1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA STR No. 1/2007 with CWP No. 71/2008 Reserved on 2.6.2009 Decided on Nov, _____, 2009 STR No. 1/2007 Excise & Taxation Commissioner, Shimla. ….Applicant Versus M/s Suraj Industries Ltd …..Respondent. For the applicant: Sh. P.K. Sharma and Ms. Ruma Kaushik, Addl. Advocate Generals. For the respondent: Sh. M.M. Khanna, Sr. Advocate with Sh. Goverdhan Sharma, Advocate for the respondent. CWP No. 71/2008 M/s Suraj Industries Ltd ….Petitioner Versus State of HP & ors ….Respondents. For the Petitioner: Sh. M.M. Khanna, Sr. Advocate with Sh. Goverdhan Sharma, Advocate for the petitioner. For the respondents: Sh. P.K. Sharma and Ms. Ruma Kaushik, Addl. Advocate Generals. Coram The Hon’ble Mr. Justice R.B. Misra, Judge. The Hon’ble Mr.Justice Dev Darshan Sud, Judge. Whether approved for reporting?1 Per R.B. Misra, J. The present Sales Tax reference No.1 of 2007 has been preferred by the applicant ‘Excise & Taxation 1 Whether the reporters of the local papers may be allowed to see the Judgment? 2 Commissioner’ in respect of an order dated 6.7.2007 passed in Ref. 4/2009 of Financial Commissioner (Appeals), whereby the said reference preferred under section 33 of the H.P. General Sales Tax Act, 1968, was allowed on two points after allowing the application preferred under section 5 of the Limitation Act for condonation of delay. 2. Being aggrieved by the above order condoning the delay and allowing reference, M/s Suraj Industries Ltd, has also preferred a writ petition No. 71/2008. 3. In order to deal the reference and the writ petition, it is necessary to give the factual background of the case. It appears that M/s Suraj Industries Limited, a Small Scale Industrial Unit ( in short ‘SS Unit’) is engaged in manufacturing vegetable ghee and refined oil. The said industry has been declared as “Pioneer Unit” by the State of HP,vide notification dated 18.10.1993, whereby, the said industry has been exempted from payment of tax for manufacturing vegetable ghee and refined oil. The assessment order was passed on 2.2.1999 for the assessment years 1994-95, under H.P. General Sales Tax Act (in short ‘Act’) as well as, under the Central Sales Tax Act ( in short ‘CST Act’) by A.E.T.C cum-Assessing Authority, Kangra District holding that sales tax benefit shall be liable to be paid as below (i) Sales tax on the sale of bye products/residue.(ii) The process of filtration is manufacturing activity of oil and, as such, liable to sales tax; (iii) Central sales tax @ 10% is leviable on inter-State sales of vegetable ghee and refined oil as well as over the bye products, in absence of non submission of statutory form ‘C’. 3 4. Being aggrieved by the said order, M/s Suraj Industries Limited has preferred Appeals No. 78/99-2000 and 79/99-2000 and the Additional Excise & Taxation Commissioner- cum-Appellate Authority, as the first appellate authority, has remanded both these cases with directions to the Assessing Authority vide its order dated 12.11.1999 to pass fresh order of assessment on limited aspects. 5. Being aggrieved, M/s Suraj Industries Limited preferred two appeals No. 193/99-2000 and 194/99-2000, under section 30 (2) before the Himachal Pradesh Sales Tax Tribunal (in short called “Ld. Tribunal). While setting aside the above order dated, learned Tribunal has allowed both the appeals vide its order dated 15.12.2000 with following observations:- (a) The industry being SSI-Unit enjoying tax exemption for manufacturing vegetable ghee and refined oil as main products cannot be held liable of sales tax on the sales of its product/residue/waste, same being the resultant products in the process of manufacturing activity. (b) The industrial unit in question is not required to produce declaration form No. ‘C’ under CST Act for claiming concession in sales tax over the transaction of main product made in inter-State trade. (c ) The products as an outcome of the filtration activity cannot be the subject matter of sales tax separately. 6. Above order dated 15.12.2000 was endorsed to AETC on 29.12.2000, indicating that the sales tax was liable to be 4 refunded by Excise & Taxation Commissioner, when an application dated 23.2.2001 seeking refund received to AETC on 28.2.200, forwarded to Excise & Taxation Commissioner (ETC) on 5.3.2000, was examined after obtaining the legal opinion, an application under section 33(1) was moved on 15.7.2002 before learned Tribunal for making a statement of case to the High Court for adjudicating the legal questions involved in the case. Accordingly, the said reference No. 4/2002 was preferred. The Financial Commissioner (Appeals), HP vide its order dated 6.7.2007 has allowed the application of condonation of delay and referred following two questions of law, as statement of case to the High Court for adjudication: (i) Does the residue or by-product of a main