Enterprises & Ors. Vs. State of M.P. & Ors.
[C.A.No.2223 of 2012
(@ SLP (C) No.26619/2010]
[Civil Appeal No.
2222 of 2012 @ SLP (C) No.25637 of 2010]
[C.A.No.2224 of 2012 @
SLP (C) No.26622/2010]
[C.A.No.2225 of 2012 @
SLP (C) No.26798/2010]
O R D E R
we intend to direct the appellants/assessees in these matters to subject themselves
for appropriate adjudication before the Assessing Authority, we have taken up
these appeals for early hearing.
appellants are dealers, registered both under 2the provisions of the Madhya
Pradesh Commercial Taxes Act/VAT Act and Central Sales Tax Act, 1956 (for short
`the Act'). They have also registered as exporters of Tendu leaves (Tendu
Pattas) and Bamboos. Some of the assessees are dealers in Tendu leaves and some
of them are dealers in Bamboo.
Madhya Pradesh State Minor Forest Product (Trading & Development) Co-operative
Federation Limited ('the Federation' for short) had initiated the tender
process for sale of Tendu leaves and the bamboos, which are minor forest
produce. One of the condition that was stipulated in the tender documents was that
the highest bidder whose bid is accepted, has to remit the taxes under the VAT
Act to the State Government.
appellants herein are successful bidders. Immediately after their tender documents
were accepted, the appellants had approached the High Court by filing a
petition under Article 226 of the Constitution, inter alia, seeking a writ in the
nature of mandamus to the respondents/revenue to treat the sales, made by the
Federation in favour of 3the appellants, as purely inter-state sale and, therefore,
not exigible for the levy of tax under the VAT Act. They had also sought for incidental
and ancillary prayers in the writ petition.
High Court, after hearing the learned counsel for the parties to the lis, merely
relying upon certain clauses in the tender documents, has proceeded to hold
that the purchase of tendu leaves and bamboos by the appellants is pursuant to the
tender process initiated by the Federation and in view of a particular clause
in the tender documents, the assessees are liable for payment of tax under the VAT
Act. The reasoning and the conclusions reached by the High Court is flawed by the
appellants in these Civil Appeals.
have heard Shri Ravindra Shrivastava, learned senior counsel appearing for the
appellants and other learned counsel appearing for other appellants in these appeals
and also Shri Vivek Tankha, learned Additional Solicitor General for the State
of Madhya Pradesh and other learned counsel appearing for the authorities under
the VAT Act.
the outset, we intend to note that in these type of cases, the High Court ought
not to have entertained the writ petitions filed under Article 226 of the Constitution.
We say so for the reason, that, whether a sale originating in a State is an inter-state
sale or not is essentially a question of fact to be determined by the authorities
under the Act, since it involves the application of the provisions of Sections
3, 5, 6 and 9(i) of the Act to the facts established and hence, it will be a
mixed question of law and fact.
The facts requires to
be brought to the notice of the Assessing Authority by the appellants and it is
for the assessing authority to come to a conclusion, based on those facts
whether a particular transaction is intra-state sales which is exigible to the
taxes under the VAT Act or inter-state sales, as envisaged under Section 3 of
the Act read with Section 6 of the charging provisions therein. It is after
such adjudication, the matter can travel from one stage to the other as provided
under the Act.
the instant case, as we have already stated, the relevant facts were not before
the Court nor the finding of the assessing authority to decide whether the
transactions in question are intra-state sales or inter-state which are
exigible to taxes under the VAT Act or taxes under the provisions of the Central
Sales Tax Act. Merely based on certain clauses in the agreement, in our
opinion, the High Court ought not to have decided and declared that the transactions
in question would be purely and simply intra-state sales and not inter-state
In our view, whenever
a question arises as to whether a sale is inter-state sale or not, it has to be
answered with reference to Section 3 and Section 3 alone. See Constitution Bench
judgment in Tata Iron and Steel Co. Limited v. S.R. Sarkar (1960) 11 STC 655. Similarly,
when the question arises, in which State is the tax leviable, one must look to
and apply the test in Section 9(i); no other provision is relevant on this
question: See Bharat Heavy Electricals Ltd. v. Union of India (1996) 102 STC
373. In that view of the matter, we cannot sustain the orders passed by the
view of the above, we set aside the orders 6passed by the High Court and direct
the appellants/assessees in these cases to file their monthly/annual returns
before the assessing authority within a month's time from today, if not already
filed. We also direct the assessing authority to adjudicate upon the returns so
filed in accordance with law after affording opportunity of hearing to the
appellants/assessees within two months' time from the date of filing of the
returns by the assessees, uninfluenced by the observations made by the High Court.
Till such proceedings
are completed, the assessing authority(s) are restrained from issuing further
demand notices to the appellants/assesses for recovery of taxes either under
the VAT Act or under Central Sales Tax Act. We also make it clear that the amounts
deposited by the appellants/assesses, during the pendency of the writ petitions
before the High Court or during the pendency of the Special Leave Petitions before
this Court, shall not be demanded to be refunded to them.
appeals are disposed of accordingly, with no order as to costs.
(ANIL R. DAVE)