and Taxation Officer, Thallam Balasubrahmanyam v. State of A.P., International Cotton Corporation (P) Ltd v. Commercial Tax Officer, A.V. Rajasekharappa v. Commercial Tax Officer, Rattanlal Tiku v. Commissioner of Income Tax, R.C.Hiremath v. The Judicial Magistrate First Class, S.S. Gadgil v. Lal and Company, Jameel and Company v. CTO, State of Tamil Nadu v. Sita Lakshmi Mills, Gwalior Rayon Silk Mfg.(WVG) Co. Ltd v. Assistant Commissioner Of Sales Tax, Orissa Cement Ltd v. State of Orissa, M/s. Khemka and Co. ( Agencies ) Pvt Ltd v. State of Maharastra, India Carbon Ltd v. State of Assam, New Central Jute Mills Co. Ltd v. The Assistant Collector of Central Excise, Allahabad, Bhatinda Improvement Trust v. Balwant Singh, Commissioner of Income Tax v. M/s Mahaliram Ramjidas, Colombia Sportswear Company vs. Director of the Income Tax
• Laws Referred To: A.P. VAT Act, 2005, Central Sales Tax Act, 1956
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B VENKATADRI
• Assessee Lawyers: S R R VISWANATH
• Keywords: Advance ruling; Assessment; Central Sales Tax; Jurisdiction; Value Added Tax
• Section: 9; 67

Judgement Text

"* THE HON’BLE SRI JUSTICE GODA RAGHURAM AND * THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO + W. P. Nos. 35355 and 35359 of 2012 %23.01.2013 W.P No. 35355 of 2012 and batch:- # M/s. PRATHISTA INDUSTRIES LIMITED, 1-5-1015/Plot Nos.80 & 81; Vaishnavi Bhavan; Father Balaiah Nagar, Manjeera Colony; Old Alwal, Secunderabad – 500 010. Rep. by its Director Sri K.S.N. Murthy. …. PETITIONER AND 1. Commercial Tax Officer, Bhongir Circle, D.No.3-2-202, Meena Bazar, Opp. Bharatha Talkies, Bhongir 508 116. Nalgonda District. 2. Authority for Clarification And Advance Ruling, IV Floor; Commercial Taxes Complex, Opp. Gandhi Bhavan, Nampally, Hyderabad. .....RESPONDENTS ! Counsel for the petitioner: Sri S. R. R. Viswanath, Advocate, ^ Counsel for respondents: Sri B. Venkatadri, Special Government Pleader for Commercial Taxes < Gist: > Head Note: ? Cases referred: 1) (1990) 1 SCC 193 2) (1996) 3 SCC 301 3) Civil Appeal No.1585,1586 of 2005 dt: 11-8-2011. 4) (1985) 60 STC 1 (SC) 5) (2011) 52 APSTJ 48 (A.P) 6) AIR 1969 SC 147 7) (1971) 27 STC 559 (Karnataka) 8) (2011) 186 ECR 34 (Delhi) = ((2011) 42 VST 108 (Delhi)) 9) AIR 1972 SC 491 10) (1989) 4 SCC 592 11) AIR 1965 SC 1510 12) (1966) 17 STC 5 ( Karnataka) 13) AIR 1973 SC 2230 14) (1972) 29 STC 585 (Punjab and Haryana) 15) (1973) 31 STC 498 ( A.P) 16) AIR 1975 SC 1604 17) (1975) 35 STC 379 ( Karnataka) 18) (1974) 97 ITR 553 ( Jammu and Kashmir) 19) (1981) 47 STC 38 ( Karnataka) 20) AIR 1965 SC 171 21) (1973) 30 STC 321 ( A.P) 22) AIR 1974 SC 1505 23) AIR 1974 SC 1660 24) AIR 1970 SC 1672 25) (1975 ) 2 SCC 22 26) AIR 1997 SC 3054 27) AIR 1970 SC 454 28) AIR 1992 SC 2214 29) AIR 1940 PC 124 30) Order dated 30-07-2012 in SLP(C) No.3318 of 2011 and batch. THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO W. P. Nos. 35355 and 35359 of 2012 COMMON ORDER: (per Hon’ble Sri Justice M.S. Ramachandra Rao) In these writ petitions, the question which arises for consideration is whether the provisions relating to Clarification and Advance Rulings contained in Section 67 of the A.P. VAT Act, 2005 would automatically apply to assessments made under the Central Sales Tax Act, 1956, inasmuch as Section 9 of the latter Act applies the machinery provisions of the former Act to assessments, levy and collection of tax under the latter Act. Heard Sri S.R.R.Viswanath, learned counsel for the petitioner at the stage of admission and Sri B. Venkatadri, learned Special Government Pleader for Commercial Taxes. Both writ petitions are filed by the same petitioner, a company registered under the Companies Act, 1956. It is also registered as a dealer under the A.P. Value Added Tax, 2005 and the Central Sales Tax Act, 1956. It is engaged in the manufacture of eco-friendly organic fertilizers for the benefit of various agricultural crops besides feed supplements, organic acids, chelated minerals/mineral mixtures for poultry and veterinary segments and has technical collaboration with Council for Scientific and Industrial Research, Department of Bio-technology, Government of India, etc. The petitioner believed that 17 of its products fall under entry 26 of the Ist Schedule to the A.P. VAT Act, 2005 (for short “VAT Act”) and hence exempt from tax. It made an application dated 6.2.2009 under Section 67(1) of the VAT Act to the Authority for Clarification and Advance Ruling (for short “ARA”) i.e. the 2nd respondent and sought an advance ruling with regard to classification of its 17 products under the said Act. By order dated 16.11.2011, the ARA by a majority of 2: 1 held that all the products fall under Entry 19 of IV Schedule ( six of the 17 products having microbes under the sub-category “bio fertilizers” and the remaining 11 products under the sub-category “nutrient elements” such as iron, zinc, copper ) and that they are liable to tax at the rate applicable to IV Schedule of the VAT Act. The petitioner was asked to collect the orders of the 2nd respondent on 1.5.2012. The petitioner sent its representatives with authorization dated 2.5.2012. On 3.5.2012, the 2nd respondent served the copies of the majority ruling of ARA dated 16.11.2011 and that of the dissenting member of the ARA dated 17.11.2011. Aggrieved thereby, the petitioner filed TA No.235 of 2012 to the Sales Tax Appellate Tribunal, Hyderabad ( for short “STAT”) under Section 67(4) of the VAT Act, on 1.6.2012. The appeal is pending before the STAT. The first respondent had made assessments for the years 2005-06 and 2006-07 under the VAT Act and the CST Act. The petitioner filed appeals before the Appellate Deputy Commissioner (CT), Hyderabad Rural Division. By order dated 2.1.2012, the appellate authority set aside the assessments on the issues pending before the 2nd respondent and remanded the matter with a direction to follow the ruling of the 2nd respondent. It is the contention of the petitioner that the first respondent could not have initiated and completed assessment during the period when the application for Advance Ruling was pending before the 2nd respondent; and in case the 2nd respondent disposes of the application for Advance Ruling and it is appealed against, till the disposal of such appeal by the STAT. The petitioner submits that the first respondent could not have made any assessment either under the VAT Act or CST Act during the period from 6.2.2009 till the disposal of the appeal T.A.No.235 of 2012 by the STAT. On 7.2.2011 and 8.3.2011, the first respondent issued a show cause notice for the year 2007-08 and 2008-09 under the CST Act proposing to complete assessment among others on the products on which advance ruling was sought proposing to levy a tax on a net turnover of Rs.19,54,24,967/- and Rs.30,15,59,241/- respectively at the applicable rates. The petitioner filed objections to the said show cause notices on 13.3.2011 and 26.4.2011 respectively seeking exemption on inter state sales turnover as per Entry No.26 of I Schedule to VAT Act. By orders dated 30.3.2011 and 23.2.2012 respectively, the first respondent overruled the objections of the petitioner and assessed the petitioner to tax of Rs.2,51,79,495/- and Rs.1,17,52,360/- respectively and issued notices dated 30.3.2011 and 23.2.2012 demanding the petitioner to pay the assessed tax. Subsequently, the first respondent passed a rectification order dated 13.6.2011 in respect of the assessment year 2007-08 ( CST ) on the ground that the turnover of Rs.20,03,25,237/- was subjected to tax @ 12.5% instead of @ 4% and demanded Rs.81,57,411/- from the petitioner. The assessment order dated 30.3.2011 passed by the first respondent for the assessment year 2007-08 as rectified by the order dated 13.6.2011 is challenged by the petitioner in W.P.No.35355 of 2012. The assessment order dated 23.2.2012 passed by the first respondent for the assessment year 2008-09 is challenged by the petitioner in W.P.No.35359 of 2012. The principal contention of the petitioner is that the respective assessment orders impugned in these writ petitions are void as the first respondent has no jurisdiction to pass them in view of Section 67 of the VAT Act being applicable to assessments and collection of tax under the CST Act in view of Section 9 thereof. It contends that it had made an application for Advance Ruling on 6.2.2009; that the 2nd respondent gave its ruling by order dated 16.11.2011; that the said ruling was served on the petitioner on 3.5.2012 (after lapse of six months); that the petitioner filed T.A.No.235 of 2012 against it before the STAT which is pending and under sub sections (3) and (4) of Section 67 of the VAT Act, the Assessing Authorities are barred from deciding any issue with regard to which an Advance Ruling is sought and is pending adjudication by the STAT; therefore the first respondent could not have made any assessment during the pendency of the application for Advance Ruling before the 2nd respondent and consequently the impugned orders passed are without jurisdiction and such objection can be raised even in collateral proceedings; that the impugned orders of assessment are also in violation of Articles 14, 265 and 300-A of the Constitution of India. The petitioner relied upon the decisions in Sushil Kumar Mehta v. Gobindram Bohra[1], Sabitri Devi v. Saratchandra Rout[2], State of Rajastan v. Jeev Raj[3], Govind Saran Ganga Saran v. CCT [4], Tirupati Chemicals, Vijayawada v. Dcto [5], State of Madras v. N.K.Nataraja Mudaliar [6], Mysore Electrical Industries Ltd v. Commercial Tax Officer [7], IFCI Ltd v. Commercial Tax Officer[8], Commissioner of Income Tax v. K.Srinivasan [9], Wallace Flour Mills v. Collector of Central Excise, Bombay[10], State Of Mysore v. Yaddalam Lakshminarasimhaiah Setty [11], CB Basappa v. State of Mysore [12], State of Tamilnadu v. K.A. Ramudu Chettiar [13], Tek Chand Daulat Rai v. Excise and Taxation Officer [14], Thallam Balasubrahmanyam v. State of A.P. [15], International Cotton Corporation (P) Ltd v. Commercial Tax Officer[16], A.V. Rajasekharappa v. Commercial Tax Officer [17], Rattanlal Tiku v. Commissioner of Income Tax [18], R.C.Hiremath v. The Judicial Magistrate First Class [19], S.S. Gadgil v. Lal and Company [20], Jameel and Company v. CTO [21], State of Tamil Nadu v. Sita Lakshmi Mills[22], Gwalior Rayon Silk Mfg.