NESTLE INDIA LIMITED V. DEPUTY COMMISSIONER OF COMMERCIAL TAX

SCA/15842/2012

AI Insights

Nestle India Limited filed a petition against the Deputy Commissioner of Commercial Tax, challenging the orders that imposed VAT on the sale of 'Maggi Noodles'. The case revolved around the classification of 'Maggi Noodles' under the VAT Act and whether it should be considered as 'Sev', which is exempt from tax, or as 'Farsan', which is taxable. The petitioner argued that the product had been consistently classified as 'Sev' in previous assessments and was exempt from tax based on a long-standing decision by the Gujarat Sales Tax Tribunal. The respondent, however, reclassified the product under a different entry, leading to the imposition of tax. The court examined the legal principles of res judicata, the binding nature of tribunal decisions, and the proper application of tax laws.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 726644 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 07-05-2015
• Assessment Year: misc
• Other Referred Cases: Fenoplast Vs. State of A.P. And others, Kothari Products Ltd. Vs. Govt. of A.P., Mayuri Yeast India Private Ltd. Vs. State of Uttar Pradesh and another, BSNL V. Union of India, Excel Industries Limited Vs. Commissioner of Income Tax, Union of India and others Vs. Kamlakshi Finance Corporation Ltd., E I Dupont India Private Limited and another V. Union of India and others, Deepak Agro Foods Vs. State of Rajasthan and others, Raja Bahadur Vishaswara V. CIT (Appeals), Krishak Bharti Cooperative Ltd. V. DCIT, Kamladevi Jhawar, CIT V. Kalpetta Estates Ltd., New Jahangir Vakil Milks Ltd., CIT V. Sohanlal, Lachhiram Puranmal, Baijnath Brijmohan and Sons Pvt. Ltd. V. CIT
• Laws Referred To: Gujarat Valued Added Tax Act, Gujarat Sales Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JAIMIN GANDHI
• Assessee Lawyers: S N SOPARKAR; AMAR BHATT
• Keywords: Classification of Goods; Maggi Noodles; Sales Tax; Sev; Tax Exemption; VAT
• Section: 226; 62; 5(1)

Judgement Text

"C/SCA/15842/2012 CAV JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 15842 of 2012 With SPECIAL CIVIL APPLICATION NO. 5750 of 2014 With SPECIAL CIVIL APPLICATION NO. 6193 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE S.H.VORA ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ================================================================ NESTLE INDIA LIMITED....Petitioner(s) Versus DEPUTY COMMISSIONER OF COMMERCIAL TAX & 1....Respondent(s) ================================================================ Appearance: MR S.N. SOPARKAR, SR. ADVOCATE with MR AMAR N BHATT, ADVOCATE for the Petitioner MR JAIMIN GANDHI AGP for the Respondent State ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH Page 1 of 42 C/SCA/15842/2012 CAV JUDGMENT and HONOURABLE MR.JUSTICE S.H.VORA Date :07/05/2015 CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. As common question of law and facts arises in all these petitions and as such, for the same parties but with respect to different financial years/assessment years, all these petitions are heard, decided and disposed of together by this common judgment and order. SCA No.15842 of 2012:- 2.0 By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for appropriate writ, direction and/or order to quash and set aside the impugned order dated 12.10.2012 passed by the respondent No.1 herein – Deputy Commissioner of Commercial Tax, Range IV, Ahmedabad (Annexure A to the petition), by which the petitioner is directed to pay value added tax at the rate of 12.5% with 2.5% additional tax under Entry No.87 of Schedule II to the Gujarat Valued Added Tax Act (hereinafter referred to as “VAT Act”) on the sale of “Noodles” by the petitioner. 2.1 That the petitioner has also prayed for appropriate writ, direction and/or order to quash and set aside the impugned notice for the amount assessed dated 12.10.2012 (Annexure “AA” to the petition), which is a consequential demand notice pursuant to the impugned order at Annexure A dated Page 2 of 42 C/SCA/15842/2012 CAV JUDGMENT 12.10.2012 passed by the respondent No.1. 2.2 The petitioner has also prayed for an appropriate writ, direction and/or order directing the respondent No.1 to follow and adhere to the judgment dated 9.9.1986 passed in Appeal No.11 of 1984 passed by the learned Gujarat Sales Tax Tribunal (as it was in existence on that day). SCA Nos.5750 of 2014 & 6193 of 2014:- 3. In both these petitions, the prayers are made by the common petitioner Nestle India Limited challenging similar orders challenged in Special Civil Application No.15842 of 2012, but with respect to different period/different assessment years/financial years. 3.0 For the sake of convenience, the facts of Special Civil Application No.15842 of 2012 are considered and the said Special Civil Application No.15842 of 2012 is considered as lead matter. 3.1 The petitioner – Nestle India Limited (formerly known as M/s Food Specialties Limited) is registered under the VAT Act as well as under the Central Sales Tax Act. The petitioner is carrying manufacture and sale of various food products including “Noodles” under various internationally acclaimed brands, such as MAGGI, NESCAFE and NESTLE. 3.2 It is the case on behalf of the petitioner that under section 5(1) of the VAT Act, the goods which are specified in Schedule I are exempt from tax. The case of the petitioner for Page 3 of 42 C/SCA/15842/2012 CAV JUDGMENT its product “Noodles” is covered by Entry 9(3) of Schedule I to the VAT Act. The goods specified in Entry 48(iii)(c) of Schedule II would be liable to tax at 4% and the goods not specified in any of the Schedules would be liable to tax at 12.5% under the Residuary Entry being Entry No.87 of Schedule II to the VAT Act. 3.3 During the course of the assessment proceedings for the AY 2008-2009, a notice dated 30.8.2012 was issued by the Deputy Commissioner (Assessment), Ahmedabad to the petitioner to show cause why the petitioner should not be subjected to tax on the sale of Maggi, Noodles equating it to “Farsan” sold as branded product. That on receipt of the said notice, the petitioner submitted its reply dated 10.10.2012 pointing out that the classification of the product Maggi Noodles is already concluded and stand settled on the basis of the decision of the Gujarat Sales Tax Tribunal in Appeal No.11 of 1984 in the petitioner's own case, which has been consistently followed for the last two decades without any objection whatsoever by the concerned authorities. 3.4 It appears that earlier in the year 1984, the petitioner applied for determination under section 62 of the Gujarat Sales Tax Act , 1969 (hereinafter referred to as “Sales Tax Act”) for rate of tax of Maggi Noodles under the then Gujarat Sales Tax Act. That the appropriate adjudicating authority – learned Deputy Commissioner of Sales Tax (Provisional Tax), Gujarat State, Ahmedabad vide order dated 31.3.1984 held that “Maggi Two Minutes Noodles” is a product falling under Entry 6 of Schedule III to the Sales Tax Act and as such, taxable at the rate mentioned in the said Entry. Page 4 of 42 C/SCA/15842/2012 CAV JUDGMENT 3.5 Feeling aggrieved by and dissatisfied with the aforesaid determination order, the petitioner preferred appeal before the learned Sales Tax Tribunal being Appeal No.11 of 1984. It was the case on behalf of the petitioner that product “Maggi Two Minutes Noodles” is covered under Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act and as such, tax free. It was the case on behalf of the petitioner that the product viz. “Maggi Two Minutes Noodles” is quite akin to “Sev” and therefore, covered by the term “Sev” mentioned in Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act and as such, tax free. That by detailed judgment and order dated 9.9.1986, the learned Sales Tax Tribunal allowed the said appeal, set aside the determination order passed by the learned Deputy Commissioner passed under section 62 of the Sales Tax Act and held that the petitioner's product viz., “Maggi Two Minutes Noodles” shall be covered by Sub Entry (d) of Entry 1 of Schedule I to the Act, which is as such tax free. The learned Tribunal further passed an order that any amount of tax paid by the original appellant – petitioner, if any, to the Government according to the determination order passed by the learned Deputy Commissioner shall be refunded to it. 3.6 That upto the year 31.3.2006, the adjudicating authority/Assessing Officers in respect of Noodles sold by the petitioner accepted that the Noodles would fall under the category “Sev” made by wheat flour or maida and was not liable to tax under the Sales Tax Act. It is required to be noted that the relevant Entry came to be changed after 1.4.1992 under the Sales Tax Act. What was under Entry 1(d) Page 5 of 42 C/SCA/15842/2012 CAV JUDGMENT of Schedule I prior to 1.4.1992, the said Entry was renumbered as Entry 10(3) w.e.f. 1.4.1992. However, there was no change in the wording of the above Entry under Sales Tax Act prior to 1.4.1992 and after 1.4.1992. 