commodity or product which is exempted from tax also qualify for tax exemption when the government notification does not provide for such exemption specifically ?. (ii) Does submission of the statutory Form-C is required to be submitted for claiming tax exemption in reference to the transaction of exempted products made in inter-state sale. 7. The observations made in the order dated 6.7.2007 are given as below:- “ The first issue to be considered here is to subject of Limitation the order of the Tribunal is dated 15.12.2000 where as the reference application has been filed by the Excise & Taxation Commissioner on 15.7.2000. An application for condonation of delay has also been filed U/S 33(1) of the H.P. Sales Tax Act the limitation prescribed is 60 days and on the 5 face of it this application appears to be hopelessly time barred. The applicant has stated that no copy of the order of the Tribunal was endorsed to him (Excise & Taxation Commissioner) although one copy was received in the office of AETC Kangra on 29.12.2000. The AETC has no power to file a reference application Under Section 33 of the Act and therefore it was necessary for the Tribunal to have endorsed a copy of the order to the Excise & Taxation Commissioner which was not done. The applicant allegedly came to know of the order only on 5.3.2002 when the respondent submitted a Refund Application based on the order of the Tribunal. Thereafter the matter was examined and the reference application filed on 15.7.202. Accordingly, the applicant has sought condonation of delay. In the facts and circumstances of the case I am inclined to condone the delay, specially as the issues raised in the reference application merit consideration as they have a bearing on wider Public Policy and also because substantial Public/Govt. revenues are involved. As such the delay in filing the reference is condoned. “ 8. Before testing the justification and legality of question in STR 1/2007, it would be necessary to deal with the writ petition No. 71/2008, where main prayer is for setting aside the order dated 6.7.2007. If condonation of delay in making such reference is found to be just and proper, then only the question of law as referred in STR No. 1/2007 shall be adjudicated upon by this court. 6 9. Presently, a question arises for consideration is as to whether the Financial Commissioner (Appeals) was legally justified vide its order dated 6.7.2007 to condone the delay in reference case preferred under section 33 (1) of H.P. General Sales Tax Act, 1968 ?. 10. Section 33 of Himachal Praesh General Sales Tax Act, 1968 reads as below:- “33 (1) Within 60 days from the passing of an order under section (30 or 31) by the Financial Commissioner, affecting any liability of any dealer to pay tax under this Act, such dealer or the Commissioner may, by application in writing accompanied by a fee of one hundred rupees in case the application is made by dealer, require the Financial Commissioner to refer to the High Court any question of law arising out of such order. (2) If, for reasons to be recorded in writing, the Financial Commissioner refuses to make such reference, the applicant may, within 30 days of such refusal, either- (a) withdraw his application (and if he does so, the fee paid shall be refunded); or (b) apply to the High Court against such refusal. (3) If upon the receipt of an application under clause (b) of sub section (2), the High Court is not satisfied of the correctness of the Financial Commissioner’s decision, it may require the Financial Commissioner to state the case and refer it, and on the receipt of such requisition, the Financial Commissioner shall state and refer the case accordingly. (4) If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, it may refer the case back to the Financial Commissioner to make such additions thereto or alterations therein as the court may direct in that behalf. 7 (5) The High Court upon hearing of any such case shall decide the question of law raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send to the Financial Commissioner a copy of such judgment under the seal of the court and the signature of the Registrar, and the Financial Commissioner shall dispose of the case accordingly. (6) Where a reference is made to the High Court under this section, the cost (including the disposal of the fee) shall be in the discretion of the Court. (7) The payment of the amount, if any, if the tax due in accordance with the order of the Financial Commissioner, in respect of which an application has been made under sub section (1), shall not be stayed pending the disposal of such application or any reference made in consequence thereof but if such amount is reduced as the result of such reference, the excess tax paid shall be refunded in accordance with the provisions of section 18.” 