(WVG) Co. Ltd v. Assistant Commissioner Of Sales Tax [23], Orissa Cement Ltd v. State of Orissa[24], M/s. Khemka and Co. ( Agencies ) Pvt Ltd v. State of Maharastra [25], India Carbon Ltd v. State of Assam [26], New Central Jute Mills Co. Ltd v. The Assistant Collector of Central Excise, Allahabad [27], Bhatinda Improvement Trust v. Balwant Singh[28], Commissioner of Income Tax v. M/s Mahaliram Ramjidas [29]. The Special Government Pleader for Commercial Taxes, however contended that there is no provision under the Central Sales Tax Act for advance rulings, as in the VAT Act; that merely because Section 9 (2) of the CST Act states that provisions of the general sales tax law of the appropriate State shall apply in respect of the assessment and collection of Central Sales Tax, it would not mean that Section 67 of the VAT Act dealing with clarification and advance are automatically applicable in respect of assessments under the CST Act; that provisions relating to advance rulings are substantive in nature and have to be specifically provided for in the CST Act; that they cannot be applied by implication/interpretation; therefore there was no bar for the assessing officers to make assessments under the CST Act merely because an appeal has been filed by the petitioner before the STAT challenging the advance ruling orders dt.16- 11-2011 of the 2nd respondent; that sub sections (3) and (4) of Section 67 of the VAT Act, 2005 are not attracted; and the assessing officer had jurisdiction to make the assessments in respect of the petitioner which are impugned in these writ petitions. We have considered the submissions of the counsel for the petitioner and the learned Special Government Pleader for Commercial Taxes. The Central Sales Tax Act is enacted by the Parliament under Article 246 (1) of the Constitution of India pursuant to its exclusive power to make law with respect to the matters enumerated in Entry 92-A and 92-B in List-I in the Seventh Schedule. The VAT Act is enacted by the Andhra Pradesh State Legislature under Article 246 (2) of the Constitution of India with respect to the matters enumerated in Entry 54 of List-II in the Seventh Schedule. Section 6 and Section 9 of the CST Act state as follows: “6 Liability to tax on inter-State sales: (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales of goods other than electrical energy effected by him in the course of inter- State trade or commerce during any year on and from the date so notified: PROVIDED that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5, is a sale in the course of export of those goods out of the territory of India. (1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods,- (a) to the Government, or (b) to a registered dealer other than the Government, if the goods are of the description referred to in sub- section (3) of section 8, shall be exempt from tax under this Act : PROVIDED that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit, - (a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (b) if the subsequent sale is made— (i) to a registered dealer, a declaration referred to in clause (a) of sub-section (4) of section 8, or (ii) to the Government, not being a registered dealer, a certificate referred to in clause (b) of sub-section (4) of Section 8: PROVIDED FURTHER that it shall not be necessary to furnish the declaration or the certificate referred to in clause (b) of the preceding proviso in respect of a subsequent sale of goods if, - (a) the sale or purchase of such goods is, under the sales tax law of the appropriate State, exempt from tax generally or is subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name); and (b) the dealer effecting such subsequent sale proves to the satisfaction of the authority referred to in the preceding proviso that such sale is of the nature referred to in clause (a) or clause (b) of this sub- section. (3) Notwithstanding anything contained in this Act, if- (a) any official or personnel of- (i) any foreign diplomatic mission or consulate in India; or (ii) the United Nations or any other similar international body, entitled to privileges under any convention or agreement to which India is a party or under any law for