3.7 It appears that for the State of Gujarat, VAT Act came into force from 1.4.2006. However, under the VAT Act, relevant exemption for “Sev” being Entry 9(3) of Schedule I to the VAT Act remains the same as that of original Entry 10(3) of Schedule I to the Sales Tax Act i.e. “Sev made out of wheat flour or maida” and it has not undergone any change whatsoever. 3.8 That on or about 19.6.2010, the Assistant Commissioner of Commercial Tax, Unit No.21, Ahmedabad issued a notice upon the petitioner proposing to impose tax on sales of “Maggi Noodles” at the rate of 12.5% by treating the same as covered by Residuary Entry 87 of Schedule II to the VAT Act for the AY 2006-07. The petitioner submitted a detailed reply dated 22.7.2010 inter alia pointing out that the Noodles would be covered by Entry 9(3) of Schedule I to the VAT Act and would be exempt from tax. That by assessment order dated 26.7.2010, the Assistant Commissioner of Commercial Tax, Unit No.21, Ahmedabad held that Noodles being “Sev” would be entitled to exempt from Entry 9(3) of Schedule I to the VAT Act. That even the assessment with respect to subsequent year 2007-08 also came to be completed and assessed the “Maggi Noodles” as “Sev” under Entry 9(3) of Schedule I to the VAT Act. 3.9 That thereafter, respondent No.1 herein issued a notice Page 6 of 42 C/SCA/15842/2012 CAV JUDGMENT dated 30.8.2012 seeking to levy tax on the sales of Noodles by treating it as “Farsan” sold as branded product relying on the notification dated 29.3.2006 being No.GHN/15 VAT-2006. At this stage, it is required to be noted that Entry 22 of Schedule I to VAT Act exempts inter alia “Farsan & Eatables” except when sold in a sealed container under a brand. Therefore, respondent No.1 wanted to treat Noodles as “Farsan & Eatables” to deny exemption on the ground that it is sold under a brand name. That the petitioner gave a detailed reply dated 10.10.2012 submitting that the product “Maggi Noodles” is already held to be “Sev” and subsequently, all the Assessing Officers have accepted the same and granted exemption considering the relevant Entry under the Sales Tax Act i.e. Sub Entry (d) of Entry 1 of Schedule I for the period prior to 1.4.1992 and after 1.4.1992, under Sub Entry (3) of Entry 10 of schedule I to the Sales Tax Act. 3.10 That by impugned order dated 12.10.2012 at Annexure A, the respondent No.1 has accepted the petitioner's contention that it is not liable to be taxed at 4% on “Farsan & Eatables”. However, it is held that the petitioner is liable to be taxed on their product “Maggi Noodles” at 12% with 2.5% additional tax under Entry 87 of Schedule II to the VAT Act i.e. Residuary Entry. Thereafter, the petitioner has been served with the demand notice (Annexure AA), by which for the period from 1.4.2008 to 31.3.2009, the petitioner is assessed and directed to pay Rs.11,70,43,085/-, which includes the tax amount, interest and penalty. 3.11 That feeling aggrieved and dissatisfied with impugned order passed by the respondent herein dated 12.10.2012 Page 7 of 42 C/SCA/15842/2012 CAV JUDGMENT (Annexure A to the petition), by which it is held that on the product “Maggi Noodles”, the appellant is liable to pay VAT at the rate of 12.5% with 2.5% additional tax under Entry 87 of Schedule II to the VAT Act and the consequential notice for the amount assessed dated 12.10.2012 (Annexure AA), the petitioner has preferred the present Special Civil Application No.15842 of 2012 for the aforesaid reliefs. 4. Similar orders are passed with respect to different parties/assessment years, which are the subject matter of Special Civil Application Nos.5750 of 2014 and 6193 of 2014. 5.0 Shri SN Soparkar, learned Counsel appears with Shri Amar Bhatt, learned advocate appearing on behalf of the petitioner. 5.1 It is vehemently submitted by Shri Soparkar, learned Counsel that the impugned order passed by the respondent No.1 holding that product “Maggi Noodles” is liable to be taxed under Entry 87 of Schedule II to VAT Act at 12% with additional tax at 2.5% is absolutely illegal, most arbitrary and without jurisdiction and void ab initio and unreasonable 5.2 It is vehemently submitted by Shri Soparkar that their product “Maggi Two Minutes Noodles”, which is falling under Entry 9(3) of Schedule I to the VAT Act i.e. “Sev”, which, as such, is tax free. 5.3 It is submitted that with respect to relevant Entry under the Sales Tax Act, the very product “Maggi Two Minutes Noodles” and in the case of the very petitioner, was held to be Page 8 of 42 C/SCA/15842/2012 CAV JUDGMENT “Sev” falling under exemption i.e. Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act by the Sales Tax Tribunal in Appeal No.11 of 1984 by the judgment and order dated 9.9.1986. It is submitted that the learned Tribunal held that therefore, the product “Maggi Two Minutes Noodles” is tax free and not liable to be taxed. It is submitted that thereafter, all the Assessing Officers had treated and considered the product “Maggi Two Minutes Noodles” as “Sev” and assessed the aforesaid product accordingly and no tax has been levied. It is submitted that at the relevant time and prior to 1.4.1992, “Sev made out of wheat flour or maida” was falling under Sub Entry (d) of Entry 1 of Schedule I to Sales Tax Act. It is submitted that thereafter, after 1.4.1992, the aforesaid Entry was renumbered as Entry 10(3) and “Sev made out of wheat flour or maida” was falling under Entry 10(3) of Schedule I of Sales Tax Act. It is submitted that under the VAT act, the product/goods “Sev made out of wheat flour or maida” is falling under Entry 9(3) of Schedule I to VAT Act. It is submitted that there is no change in the wording of above entries under the Gujarat Sales Tax Act and thereafter, under the VAT Act. It is submitted that therefore, when under the Gujarat Sales Tax Act and as per the decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984, product “Maggi Two Minutes Noodles” was considered and held to be “Sev” falling under Sub Entry (d) of Entry 1 of Schedule I to the Sales Tax Act, the very product “Sev made out of wheat flour or maida” would fall under Entry 9(3) of Schedule I to the VAT Act and therefore, liable to be exempted from the VAT. 5.4 It is further submitted that in fact, upto the year Page 9 of 42 C/SCA/15842/2012 CAV JUDGMENT 31.3.2006, all the authorities/Assessing Authorities in respect of Noodles sold by the petitioner had accepted that Noodles would fall under category “Sev made out of wheat flour or maida” and therefore, not liable to be taxed under the Sales Tax Act. It is submitted that thereafter, all of a sudden, it is not open for the respondent to consider/treat the Noodles under Entry 