11. Application, under section 33 (1) was moved before learned Tribunal for making a statement of case to the High Court with inordinate delay as has been acknowledged in the order dated 6.7.2007 of Financial Commissioner (Appeals) while exercising the power of Learned Tribunal, however, It has been argued on behalf of Excise & Taxation Commissioner that since there is high stake of revenue and for involvement of such substantial quantity of government revenue, the reference application is to be decided on merits. 12. The Financial Commissioner (Appeals), while exercising the power of Tribunal, is vested with jurisdiction to condone the delay beyond permissible period provided under 8 statute, provided sufficient cause is in existence. There cannot be any straight jacket formula for accepting or rejecting the explanation furnished for delay caused in taking steps in making reference. 13. On the other hand, Mr. M.M. Khanna, learned Senior Advocate for M/s Suraj Industries Ltd has argued and submitted as below: (a) The reference in question is not to be considered, merely for involvement of government revenue but has to be adjudicated under the statutory provisions applicable to the ‘Act’. (b) Hon’ble Supreme Court in Union of India Vs Popular Construction Company (2001) 8 SCC 470 has observed as below:- “Furthermore, section 34 (1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award "in accordance with" sub-section 2 and sub- section 3. , Sub-section 2 relates to grounds for setting aside an award and is not relevant for our purposes. But an application fited beyond the period mentioned in section 34, sub-section (3) would not be an application "in accordance with" that sub-section. Consequently by virtue of section 34 (1), recourse to the court against an arbitral award cannot be made beyond, the period prescribed. The importance of the period fixed under section 34 is emphasised by the provisions of section 36 which provide that "where the time for making an application to set aside the arbitral award under section 34 has expired.......... the award shall be enforced and 9 the Code of Civil Procedure, 1908 in the same manner as if it were a decree of a court". This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was required to "proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow". Now the consequence of the time expiring under section 34 of the 1996 Act is that the award becomes immediately enforceable without any further act of the court. If there were any residual doubt on the interpretation of the language used in section 34 the scheme of the 1996 Act would resolve the issue in favour of curtailment of the court's powers by the exclusion of the operation of section 5 of the Limitation Act.” (c ) Relying on the decisions of Hon’ble Supreme Court in Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur & others (2008) 3 SCC 70, Commissioner of Customs, Central Excise, Noida Vs. Panjab Fibres Ltd, Noida (2008) 3 SCC 73, Pondicherry State Co operative Consumer Federation Ltd Vs. Union Territory of Pondicherry (2008) 1 SCC 206 & Consolidated Engineering Enterprises Vs. Principal Secretary, Irrigation Department and others (2008) 7 SCC 169, it could be submitted that section 33(1) of Act has prescribed a particular period of limitation, as such, the period indicated therein cannot be condoned. According to Mr. M.M. Khanna, learned counsel though section 5 of Limitation Act prescribe provisions for condonation of delay, however, section 33(1) is a specific Act which would 10 override the provision of section 5 of Limitation Act which require the condonation of delay only upto the period of 60 days and not beyond that. (d) In Singh Enterprises (supra), the Supreme Court has occasion to distinguish its earlier verdict given in ITC Ltd (1998) 8 SCC 610, where it was observed that the High Court and Supreme Court in appropriate case could condone the delay on sufficient cause being shown. In reference to section 35 of Central Excise Act, 1944, Supreme Court has observed in Singh Enterprises that Section 35 of Central Excise Act, 1944 could override the provision of Section 5 of Limitation Act as the statute prescribed a particular period of limitation. Similar view was also taken by the Supreme Court in Commissioner of Customs, Central Excise Vs. Punjab Fibres Ltd in reference made under section 35-H (1) of Central Excise Act, 1944. Para 8 of Punjab Fibres Ltd (supra) is reproduced as below: “8 Recently in M/s Singh Enterprises v. Commissioner of Central Excise, Jamshedpur and Ors. (2007 (14) SCALE 610) the scope for condonation of delay beyond the prescribed period was considered. It was inter-alia noted as follows: "6. At this juncture, it is relevant to take note of Section 35 of the Act which reads as follows: "35. APPEALS TO COMMISSIONER (APPEALS). (1) Any person aggrieved by any decision or order passed under this Act by a Central Excise Officer, lower in rank than a Commissioner of Central Excise, may appeal to the Commissioner of Central Excise (Appeals) [hereafter in this Chapter referred to 11 as the Commissioner (Appeals)] within sixty days from the date of the communication to him of such decision or order : Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days. (2) Every appeal under this section shall be in the prescribed form and shall be verified in the prescribed manner. 