Ashok Bhan, J. - (1.) CIVIL Appeal Nos. 2653 and 2654 of 2006 are directed against the impugned final judgment dated 7.4.2006 of Kerala High Court at Ernakulam in Writ Appeal No. 434 of 2000 and Writ Appeal No. 433 of 2000 by which the Division Bench dismissed the writ appeals thereby upholding the order of the Single Judge, rejected the challenge to the two show cause notices issued to the appellant. Civil Appeal No. 4406 is arising out of judgment dated 7.7.2006 of the Kerala High Court in Sales Tax Revision No. 9 of 2006 by which the Division Bench dismissed the Revision relying upon the judgment of the Division Bench in Writ Appeal No. 434 of 2000 of the same High Court. We propose to dispose of these appeals by a common order, as the point involved in all these appeals is the same.
(2.) FACTS are taken from Civil Appeal No. 2653 of 2006. The appellant is a company registered under the Companies Act, having its Registered Office at Kozhkkode. It is a registered dealer under the Kerala General Sales Tax Act, 1963 (for short 'the State Act'). It carried on the business of steel re-rolling mills at Nallalam, Kozhikode. The raw material used by the appellant in the production of bars and rods, is steel ingots, which the appellant either manufactures or purchases from other manufacturers from within or outside the State. Purchase of steel ingots effected by the appellant within the State are from manufacturing units, which are exempt from the payment of sales tax on the sale of such ingots by virtue of an exemption notification issued under Section 10 of the State Act. For the Assessment Year 1994-95, appellant submitted a return of turnover and was assessed to tax declaring the taxable turnover at nil, by an order dated 15.1.1998 by the assessing officer. In respect of the assessment year 1995-96 also, the appellant's assessment was completed determining the taxable turnover at Rs. 21,85,550/- vide order dated 15.1.1998. While this was so, the appellant received a show cause notice dated 11.1.2000 for the assessment year 1994-95 and another notice dated 12.1.2000 on the same date for the assessment years 1996-97 to 1999-2000. In the first show cause notice relating to the assessment year 1994-95, the assessing officer stated that the appellant had purchased ingots from dealers within the State who were exempted from payment of tax and consumed the same in the manufacture of bars and rods during the year 1994-95. The notice further stated that the ingots purchased were goods liable to tax under the State Act and since the supply of such ingots did not suffer any tax at the time of sale due to the exemption notification under Section 10(1) of the State Act, purchase turnover of the ingots during the year and consumed in the manufacture by the appellant attracted liability to tax under Section 5A of the State Act. The notice alleged that the purchase turnover of the ingots had escaped assessment under Section 5A of the State Act and accordingly proposed to determine the turnover liable to tax and assess the same at 4%. It was stated that on the request of the appellant, a hearing would be given to the appellant before completing the assessment as proposed. Notice relating to 1996-97 to 1999-2000 was worded differently. The said notice stated that the appellant had purchased ingots, scraps, mosrolls, etc. from units within the State claiming tax exemption and consumed the same in the manufacture of bars and rods during this period. It was further stated that since the goods had not suffered tax under Section 5A of the State Act, they were liable to pay purchase tax under Section 5A and called upon the appellant to remit tax with interest under Section 22 (3) within 10 days of the receipt of notice failing which an action would be taken to recover the tax. The appellant being aggrieved filed the two separate writ petitions challenging the two show cause notices issued to him. Learned Single Judge dismissed the writ petitions in limine by observing that the case involved disputed questions of fact which could not be decided in a writ petition under Article 226 of the Constitution and relegated the petitioner to avail of the remedies provided under the State Act. It was held that the writ petition was not the appropriate remedy and the appellant was accordingly directed to avail of the remedies provided under the State Act. Learned Single Judge directed the appellant to file objections to the notices before the assessing officer who shall consider the same while framing the assessment. Assessing Authority was directed to complete the assessment in accordance with law after affording due opportunity to the appellant.
(3.) AGGRIEVED by the above order of the learned Single Judge, the appellant preferred two separate writ appeals. The Division Bench dismissed the writ appeals by a common order and held that the learned Single Judge was in error in directing the appellant to avail the remedies provided under the State Act. The Division Bench, however, rejected the main contention of the appellant that in view of the provisions of Article 286(3) of the Constitution of India read with Section 15 of the Central Sales Tax Act (for short 'the Central Act'), it was impermissible to levy purchase tax under Section 5A of the State Act. In support of this contention, it was submitted by the counsel for the appellant that the iron ingots being declared goods could be subjected to tax under Section 5 read with Second Schedule of the State Act in the hands of the seller only; that the declared goods like the one involved in the present case could be subjected to levy only at one point and that point had been specified by the Statute as being 'first sale'. That goods could not be subjected to purchase tax in the hands of the purchaser under Section 5A of the State Act. The Division Bench of the High Court relying upon a judgment of this Court rejected these contentions and held that the expression "levy" includes collection of tax as well and not mere imposition. It was held that in the absence of collection of tax, there is no levy and since, the goods were exempted from payment of Sales Tax, the goods could be subjected to levy of purchase tax under Section 5A of the State Act. That the levy did not mean imposition only, the same included the collection of tax as well. Where there is no collection, there is no levy and accordingly, the goods which are not subjected to levy of tax at the point of sale could be subjected to levy of purchase tax under Section 5A. Learned Counsel for the appellant has contented before us that goods being declared goods, under Section 14 of the Central Act are subjected to limits placed by Section 15 of the Central Act, namely: (1) the tax payable on the sale or purchase of iron and steel under the law of a State shall not exceed 4% and (2) such tax shall not be levied at more than one stage. It follows that if, iron and steel are subjected to a single point levy of tax at the first point of sale, then there is no question of a second levy or charge at any subsequent point of sale or purchase. According to him, iron and steel which are the goods in question were made liable to sales tax at the stage of first sale at 4% under Section 5(1) read with Second Schedule of the State Act. That in view of Section 5(1) read with Second Schedule of the State Act, the burden of tax could not be shifted to the purchaser as the State Government had already notified that the tax would be at the point of first sale and the rate of tax would be 4%. That the High Court erred in assuming that the word "levied" in Section 15(a) of the Central Act is used in the sense of imposed and collection. According to him, the word levy could cover both imposition and non-collection of tax imposed will not cease to be a levy of tax. It was further contended that the High Court erred in distinguishing the judgment of this Court in Shanmuga Traders and Ors. v. State of T.N. and Ors. and that of the Constitution Bench judgment in Bhawani Cotton Mills Ltd. v. State of Punjab According to him, the reliance placed by the High Court in Town Municipal Committee, Amravati v. Ramchandra Vasudeo Chimote is unwarranted as in the said case this Court was interpreting the expression "continued to be levied" and "to be levied to the same purposes" in Article 277 of the Constitution of India. A strong reliance was placed by him on the decisions of this Court in Assistant Collector of Central Excise, Calcutta Division v. National Tobacco Co. of India Ltd. Somaiya Organics (India) Ltd. v. State of U.P. Pine Chemicals Ltd. v. Assessing Authority and Associated Cement Companies Ltd. v. State of Bihar ;