87 of Schedule II to the VAT Act liable to be taxed at 12.5% plus 5% additional tax. It is submitted that therefore, the impugned decision of the respondent No.1 dated 12.10.2012 to treat and consider the product Noodles within Entry No.87 of Schedule I to VAT Act is not only absolutely illegal, without jurisdiction, but is contrary to the binding decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984. It is submitted that the respondent No.1 as such being subordinate to the Sales Tax Tribunal is bound to follow the decision of the Tribunal. It is submitted that therefore, it was impermissible for the respondent to take a contrary view than that of the Tribunal in Appeal No.11 of 1984 not to treat the product “Maggi Two Minutes Noodles” as “Sev” and hold that the product “Maggi Two Minutes Noodles” would fall under Entry 87 of Schedule II to the VAT Act. It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that even, otherwise the impugned order passed by the respondent dated 12.10.2012 holding that the product “Maggi Two Minutes Noodles” would fall under Entry 87 and liable to be taxed at 12.5% with 2.5% additional tax under Entry 87 of Schedule II to the VAT Act is in breach of principles of natural justice and beyond the scope of show cause notice dated 30.8.2012. 5.5 It is vehemently submitted that as such, by show cause Page 10 of 42 C/SCA/15842/2012 CAV JUDGMENT notice dated 30.8.2012, the petitioner was called upon to show cause as to why the petitioner should not be subjected to tax on the sale of “Maggi Noodles” equating it to “Farsan” sold as branded product. It is submitted that therefore, the petitioner was never called upon to show cause why the product “Maggi Noodles” may not be treated to have fallen under Entry 87 of Schedule II to the VAT Act. It is submitted that therefore, as such, no opportunity was given to the petitioner to show cause as to why the product “Maggi Noodles” may not be treated to have been fallen under Entry 87 of Schedule II to the VAT Act. It is submitted that therefore, the impugned order holding that the product “Maggi Noodles” of the petitioner would fall under Entry 87 of Schedule II to VAT Act and liable to be taxed at 12.5% is absolutely illegal, against the principles of natural justice and beyond the show cause notice dated 30.8.2012. 5.6 It is further submitted that even, otherwise in view of the binding decision of the Sales Tax Tribunal in Appeal No.11 of 1984, by which, it was held that the product “Maggi Two Minutes Noodles” is “Sev” falling under Sub Entry (d) of Entry 1 of Schedule I to Sales Tax Act and is exempted from tax and when the same has been accepted by the department for approximately 20 years and thereafter, all of a sudden, it is not open for the respondent to treat the said product “Maggi Two Minutes Noodles” falling within Entry 87 of Schedule II to VAT Act. 5.7 It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioner that the impugned order suffers from non-application of mind, inasmuch as the Page 11 of 42 C/SCA/15842/2012 CAV JUDGMENT petitioner along with its reply annexed copy of order dated 26.7.2010 passed by the Assistant Commissioner, Unit No.21, Ahmedabad in response to the notice dated 19.6.2010 seeking to levy the tax under the Residuary Entry and by which the Assistant Commissioner accepted the case of the petitioner that Noodles being “Sev” would be entitled to exemption under Entry 9(3) of Schedule I to the VAT Act. It is submitted that while passing the impugned order, the aforesaid aspect has not been considered by the respondent at all. 5.8 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has vehemently submitted that while passing the impugned order, respondent No.1 has failed to appreciate that once the goods are covered by exemption, they cannot be taxed even if there is any other specific Entry in any other Schedule for taxable goods. In support of his above submissions, he has relied upon the decision of Hon'ble Supreme Court in case of Fenoplast Vs. State of A.P. And others reported in (1998) 8 SCC 185 as well as in the case of Kothari Products Ltd. Vs. Govt. of A.P. reported in (2000) 9 SCC 263. 5.9 It is submitted that without prejudice to the above, even the resort to the Residuary Entry has to be made only as a last resort. It is submitted that it is settled principles of law that in case of conflict between the specific Entry and the Residuary Entry, the specific Entry has to be preferred. In support of his above submission, Shri Soparkar, learned Counsel appearing on behalf of the petitioner has heavily relied upon the decision of the Hon'ble Supreme Court in case of Mayuri Yeast India Private Ltd. Vs. State of Uttar Pradesh Page 12 of 42 C/SCA/15842/2012 CAV JUDGMENT and another reported in (2008) 5 SCC 680. 5.10 It is submitted that even otherwise, the impugned order passed by the respondent is required to be quashed and set aside, as the same is hit by the provisions of constructive res judicata, inasmuch as the said order seeks to re-agitate the same issue of classification of the impugned product, which stands settled by the judgment of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984 and that too in the petitioner's own case and which has been consistently followed for the last two decades without any objection whatsoever by any of the adjudicating authorities/Assessing Officers. 5.11 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has heavily relied upon the decision of the Apex Court in the case of Commissioner of Income Tax V. Excel Industries Limited reported in (2014) 13 SCC 459, more particularly, para 26 of the said decision in support of his submission that it is not appropriate to allow the reconsideration of any issue for subsequent assessment years if the same “fundamental aspect” permeates in different assessment years. 5.12 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also heavily relied upon the decision of the Hon'ble Supreme Court in the case of BSNL V. Union of India reported in (2006) 3 SCC 1, more particularly, para 20 of the said decision and has submitted that as held by the Hon'ble Supreme Court in the said decision, if an Entry had been interpreted consistently in a particular manner for several Page 13 of 42 C/SCA/15842/2012 CAV JUDGMENT assessment years, ordinarily, it would not be permissible for the revenue to depart there from unless there is any material change. 5.13 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also relied upon decision in case of Ponds India Limited (merged with H.L. Limited) V. Commissioner of Trade Tax, Lucknow reported in (2008) 8 SCC 369 in support of his above submissions. 5.14 Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also relied upon the decision of the Division Bench of this Court in case of E I Dupont India Private Limited and another V. Union of India and others dated 25.10.2013 in Special Civil Application No.14917 of 2013 and other allied petitions in support of his submission that the respondent No.1 being the subordinate to the learned Tribunal, was bound to follow and obey the decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984, by which, in the case of the very petitioner and with respect to the very product, “Maggi Two Minutes Noodles” was held to be “Sev” under Sub Entry (d) of Entry 1 to Schedule I to the Sales Tax Act and was exempted from payment of tax. Shri Soparkar, learned Counsel appearing on behalf of the petitioner has also heavily relied upon the decision of the Hon'ble Supreme Court in the case of Union of India and others Vs. Kamlakshi Finance Corporation Ltd. reported in AIR 1992 SC 711 in support of his submissions that the respondent authority, as such, is/was bound to follow the binding decision of the Tribunal even while maintaining the judicial discipline. Making the above submissions and relying upon the above Page 14 of 42 C/SCA/15842/2012 CAV JUDGMENT decision, it is requested to allow the present Special Civil Application and grant the relief, as prayed for. 6.0 Present petition is opposed by learned AGP Shri Jaimin Gandhi appearing on behalf of the respondent – State. 