the time being in force; or (b) any consular or diplomatic agent of any mission, the United Nations or other body. Referred to in sub- clause (i) or sub-clause (ii) of claue (a), purchase any goods lfor himself or for the purposes of such mission, United Nations or other body, then, the Central Government may, by notification in the Official Gazette, exempt, subject to such conditions as maybe specified in the notification, the tax payable on the sale of such goods under this Act.) 9 Levy and collection of tax and penalties: (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter- State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced: PROVIDED that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected- (a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of Section 8 in connection with the purchase of such goods; and (b) where such subsequent sale has been effected by an unregistered dealer, in the State from which such subsequent sale has been effected. (2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-asses, collect and enforce payment of tax, including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: PROVIDED that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf make necessary provision for all or any of the matters specified in this sub-section. ((2A) All the provisions relating to offences, interest and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in sections 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.) (2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax and assessment and collection of interest for delayed payment of tax, of the general sales tax laws of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law. (3) The proceeds in any financial year of any tax, including any interest or penalty, levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it; and the proceeds attributable to Union Territories shall form part of the Consolidated Fund of India.” I n Nataraja Mudaliar’s case (6 supra), the circumstances leading to the enactment of the Central Sales Tax Act, 1956 have been set out. The Supreme Court noticed that prior to the framing of the Constitution, Entry 48 of List-II of the Seventh Schedule to the Government of India Act, 1935 empowered the provinces to legislate on the subject of “tax on the sale of goods and on advertisement”; that in exercise of the said power, provincial legislatures enacted sales tax laws for their respective provinces acting on the principle of “territorial nexus”, and picked out one or more ingredients constituting a sale and made it or them the basis of imposing liability for tax; that such exercise of taxing power by the provinces led to multiple taxation of the same transaction by many provinces and the burden of tax fell ultimately on the consuming public; that the taxation enquiry commission examined the matter of tax on interstate sales and its recommendation led to enactment of the Constitution (6th amendment) Act, 1956; by that amendment Entry 92-A was added in Union List in the Seventh Schedule to the Constitution conferring power upon the Union to legislate in respect of “taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of interstate trade or commerce” ; and for Entry 54 in the State List, the following entry was substituted i.e. “taxes on sale or purchase of goods other than newspapers, subject to the provisions of Entry 92-A of List-I”; that Explanation to clause (1) of Article 286 was omitted and clauses (2) and (3) were substituted by fresh clauses by the newly enacted clause (2) and Parliament was authorized by law to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1) and by clause (3) it was enacted that any law of a State shall, insofar as it imposes or authorizes the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in interstate trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify; that in Article 269 (1) clause (g) was added authorizing the Government of India to collect tax on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of interstate trade or commerce and making it obligatory upon the Government of India to assign the tax to the States in the manner provided in clause (2); by clause (3) it was enacted that “Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of interstate trade or commerce”; that in the exercise of the authority conferred by the Constitution (6th amendment) Act, 1956, Parliament enacted on 21-12-1956, the Central Sales Tax Act, 1956 with a view to formulate principles (a) for determining when a sale or purchase of goods takes place in the course of interstate trade or commerce or outside a State or in the course of import into or export from India, (b) providing for the levy, collection and distribution of taxes on sales of goods in the course of interstate trade or commerce and (c) declaring certain goods to be of special