6.1 It is vehemently submitted that against the impugned assessment order, alternative statutory remedy by way of appeal before the first appellate authority and thereafter, if aggrieved, a further appeal before the learned Tribunal would be available and maintainable. It is submitted that therefore, the present petition against the assessment order may not be entertained. It is further submitted that in the present case, there are disputed questions of facts involved and whether the Noodles may be considered as “Sev” or not is a question of fact and therefore, the petitioner should be relegated to avail the alternative remedy by way of appeal and therefore, the present petition may not be entertained. Shri Gandhi, learned AGP has vehemently submitted that as observed by the Hon'ble Supreme Court in the case of Union of India V. VTR Verma reported in AIR 1957 SC 882 and in the case of Thansingh Nathmal V. Superintendent of Taxes reported in AIR 1964 SC 1419, if questions of facts are involved, then the petitioner should go for appellate remedy and the petition may not be entertained. 6.2 It is further submitted by Shri Gandhi, learned AGP that for not availing the alternative remedy of appeal by the petitioner, the only ground pleaded by the petitioner is payment of higher amount of pre-deposit. It is submitted that the aforesaid cannot be a sufficient ground to bypass the Page 15 of 42 C/SCA/15842/2012 CAV JUDGMENT statutory remedy. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Tithagpur Paper Mills Ltd. V. State of Orissa reported in AIR 1983 SC 603 (para 12). 6.3 Now, so far as the contention on behalf of the petitioner that in view of the earlier decision of the Tribunal dated 9.9.1986 in Appeal No.11 of 1984, the impugned order of assessment cannot be sustained on the principles of res judicata/consistent and binding precedent of judicial order of the Tribunal is concerned, it is vehemently submitted by Shri Gandhi, learned AGP that in fiscal law, the principle of res judicata shall not be applicable. It is submitted that the res judicata is not applicable to tax laws, as every year is a separate unit. In support of his above submissions, he has relied upon the following decisions of the Hon'ble Supreme Court as well as various High Courts. 1. 41 ITR 685(SC), Raja Bahadur Vishaswara V. CIT (Appeals) 2. 350 ITR 24 (DEL), Krishak Bharti Cooperative Ltd. V. DCIT 3. 115 ITR 401 (CAL), Kamladevi Jhawar 4. 211 ITR 635 (KER), CIT V. Kalpetta Estates Ltd. 5. 49 ITR 137(SC), New Jahangir Vakil Milks Ltd. 6. 257 ITR 242(DEL), CIT V. Sohanlal 7. 119 Taxmann 1 (MP), Lachhiram Puranmal 8. 161 ITR 234(BOM), Baijnath Brijmohan and Sons Pvt. Ltd. V. CIT 9. (1992) 60 Taxmann 248, Radhasoami Satsang Vs. CIT Page 16 of 42 C/SCA/15842/2012 CAV JUDGMENT 6.4 It is vehemently submitted that as observed by the Hon'ble Supreme Court in the case of Radhasoami Satsang (supra), there cannot be a wide application of the rule of consistency. It is submitted that in the aforesaid decision of the Hon'ble Supreme Court, it acknowledged that there is no res judicata as regards assessment years and assessments for one year may not bind the officer for the next year. It is further submitted that erroneous or mistaken views cannot fetter the authorities into repeating them by application of rule, such as estoppel, for the reason that being an equitable principle, it is to be yield to the mandate of law. It is submitted that blind adherence to the rule of consistency would lead to enormous results, for the reason that it would endanger the unequal application of laws and direct various authorities to adopt varied interpretations to suit individual assessee. 6.5 It is further submitted by Shri Gandhi, learned AGP that merely because order of Tribunal in earlier years is against the revenue, it is not a bar to pass assessment order against the assessee in the subsequent year. In support of his above submissions, Shri Gandhi, learned AGP has heavily relied upon the circular No.530 dated 6.3.1989 as well as following decisions of the Hon'ble Supreme Court as well as the decision of the M.P., Bombay and Delhi High Courts. 1. 343 ITR 270, Catholic Syrian Bank 2. 119 Taxmann 1 (MP), Lachhiram Puranmal 3. 47 Taxman.com 258 (Bom.) 4. 292 ITR 22 (Del) Page 17 of 42 C/SCA/15842/2012 CAV JUDGMENT 6.6 It is submitted that therefore, in the present case, the Assessing Officer is absolutely justified in passing the impugned order with respect to subsequent assessment years. It is submitted that even on facts, the respondent authority is justified in passing the impugned order. It is further submitted that even, otherwise, in the years, the ingredients of Maggi has been changed and therefore, also, the Assessing Officer is justified in passing the impugned order. 6.7 It is further submitted that even otherwise, the order passed by the learned Tribunal dated 9.9.1986 passed in Appeal No.11 of 1984, upon which, much reliance has been placed by the petitioner is concerned, it is vehemently submitted that as such, the order of the learned Tribunal cannot come in the way of the Assessing Officer to pass appropriate order in the subsequent year, as the order of the Tribunal is per incuria as it did not consider the object of the exemption as per the speech of the Hon'ble Finance Minister. In support of his above submission, he has heavily relied upon the decision of the Bombay High Court in the case of H.A. Shah & Co. V. CIT reported in 30 ITR 618. 6.8 It is submitted that the contention on behalf of the petitioner that in case, the Assessing Officer follows the earlier orders passed by the learned Tribunal and passes an order in favour of the assessee, in that case, the revenue will be able to challenge the order before the learned Tribunal is concerned, it is submitted that the aforesaid is actually premature as there is possibility that the Tribunal may take a view in favour of the revenue. It is submitted that the Page 18 of 42 C/SCA/15842/2012 CAV JUDGMENT Tribunal may even take a different view than its earlier view, because there is change of facts as the ingredients in making of Noodles have changed. 6.9 It is further submitted by Shri Gandhi, learned AGP that even on merits also, the petitioner has no case and Noodles will not fall under Entry 9(3) of Schedule I. It is submitted that even on production of “Maggi Noodles”, the petitioner shall not be entitled to exemption from payment of tax. It is submitted that as per the speech of the Hon'ble Finance Minister at the relevant time, providing the exemption to “Sev”, the purpose of exemption to “Sev” was to provide employment to women in Gujarat. It is submitted that here the manufacturing of Noodles neither takes place in Gujarat nor it provides employment to women. It is submitted that the aforesaid relevant aspect either was not brought to the notice of the learned Tribunal at the time of deciding Appeal No.11 of 1984 nor the same has been considered by the learned Tribunal while deciding Appeal No.11 of 1984. Relying upon the decision of the Andhra Pradesh High Court in the case of CIT V. Ampro Food Products reported in 215 ITR 904 as well as the decision of the Bombay High Court in the case of B.R. Sounds – N – Music V. O.P. Bharadwaj reported in 173 ITR 904, it is vehemently submitted that speech of the Hon'ble Finance Minister is relevant for interpreting the ambiguity , if any, in the Act. It is submitted that the speech of the Hon'ble Finance Minister on the floor of the house is also relevant to consider the real object and purpose of providing exemption. It is submitted that the aforesaid relevant aspect was not considered by the learned Tribunal while passing the order in Appeal No.11 of 1984. It is submitted that therefore, on true Page 19 of 42 C/SCA/15842/2012 CAV JUDGMENT interpretation and on considering the object and purpose of providing exemption to “Sev”, in the facts and circumstances of the case and as it is found that the manufacturing of Noodles neither takes place in Gujarat nor it provides employment to women and when it has been found that the purpose of exemption to “Sev” will be frustrated, the respondent authority has rightly passed the impugned order. 6.10 It is submitted that while interpreting the provisions of exemption in case of ambiguity, the benefit of doubt always should go to the State. In support of his above submissions, he has relied upon the following decisions of the Hon'ble Supreme Court. (1) 1992 SCC Supp(1) 21 (2) 1994 SCC Supp(3) 606 (3) 137 STC 389 (SC) 6.11 It is further submitted by Shri Gandhi, learned AGP that as rightly held by the respondent authority, product “Noodles” manufactured and sold by the petitioner shall not fall within Entry 22 of Schedule II, as “Farsan” are ready to eat items and Noodles is not ready to eat items and therefore, it is not “Farsan”. It is submitted that therefore, the respondent authority has rightly held that “Maggi Noodles” shall fall within Entry 87 and is liable to be taxed at 12.5% plus 2.5 % additional duty. It is further submitted that even the Noodles shall not fall within Entry 48(iii)(c), as the Noodles cannot be said to be “Farsan” that is to say eatables. It is submitted that therefore, and in view of the aforesaid facts and circumstances, the Noodles is rightly held to be falling within Entry 87. Page 20 of 42 C/SCA/15842/2012 CAV JUDGMENT 6.12 It is further submitted that while passing the impugned order, the Assessing officer has passed the detailed and reasoned order while holding that the Noodles shall not fall within the definition of “Sev” i.e. falling under Entry 9(3) of Schedule I. It is submitted that therefore, the impugned order passed by the respondent – assessing authority is absolutely just and proper and is not required to be interfered with by this Court in exercise of powers under Article 226 of the Constitution of India. Making above submissions and relying upon the above decisions, it is requested to dismiss the present petition. 7.0 Heard learned advocates appearing on behalf of the respective parties at length. 8.0 Now, so far as the first contention on behalf of the respondent State and the submissions of Shri Gandhi, learned AGP not to entertain the present petition against the impugned order of assessment passed by the learned Assessing Officer and to relegate the petitioner to prefer the statutory appeal before the first appellate authority and/or the learned Tribunal is concerned, at the outset, it is required to be noted that while admitting the present Special Civil Application, which came to be admitted after hearing the learned AGP, the Division Bench, as such, overruled the said objection and has admitted the present Special Civil Application by observing that several issues purely on legal consideration arise and therefore, the petitioner may not prefer appellate remedy. Under the circumstances, when after considering the objection with respect to maintainability Page 21 of 42 C/SCA/15842/2012 CAV JUDGMENT of the present petition in view of the statutory remedy available available, when the Division Bench had earlier thought it fit to admit the present petition and to consider the petition on merits and accordingly, the petition is heard on merits, now it will not be proper and/or appropriate to dismiss the petition on the ground of availability of alternative remedy. 8.1 A short but interesting question of law for the consideration of this Court is whether in the facts and circumstances of the case, it was open for the Assessing Officer to just take a contrary view than the view taken by the higher authority/court and whether in the facts and circumstances of the case, the principle of res judicata will be applicable in light of the decision of the learned Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984? 8.2 While deciding and considering the aforesaid main questions, entries in the erstwhile Gujarat Sales Tax Act and the subsequent entries under the VAT Act are required to be referred to so as to appreciate whether there is any material change in the respective entries under the erstwhile Gujarat Sales Tax Act and the present VAT Act, which are as under: “Gujarat Sales Tax Act Entry No. Schedule (Exemption from Taxes) Description of Goods Gujarat Sales Tax Act (Prior to 1/4/92) 1(d) I Sev made out of Wheat Flour or Maida Gujarat Sales Tax Act (with effect from 1/4/92) 10(3) I Sev made out of Wheat Flour or Maida Page 22 of 42 C/SCA/15842/2012 CAV JUDGMENT Value Added Tax Act, 2003 9(3) I Sev made out of Wheat Flour or Maida 8.3 Some other entries, which are required to be referred to while considering the issues in the present Special Civil Applications under the VAT Act are as under: “SCHEDULE – I [See: sub-section(1) of section 5] GOODS, THE SALES OR PURCHASE OF WHICH ARE EXEMPT FROM TAX Sr. No. Description of goods Conditions and exceptions subject to which exemption is granted. 1 2 3 22 Farsan and eatables (other than sweetmeats) as the State Government may by notification in the Official Gazette, specify for the purpose of this Entry. Note:-(1) refer-Noti.No.(GHN- 15)VAT-2006/CH-I(22)(1) TH dtd 29.3.2006 (2) Sales or purchases of mamra and pauva (II/87) are exempt from whole of tax by Entry 19 of Noti.(No.GHN-44- u/s5(2)(3) w.e.f. 29.4.2006 Except when sold in sealed containers under a brand. [Explanation:- The word “brand” means any goods sole under a trade mark registered under the trade marks act, 1999(47) of 1999]. 87 All goods other than those specified in [schedule I or Schedule III] & in the preceding entries of this Schedule. Note: As per proviso of Sec 7(1A)(i) two and half paise in the rupee levied an additional tax on the turn over of sales of goods w.e.f. 1-4-08. Page 23 of 42 C/SCA/15842/2012 CAV JUDGMENT 8.4 From the above entries, it appears that under the Gujarat Sales Tax Act, prior to 1.4.1992 and thereafter, upto the Gujarat Value Added Tax Act, 2003 came into force from 1.4.2006 “Sev made out of wheat flour or maida” was exempt from payment of sales tax as if fall within exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act (prior to 1.4.1992) and under exemption Entry 10(3) under the Gujarat Sales Tax Act w.e.f. 1.4.1992 till the Value Added Tax Act came into force. Under exemption Entry 9(3), under the VAT Act, “Sev made out of wheat flour or maida” is also exempted. Not only that, even as per Entry 22 “Farsan and eatables (other than sweetmeats) as the State Government may by notification in the official gazette specify for the purpose of said Entry except when sold in sealed container under a brand, is exempted from payment of sales tax. However, as per Entry 87, which can be said to be a Residuary Entry of goods other than those specified in Schedule I or Schedule III are chargeable to tax at 12 ½ – 1. 8.5 Therefore, it is the case on behalf of the petitioner that “Maggi Noodles” would fall under Entry 9(3) of Schedule I of the VAT Act, as the same is held to be “Sev” as per the decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984. The Assessing Officer/determination authority has taken subsequently contrary view and it is held that on the goods/product sold “Maggi Noodles”, tax at the rate of 12.5% and additional tax is leviable as per Entry 87. 