importance in interstate trade or commerce and specifying the restrictions and conditions to which State Laws imposing taxes on the sale or purchase of such goods of special importance shall be subject; that the CST Act and the Constitutional provisions were intended to restrict the imposition of multiple taxation on a single interstate transaction by different States, each State relying upon some territorial nexus between the State and the sale; that the tax though collected by the State under the CST Act was as an agent of the Central Government, it was, by sub section (4) of Section 9 enacted in the implementation of the principle of assignment of tax set out in clause (2) of Article 269, assigned to the State which collected it; and that the Central Sales Tax Act is enacted under the authority of the Union Parliament, but the tax is collected through the agency of the State and is levied ultimately for the benefit of the State and is statutorily assigned to the States. In Mysore Electrical Industries Ltd’s case (7 supra), the High Court of Karnataka held that Section 9 (2) of the CST Act had adopted the procedure prescribed by the general sales tax law of the appropriate State in the matter of assessment, reassessment, collection and enforcement of payment of tax; that the said Act, if it had intended, could have delegated to the State Government the power to frame rules providing for assessment, reassessment, collection and enforcement of payment of tax under the CST Act; that instead of doing so, by Section 9 (2) of the Act, it had adopted the procedure under the general sales tax law of the appropriate State; and that in adopting the procedural law of the State, the Parliament cannot be said to have abdicated its essential legislative function. Similar view was expressed in Rajasekharappa’s case (17 supra) by the same High Court, Tekchand Daulat Rai’s case (14 supra) by the Punjab and Haryana High Court and in Thallam Bala Subrahmanyam’s case (15 supra) by this Court. The Supreme Court in International Cotton Corporation (P) Ltd.’s case (16 supra), approved the above view and held that the whole scheme of the Central Sales Tax Act (particularly Section 8 (2) (a) of the CST Act) is to adopt the machinery of the law relating to Sales Tax Acts of the various States, in cases where those States happen to be the appropriate States as also the rates prescribed by those Acts; that the adoption of the machinery of and the rate of tax prevalent in the State is for the convenience of assessment as well as for the convenience of the parties so that they will not have to deal with two sets of officers and two sets of laws in addition to avoiding discrimination between intrastate and interstate sales; that the very purpose of the Act and its scheme would be defeated or at least considerably impeded if the rates of tax applicable in any State in respect of intra-state sales were not applicable to inter-state sales where that State is the appropriate State. I n K.A.Ramudu Chettiar’s case (13 supra), the Supreme Court held that the power conferred under the amended Section 9 (2) of the CST Act embraces all the powers that the assessing authority had under the Sales Tax Law of the State in force during the relevant assessment year; and that by virtue thereof, the Appellate Assistant Commissioner, at the time he decided the appeal of the assessee, had the power to enhance the assessment because of the existence of such a power under the Madras General Sales Tax Act, 1959. In R.C. Hiremath’s case (19 supra), the High Court of Karnataka held that the provisions for making assessment is a substantive provision and not merely procedural. In the said case a firm which included the petitioner as a partner had become liable to pay tax but it was dissolved on 01-07-1963; that on the said day, there was no provision in the State Act or the Central Act prescribing a procedure for making an assessment against a dissolved firm; that subsequently by Act 9 of 1964, sub section (2) was introduced in the Karnataka Sales Tax Act, 1957 by amendment Act No.9 of 1964 providing for making of assessment against a dissolved firm and Section 34 of the said Act validated all the proceedings including assessments made against the dissolved firms; by Act 9 of 1970, the amended Section 15 (2) was given retrospective effect and Section 24 of the amending Act provided that all assessment orders made against dissolved firms earlier shall also be valid as having been made under the principal State Act as amended by Act 9 of 1970; by Central Sales Tax (Amendment) Act No.28 of 1969, Section 9 (2) of the said Act was given retrospective effect and by the said provision, all assessments made against the dissolved firms under the Central Act pursuant to the provisions under the Central Act were also validated. The Court held that the provision