8.6 It is required to be noted that whether “Maggi Noodles” can be said to be “Sev” or not came to be considered by the Gujarat Sales Tax Tribunal as far as back in the year 1986 and Page 24 of 42 C/SCA/15842/2012 CAV JUDGMENT by judgment and order dated 9.9.1986 in Appeal No.11 of 1984, the product “Maggi Noodles” is held to be “Sev” covered by the then exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act and it is held that on sale of “Maggi Noodles”, which is held to be “Sev”, no sales tax is leviable as it is exempt as they will fall under exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act. It is required to be noted that the said judgment and order passed by the Sales Tax Tribunal had attained finality, inasmuch as, not only the revenue had not challenged the same before the higher authority/forum, all throughout the “Maggi Noodles” has been considered as “Sev” and on sale of the same, the petitioner has been granted the exemption from payment of sales tax. At this stage, it is required to be noted that “Sev made out of wheat flour or maida” was falling under exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act prior to 1.4.1992 and thereafter, number of Entry was changed and the “Sev made out of wheat flour or maida” was falling under exemption Entry 10(3) of Schedule I to the Gujarat Sales Tax Act w.e.f. 1.4.1992, however, without any change in the wording. 8.7 Even after the Value Added Tax Act, 2003 came into force, “Sev made out of wheat flour or maida” is falling under Entry 9(3) of Schedule I to the Value Added Tax Act,2003 and the “Sev made out of wheat flour or maida” is exempted from payment of sales tax/VAT. It is required to be noted that upto the year 31.3.2006, in all the assessments in respect of the “Noodles” sold by the petitioner, the department had accepted that the “Maggi Noodles” would fall under category “Sev made out of wheat flour or maida” and was not liable to Page 25 of 42 C/SCA/15842/2012 CAV JUDGMENT tax under the Gujarat Sales Tax Act. However, subsequently, during the course of assessment proceedings for the AY 2008- 09, the petitioner was served with the notice dated 30.8.2012 issued by the Deputy Commissioner (Assessment), Ahmedabad, by which the petitioner was called upon to show cause as to why the petitioner should not be subjected to tax on the sale of “Maggi Noodles” equating it to “Farsan” sold as branded product. At this stage, it is required to be noted that as such, in the year 2010, the Assistant Commissioner of Commercial Tax, Unit No.21, Ahmedabad issued notice upon the petitioner proposing to impose tax on sales of “Maggi Noodles” at the rate of 2.5% by treating the same as covered by Residuary Entry 87 of Schedule II to the VAT Act for AY 2006-07, to which the petitioner gave a reply and submitted that the “Noodles” would be covered by Entry 9(3) of Schedule I to the VAT Act and would be exempted from tax and as such, the Assessing Officer accepted the same and held that the “Noodles” being “Sev” would be entitled to exempt under Entry 9(3) of Schedule I to the VAT Act. Not only that, even the assessment for the subsequent year 2007-2008 came to be duly completed accordingly and as such, “Maggi Noodles” as “Sev” under Entry 9(3) of the Schedule I to the VAT Act. That thereafter, the Deputy Commissioner (Assessment), Ahmedabad issued the aforesaid notice dated 30.8.2012 during the course of the assessment proceedings for the AY 2008-09 and though the show cause notice was to show cause why the petitioner should not be subjected to tax on the sale of “Maggi Noodles” treating it as “Farsan” sold as branded product i.e. at 4%, despite the assessment order passed by the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984 treating the “Maggi Noodles” as “Sev” falling Page 26 of 42 C/SCA/15842/2012 CAV JUDGMENT under Entry 1(d) of Schedule I to the Gujarat Sales Tax Act exempted from tax, by impugned order, the Assessing Officer – Deputy Commissioner (Assessment) has held that the petitioner is liable to pay tax on sale of “Maggi Noodles” under Entry 87 (Residuary Entry) at the rate of 12.5% plus additional tax. 8.8 It is the case on behalf of the petitioner that in view of the binding decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984, now it is not open for the Assessing Officer to take a contrary view and treat the “Maggi Noodles” falling under Entry 87, as the decision of the Tribunal holding that “Maggi Noodles” is a “Sev” and therefore would fall under exemption Entry No.1(d) of Schedule I to the Gujarat Sales Tax Act had attained finality and not only attained finality, but even the department had granted exemption to the petitioner for all these years upto 2007-2008 and there is no change in the wording of the erstwhile Entry 1(d) of Schedule I to the Sales Tax Act prior to 1.4.1992 under Entry 10(d) of Schedule I to the Gujarat Sales Tax Act after 1.4.1992 and even under Entry 9(3) of the Gujarat VAT Act. 8.9 It is also the case on behalf of the petitioner that even otherwise, the impugned order cannot be sustained, inasmuch as show cause notice dated 30.8.2012 was issued by the Deputy Commissioner (Assessment) calling upon the petitioner to show cause why the product “Maggi Noodles” may not be treated as “Farsan and Eatables” (except sold in sealed container under a brand) falling under Entry 22 and why the tax at the rate of 4% is not leviable? However, the impugned order has been passed levying the tax at 12.5% Page 27 of 42 C/SCA/15842/2012 CAV JUDGMENT putting the “Maggi Noodles” in the Residuary Entry i.e. Entry 87. It is submitted that therefore, the impugned order has gone beyond the scope and ambit of the show cause notice. 8.10 On the other hand, it is the case on behalf of the revenue that as such, on the goods manufactured and sold “Maggi Noodles” which is under brand and the object and purpose for which the “Sev” was exempted from payment of tax under the Sales Tax Act even subsequently Gujarat VAT Act, the petitioner is not entitled to the exemption from payment of tax on manufacture and sale of “Maggi Noodles”. It is also the case on behalf of the revenue that while considering the fiscal statute, the principle of res judicata would not be applicable and each assessment year is a different unit and therefore, having of the opinion/view that the petitioner is not entitled to exemption from payment of tax on “Maggi Noodles”, the impugned order passed by the Deputy Commissioner (Assessment) is absolutely just and proper and as such in consonance with the object and purpose of the exemption granted for “Sev”. 8.11 As observed hereinabove in view of the decision of the Tribunal, “Maggi Noodles” has been treated as “Sev” falling within exemption Entry 1(d) of Schedule I to the Gujarat Sales Tax Act and therefore, exempted from payment of tax. As observed herein above, the subsequent entries in the Gujarat Sales Tax Act – Entry 10(d) of Schedule I to the Gujarat Sales Tax Act w.e.f. 1.4.1992 and even Entry 9(3) of Schedule I to the VAT Act are absolutely similar/same and para materia and there is no change at all. As observed herein above, all throughout after 1986, the department has granted exemption Page 28 of 42 C/SCA/15842/2012 CAV JUDGMENT on sale of product “Maggi Noodles” treating it as “Sev” in light of the decision of the Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984 and which has operated and the exemption is granted since two decades. In light of the aforesaid facts and circumstances, the decision relied upon by the learned advocates appearing on behalf of the respective parties are required to be appreciated and considered. 8.12 First of all, we shall deal with the decisions relied upon by the learned Counsel appearing on behalf of the petitioner. 8.12.1 In the case of Ponds India Limited (supra), it has been observed and held by the Hon'ble Supreme Court that if an Entry had been interpreted consistently in a particular manner for several assessment years, ordinarily, it would not be permissible for the revenue to depart there from unless there is any material change. In the aforesaid decision, the Hon'ble Supreme Court considered decision of the Hon'ble Supreme Court in the case of BSNL V. Union of India reported in (2006) 3 SCC 1, more particularly, para 20, which reads as under: \"...The Courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasi judicial or judicial can generally be permitted to take a different view. This mandate is subject only to the usual gateways of distinguishing the earlier decision or where the Page 29 of 42 C/SCA/15842/2012 CAV JUDGMENT earlier decision is per incuriam. However, these are fetters only on a coordinate bench which, failing the possibility of availing of either of these gateways, may yet differ with the view expressed and refer the matter to a bench of superior strength or in some cases to a bench of superior jurisdiction.\" 8.12.2 In the recent decision in the case of Excel Industries Limited (supra), when it was found from the record that in several assessment years, the revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further, but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. It is observed and held by the Hon'ble Supreme Court that the revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers’ money in pursuing litigation for the sake of it. In the aforesaid decision, the Hon'ble Supreme Court has referred to para 16 and 17 of the decision of the Hon'ble Supreme Court in the case of Parashuram Pottery Works Ltd. v. Income Tax Officer reported in 1977(1) SCC 408. “16. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. “17. On these reasonings in the absence of any material change justifying the Revenue to take a Page 30 of 42 C/SCA/15842/2012 CAV JUDGMENT different view of the matter — and if there was no change it was in support of the assessee — we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income Tax in the earlier proceedings, a different and contradictory stand should have been taken.” 8.12.3 In the case of Kamlakshi Finance Corporation Ltd. (supra), the Hon'ble Supreme Court confirmed the decision of the Bombay High Court and has passed strictures against the officer, who dealt with the matter, however, did not follow the binding decision of the higher forum. In that case, the Hon'ble Supreme Court also considered submission made by the learned Additional Solicitor General that anxiety on the part of the Assistant Collector that, if he accepts the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified. In para 6 to 8 , the Hon'ble Supreme Court has observed as under: “6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issue which were placed before them,one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view,rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of Page 31 of 42 C/SCA/15842/2012 CAV JUDGMENT the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not \"acceptable\" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. 7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35-E confers adequate powers on the department in this regard. Under Sub-section (1), where the Central Board of Direct Taxes come across any order passed by the Collector of Central Excise with the legality or propriety of which it is not satisfied, it can direct the Collector to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order.Under Sub-section(2) the Collector of Central Excise, when he comes across any order passed by an authority subordinate to him, if not satisfied with this legality or propriety, may direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order and there is a further right of appeal to the department. The position now, therefore, is that,if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to Page 32 of 42 C/SCA/15842/2012 CAV JUDGMENT have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer.He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section.35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail. 8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them.” 8.12.4 In the case of Claris Lifesciences Ltd. and another Vs. Union of India, the Division Bench of this Court in Special Civil Application No.3022 of 2013, when despite the binding Page 33 of 42 C/SCA/15842/2012 CAV JUDGMENT decision of the Tribunal, the adjudicating authority issued show cause notice, relying upon the decision of the Hon'ble Supreme Court in the Kamlakshi Finance Corporation Ltd. (supra), the Division Bench of this Court, to which one of us was party, in para 26 has observed as under: “26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this very petitioner. Resultantly, petition stands allowed. Both the show cause notices dated 21.8.2012 and 22.1.2013 are quashed and struck down.” 8.12.5 In the recent decision in the case of E I Dupont India Private Limited (supra), the Division Bench of this Court, to which one of us was a party, in para 6.1 observed and held as under: “[6.1] Before parting with the present order, we are constrained to strongly disapprove such arbitrary act on the part of the lower adjudicating authority and/or lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Time and again the Hon’ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned Page 34 of 42 C/SCA/15842/2012 CAV JUDGMENT authorities. In the recent decision in the case of Claris Lifesciences Ltd. (Supra) in para 26 this Court has observed as under: “26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this very petitioner. Resultantly, petition stands allowed. Both the show cause notices dated 21.8.2012 and 22.1.2013 are quashed and struck down.” It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts. Being a part of the justice delivery system. All efforts should be made by the authorities/quasi judicial authorities and Page 35 of 42 C/SCA/15842/2012 CAV JUDGMENT judicial authorities to see that there is no multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure.” 8.13 Now, so far as the decisions, upon which the learned AGP has relied, which are referred to herein above in support of his submission that principle of res judicata is not applicable to Tax Laws, as every year is a separate unit is concerned, there cannot be any dispute that generally, the principle of res judicata would not be applicable to Tax Laws as every year is a separate unit. However, it is required to be noted that the same would not be applicable in a case where the issue with respect to classification and/or Entry is interpreted by higher forum and the same had attained finality, inasmuch as the same is not challenged and the decision of the higher forum has been followed consistently for number of years, unless there are change circumstances in the subsequent assessment years. Unless there are change circumstances, in the subsequent years, in case of interpretation of Entry i.e. whether a particular goods fall in a particular Entry or not and consequently, on the said goods, there is exemption leviable or not, the subordinate authority even on the ground of judicial discipline is bound to follow the decision of the higher court/forum. If the State and/or authority is of the opinion that the earlier decision, which is against the revenue, is not correct decision and for whatever reason, earlier, the same was not challenged before the higher forum and the same came to be implemented erroneously and/or mechanically and the authority is of the opinion that there is likelihood of huge loss to the revenue, even in such a case, appropriate remedy available to the Page 36 of 42 C/SCA/15842/2012 CAV JUDGMENT authority would be to pass an order following the earlier binding decision of the higher forum and thereafter, the revisional authority either may take the order in suo motu revision and thereafter, the matter may be carried to the Tribunal (in the present case, VAT Tribunal) and in that case, the Tribunal being Coordinate Bench may either follow the earlier decision of the Tribunal (Coordinate Bench) or may refer the matter to the Special Bench/Full Bench and if the Tribunal concurs with the earlier decision, in that case, the revenue may still approach the High Court and the High Court may take different view than the earlier view taken by the Tribunal, as in that case, the decision of the Tribunal is not binding to the High Court. Thus, even in case, where the officer and/or authority is of the opinion that the earlier decision though not challenged and/or even implemented for years is not a good decision and/or not in the interest of the revenue, the revenue is not remediless. However, as observed hereinabove, the Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances and the decision of the higher forum (in the present case, learned Tribunal), has been acted upon and implemented for the years. 