introduced in the form of sub section (2) of Section 15 of the State Act was only procedural and not substantive; but the order of the assessing authority made on 19-03-1967, levying central sales tax against the dissolved firm became valid by virtue of the subsequent amendment made to the State Act and the Central Act mentioned above. In Jameel & Co.’s case (21 supra), a Division Bench of this Court held that Rule 14-A (8) of the Central Sales Tax Rules which fixes time limits for making best judgment assessment in respect of escaped turnover is a fetter and not a period of limitation and that it is not a substantive provision, but is a rule of procedure, which falls within the domain of adjectival law. Therefore, the State Government has the power to make the Rule for carrying out the purposes of the Central Sales Tax Act by Section 13 (3) or 13 (4) of the Central Sales Tax Act. It also held that it was a case where one enactment (APGST Act) had been referred in another enactment (CST Act), but not a case where one enactment is incorporated and its provisions bodily lifted and put in the second enactment. Therefore all subsequent amendments to the general sales tax law, which were made, are applicable to the facts of the case. In M/s. Khemka & Co.’s case (25 Supra), the Supreme Court held that an assessee under the Central Sales Tax Act, 1956 cannot be made liable for penalty under the provisions of the State Sales Tax Act for default in payment of taxes within the prescribed time under the State Act when there is no provision in the Central Act for imposition of penalty for delay or default in payment of tax; that under Sec. 9(2) of the Central Sales Tax Act, the provisions of the State Act shall apply only for the purpose of assessment, re-assessment, collection and enforcement; that whatever be the objects of levying a penalty, its imposition gives rise to a substantive liability which can be viewed either as an additional tax or as a fine for the infringement of the law; that the machinery or procedure for its realization comes into operation after its imposition; in any case, it is an imposition of a pecuniary liability which is comparable to a punishment for the commission of an offence; that it is a well settled canon of construction of Statute that neither could a pecuniary liability be imposed nor an offence created by mere implication; that the imposition of a pecuniary liability, which takes the form of a penalty or fine for the breach of a legal obligation cannot be relegated to the region of mere procedure and machinery for the realization of tax. In India Carbon Ltd’s Case (26 Supra), the Supreme Court held that when there is no substantive provision in the Central Sales Tax Act, 1956 which obliges an assessee to pay interest on delayed payments of Sales Tax, by invoking Section. 9(2) of the Central Act the assessee cannot be made liable to pay interest for delayed payments of Sales Tax by relying upon the provisions of the Assam Sales Tax Act, 1947; that the provision relating to interest in the latter part of Section. 9(2) of the Central Act can be employed by the State’s Sales Tax Authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central Sales Tax and only to that extent; that the substantive law that the State’s Sales Tax Authorities must apply is the Central Act and in such application for procedural purposes alone would the provisions of the State Act become available. We will now consider, in the light of the above decisions, whether the provisions in S.67 of the VAT Act which provides for “Clarification and Advanced Ruling” are merely procedural provisions and by virtue of Section.9 (2) of the Central Sales Tax Act, these provisions would also apply in respect of assessments of Sales Tax in respect of inter-state sale transactions. It is not disputed that no such provision is entered in the Central Sales Tax Act. I n Tirupathi Chemicals’s case (5 Supra), a Division Bench of this High Court, interpreting the nature of power conferred by S.67 of the VAT Act held as follows: “As is evident from the title of Section 67 the clarification/ruling, which the ARA is required to give, is in “advance”. The word “advance” means made or given ahead of time. It is only a ruling given ahead of time which is an “advance ruling”. The object of giving a clarification in advance is to ensure uniformity in orders of assessment, appellate and Revisional orders (other than a revisional order passed by the Commissioner), with regards classification of goods under different entries of the various Schedules of the Act, or the rate of tax applicable to such goods, etc., thereby avoiding conflicting orders being passed by different assessing, appellate/revisional authorities under the Act. It is in furtherance of this object that Sections 67(2) and (3) of the Act respectively prohibit