8.13.1 Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Deepak Agro Foods Vs. State of Rajasthan and others reported in (2008) 7 SCC 748, on facts, the said decision shall not be applicable to the facts of the case on hand. In the said decision, the Hon'ble Supreme Court was as such considering Page 37 of 42 C/SCA/15842/2012 CAV JUDGMENT the binding effect of a null and void order. In the said decision, the Hon'ble Supreme Court was considering the difference of null and void and irregular, wrong or illegal order. In the said decision, the Hon'ble Supreme Court has observed and held that the order passed without jurisdiction renders the order ab initio because absence of jurisdiction goes to the root of the matter and such a defect is not curable at all. In the said decision, it is observed by the Hon'ble Supreme Court that every order passed in a wrongful manner by an authority having jurisdiction is not a nullity, but an irregularity or illegality which can be cured by passing a fresh order. Therefore, the observations made by the Hon'ble Supreme Court in the said decision are required to be considered in light of the facts of that case. 8.13.2 Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Raja Bahadur Visheswara Singh (supra), by Shri Gandhi, learned AGP is concerned, on considering the same, we are of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the case before the Hon'ble Supreme Court, it was found that in one assessment year, the assessee was held not to be carrying on any trade, however, for the subsequent assessment years, the assessee was found to be a dealer in shares and securities and to that, it was observed that there is nothing as res judicata in income tax matters. Therefore, in the case before the Hon'ble Supreme Court, it was a case of changed circumstances with respect to the subsequent assessment years. 8.13.3 Similarly, other decisions relied upon by Shri Page 38 of 42 C/SCA/15842/2012 CAV JUDGMENT Gandhi, learned AGP of various High Courts referred to herein above in support of his submissions that in a fiscal matters, principle of res judicata shall not be applicable, as such there cannot be any dispute with respect to the aforesaid proposition of law. However, considering the facts of the case on hand referred to herein above and observations made by the Hon'ble Supreme Court in the case of Excel Industries Limited (supra), Ponds India Limited (supra) and Kamlakshi Finance Corporation Ltd. (supra), none of the decision shall be applicable to the facts of the case on hand. 8.14 Even, otherwise the impugned order passed by the Assessing Officer cannot be sustained, as the same is beyond the scope and ambit of the show cause notice dated 30.8.2012. It is required to be noted that by show cause notice dated 30.8.2012, the petitioner was called upon to show cause why “Maggi Noodles” shall not be treated as “Farsan and Eatables” (except sold in sealed container under a brand) falling under Entry 22 and liable to be taxed at 4%. However, by impugned order, the adjudicating authority has passed the impugned order holding that product “Maggi Noodles” would fall within Entry 87 (Residuary Entry) and liable to be taxed at 12.5% plus additional duty. Under the circumstances also, the impugned order cannot be sustained. 8.15 Now, so far as the contention on behalf of the State that at the time when the Sales Tax Tribunal passed order dated 9.9.1986 in Appeal No.11 of 1984, the learned Tribunal did not consider the object and purpose of granting the exemption for the product “Sev” falling under exemption Entry 1(d) of the Gujarat Sales Tax Act. It is submitted that as per the Page 39 of 42 C/SCA/15842/2012 CAV JUDGMENT speech made by the Hon'ble Finance Minister on the floor of the house while declaring the exemption for the product “Sev”, the object and purpose was to give benefit to the women and to encourage “Home Made Sev” and for upliftment of the women. It is the case on behalf of the State that it was never the intention to give exemption to such multinational companies and/or branded companies, who manufacture tne “Maggi Noodles” by machines. It is submitted that therefore, the exemption availed by the petitioner on manufacture and sale of “Maggi Noodles” is against the object and purpose of granting exemption with respect to the product “Sev” and therefore, it will be against the interest of the revenue if the petitioner is continued to avail the exemption. We are afraid the aforesaid can be considered in the present petition. Before this Court, as such, the judgment and order passed by the learned Sales Tax Tribunal dated 9.9.1986 in Appeal No.11 of 1984 is not under challenge. For whatever reason, the State did not challenge the aforesaid order passed by the learned Tribunal and granted the benefit of exemption to the petitioner on the manufacture and sale of “Maggi Noodles” till 2006-2007. As observed hereinabove, still the remedy available to the revenue/State would be to carry out the matter upto the Tribunal or this Court as observed herein above and get the dispute adjudicated upon and/or settled by the higher forum/courts and the matter can be considered by the higher forum/court in accordance with law and on merits as in such a case, the decision of the Tribunal would not be binding upon the higher court/forum. In a given case, the State/revenue may be right. However, the same is required to be get settled subsequently by appropriate higher forum. However, at the Page 40 of 42 C/SCA/15842/2012 CAV JUDGMENT same time, the adjudicating authority/ Assessing Officer cannot be permitted to ignore and/or cannot be permitted to pass a contrary order than order passed by the higher forum, unless there are chang circumstances found in the subsequent assessment years. 9. In view of the above and for the reasons stated above, the impugned orders dated 12.10.2012, 28.3.2014 and 31.3.2014 passed by the respondent No.1 deserve to be quashed and set aside and accordingly, are quashed and set aside on the aforesaid ground alone. However, with a liberty to the State/revenue to take appropriate remedial measures as observed herein above. It is also made clear that this Court has not expressed anything on merits with respect to the legality and validity of the order passed by the Gujarat Sales Tax Tribunal dated 9.9.1986 passed in Appeal No.11 of 1984 and has not expressed anything on merits whether the product “Maggi Noodles” is exempted from Sales Tax/VAT and/or whether it will fall in Entry 9(3) of Schedule I to the VAT Act or not, as impugned orders are quashed and set aside on the ground stated herein above only. 10. The petitions are allowed to the aforesaid extent. Necessary consequences of quashing and setting aside of the impugned orders shall follow. Rule is made absolute to the aforesaid extent with no order as to costs. (M.R.SHAH, J.) Page 41 of 42 C/SCA/15842/2012 CAV JUDGMENT (S.H.VORA, J.) shekhar Page 42 of 42 "