the ARA, and the officers or authorities in the commercial tax department, from entertaining an application seeking clarification, or to decide any issue for which an application has been made by an applicant under the Section and is pending before the ARA. The words “question” and “issue” are used inter-changeably in Sections 67(2) and (3), and mean the same. The effect of these two provisions is that the applicant-dealer is required to seek a clarification from the ARA prior to assessment proceedings being initiated against him, or before an appeal is filed either before the appellate authority or the STAT. Likewise the ARA is prohibited from giving a clarification when the quasi judicial/ judicial authorities under the Act have already initiated appropriate proceedings for, in such an event, the clarification given by the ARA would no longer be an advance ruling, and would fetter exercise of quasi judicial functions under the Act. The statutory bar under Section 67(3) would require the officers/authorities to defer assessment/ appellate/ revisional proceedings under the Act, and await the rulings of the ARA. The binding effect of the Ruling on all officers of the commercial taxes department, (other than the Commissioner), would ensure uniformity in the quasi-judicial orders passed by such officers as all of them are statutory bound to follow the ruling of the ARA. A similar bar is found in the proviso to Section 32(2) of the Act and, thereunder, the power of revision, under Section 32(1) and (2), cannot be exercised by the revisional authority in respect of any issue or question which is the subject matter of appeal before the Tribunal. The bar, under sub-section (3) of Section 67, would not apply either to the proceedings pending before the STAT under Section 33 of the Act, or those before this Court under Section 34, as such a bar is limited only to officers and authorities of the commercial taxes department. The requirement of the proviso to Section 67(2), of giving the applicant an opportunity of being heard, is to enable him to satisfy the ARA that the matter, pending before any officer or authority of the department or the tribunal or the Court, is not on a question raised in the application filed before the ARA. The requirement of the ARA recording reasons, for rejection of the application, is to enable the STAT to examine the validity of the ruling of the ARA (i.e., the principle on which the ruling is based), in the appeal preferred there against by the applicant.” Similar provision akin to S.67 of the VAT Act is also contained in S.245-Q to S.245-S of the Income Tax Act, 1961. The Supreme Court of India in Colombia Sportswear Company vs. Director of the Income Tax[30], held that S.245-S expressly makes the Advance Ruling binding on the applicant, in respect of the transaction and on the Commissioner and the Income Tax authorities subordinate to him; and therefore the Authority is a body acting in Judicial capacity and is a Tribunal within the meaning of the expression in Article 136 and 227 of the Constitution; that such a ruling would not affect the jurisdiction of the Supreme Court under Article 136 of the Constitution or of the High Court under Article 226 and 227 of the Constitution to entertain a challenge to the Advance Ruling pronounced by the authority; that when an Advance Ruling of the Authority is challenged before the High Court under Article 226 and / or Article 227 of the Constitution, the same should be heard directly by a Division Bench of the High Court and decided as expeditiously as possible. In our view, the provision for “Advance Ruling” is a mechanism introduced by the Legislature to ensure uniformity in orders of assessment, Appellate and Revisional Orders(other than a Revisional Order passed by the Commissioner), with regard to the classification of goods under different entries of the various schedules to the Act or the rate of Tax applicable to such goods etc., thereby avoiding conflicting orders being passed by different assessing / Appellate / Revisional Authorities. Such a mechanism can only be introduced by way of a substantive provision in a Statute and cannot be implied. Our view is also supported by the language of S.9 of the Central Sales Tax Act. Sub-section (2) thereof only makes applicable provisions of the State Sales Tax Law relating to assessment, re-assessment, collection and enforcement of Tax, including any interest or penalty. A provision relating to “Advance Ruling” would not fall into any of the above categories. An Advance Ruling may be an “aid” to an assessment, re-assessment, collection or enforcement of payment of tax but it is not in itself a mechanism for assessment, re-assessment, collection and enforcement of Tax which are normally done under the provisions of the Central Sales Tax Act by the competent authorities under the VAT Act. The above activities, it cannot be denied, can be done by such authorities without benefit of an Advance Ruling also (subject to appeal, revision etc., in the hierarchy of authorities provided under the VAT Act). It may be that the tax collected under the Central Sales Tax Act is ultimately assigned to the State in view of Article 269 as explained in N. K. Nataraja Mudaliar’s Case (6 Supra) and the Central Sales Tax though levied for and collected in the name of the Central Government is a part of the Sales Tax levied and imposed for the benefit of the State. But from this it does not follow nor does it follow from S.9 of the Central Sales Tax Act that every provision of the VAT Act including provisions relating to “Advance Ruling” would apply to proceedings for assessment, re-assessment, collection and enforcement of payment of Tax in relation to inter-state sale transactions under the Central sales Tax Act. S.67 (1) of the VAT Act which deals with “Clarification and Advance Ruling” empowers the Commissioner to constitute a State level “Authority for Clarification and Advance Rulings” comprising three officers not below the rank of Joint Commissioner to “clarify, in the manner prescribed, any aspect of the implementation of the Act” i.e, the said Authority can only clarify any aspect of the implementation of the VAT Act. We therefore hold that S. 67 does not empower the said Authority to issue clarifications or rulings in respect of implementation of statutes such as the Central Sales Tax Act (other than the VAT Act). We are of the view that the Judgment in Jameel and Co (21 Supra), is clearly distinguishable as in the said case, the provision imposing time limit on the powers of the assessing authority to make a best judgment assessment was held to be only a rule of procedure. Likewise Rattan Lal Tiku’s case (18 Supra) would also be inapplicable as in that case it was held that the provisions of S.143 of the Income Tax Act, 1961 were also held to be procedural. Orissa Cement’s case(24 Supra) was also a case dealing with the issue whether in view of S. 9(3) of the Central Sales Tax Act, the rebate provided in S.13(8) of the Orissa Sales Tax Act is payable to the assessee under the Central Sales Tax Act, if they pay the tax assessed within the prescribed time. It was held that a rebate for payment of Tax levied within the time prescribed under the Orissa Act was provided as a stimulus for prompt payment, that such a stimulus would facilitate and expedite collection and therefore is a part of process of collection. It was held that the power to collect tax assessed in the manner as the sale and purchase under the General Sales Tax Law of the State as provided in S.9(3) of the Central Sales Tax Act (as it then stood) included within itself, all concessions given under the Orissa Act for payment within the prescribed time. The said judgment would also not apply as the provision of rebate was held to be part of the process of “Collection of Tax” covered by S.9 and is different from a provision such as one for “Advance Ruling”. In our opinion a provision relating to “Advance Ruling” would fall in the same category as one relating to “Penalty” or “interest”, both of which were held to be substantive provisions in Khemka & Co., (Agencies) Private Ltd., (25 Supra) and India Carbon Limited (26 Supra). In this view of the matter we are of the opinion that the 1st Respondent is entitled to initiate and complete the assessment under the Central Sales Tax Act in respect of the petitioner when its application for “Advance Ruling” was pending before the Authority for Advance Ruling and pendency of its appeal against the said ruling before the S.T.A.T would also not impede or operate to disentitle the 1st respondent in any way in initiating or completing assessment under the Central Sales Tax Act, as provisions of S.67 of the VAT Act would not apply to assessments made under the Central Sales Tax Act. Therefore, it cannot be said that the impugned orders dated 30-03-2011 and 23-02-2012 passed by the 1st respondent under the Central Sales Tax Act are without jurisdiction. Therefore, the principles laid down in Sushil Kumar Mehta (1 Supra), Sabitri Devi (2 Supra), Jeev Raj (3 Supra) decisions that an order passed by a Court without jurisdiction is a nullity and its invalidity could be set up whenever and wherever it is sought to be enforced, have no application to the facts of this case. For the above reasons, the Writ Petitions are dismissed as being without any merit. No costs. ___________________________ JUSTICE GODA RAGHURAM ___________________________________ JUSTICE M.S. RAMACHANDRA RAO Dt: 23-01-2013 Note: L.R COPY TO BE MARKED. (b/o) kvr/scs [1] (1990) 1 SCC 193 [2] (1996) 3 SCC 301 [3] Civil Appeal No.1585,1586 of 2005 dt: 11-8-2011. 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