7. It is to be noted that the periods "sixty days" and "thirty days" have been substituted for "within three months" and "three months" by Act 14 of 2001, with effect from 11.5.2001. 8. The Commissioner of Central Excise (Appeals) as also the Tribunal being creatures of Statute are vested with jurisdiction to condone the delay beyond the permissible period provided under the Statute. The period upto which the prayer for condonation can be accepted is statutorily provided. It was submitted that the logic of Section 5 of the Indian Limitation Act, 1963 (in short the 'Limitation Act') can be availed for condonation of delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication to him of the decision or order. However, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other words, this clearly shows that the appeal has to be filed within 60 days but in terms of the proviso further 30 days time can be 12 granted by the appellate authority to entertain the appeal. The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period." 14. According to the learned counsel for the petitioner, Full Bench of Supreme Court in Consolidated Engineering Enterprises Vs. Principal Secretary, Irrigation Department and others (2008) 7 SCC 169 has held that in reference to Arbitration and Conciliation Act, 1996, proviso to Section 34 (3) being a specific legislation, excludes applicability of general provisions contained in Section 5 of Limitation Act and the court has no discretion to extend limitation period 30 days prescribed in Section 34(3) of Arbitration and Conciliation Act, 1996 even if sufficient cause shown for it. 15. Plain reading of section 33 (1) reveal that within 60 days from passing of the order of Financial Commissioner, dealer or the Commissioner may, by application in writing, require the Financial Commissioner to refer to the High Court any question of law arising out of such order. It is very clear that the statute i.e. above Act prescribes only 60 days period. It is necessary to refer 13 section 30 of the H.P. General Sales Tax Act which provides as under: 30(1) An appeal from every original order passed under this Act or rules made thereunder shall lie- (a) if the order is made by an assessing authority or by an officer in charge of the check post or barrier or any other officer not below the rank of the Excise & Taxation Officer, to the Deputy Excise and Taxation Commissioner; (b) if the order is made by the Deputy Excise & Taxation Commissioner, to the Commissioner: (c) if the order is made by the Commissioner or any officer exercising the powers of the Commissioner, to the Financial Commissioner. 16. The provision of Section 30 (4) specifically provide that the appellate authority may allow, for reasons to be recorded in writing the appeal beyond 60 days. Here the provision has specifically empowered the appellate authority to condone the delay but the above Act in question has prescribed certain period of limitation of 60 days under section 33 (1) and that is not subject matter of condonation even for reasons to be recorded. 17. After hearing learned counsel for the parties and in reference to the above referred cases, we are of the considered view that the Himachal Pradesh General Sales Tax Act, 1968 being a specific Act or statute since has prescribed limitation period under section 33 (1) for making statement of case to the High Court by the Financial Commissioner. Such statutory prescribed period is a requirement under law which could over ride the provision of Section 5 of Limitation Act as legislative intent carries importance which requires that the condonation of delay 14 could only be granted upto to 60 days for making statement of case to the High Court. We have noticed that the grounds and explanation for condonation of delay are vague and insufficient, however we are not going to examine sufficiency of cause for condonation of delay but we are of the considered view that the sales tax reference should not have been made beyond the period prescribed under section 33 (1) of the Act. In view of above analysis, sales tax reference above mentioned e.g. STR No. 1/2007 is dismissed. After dismissal of the reference e.g STR 1/2007 in question, the present writ petition, whereby a prayer has been made to set aside the order dated 6.7.2007 passed by Financial Commissioner (Appeals), Govt. of HP in making reference by inordinate delay is liable to be allowed. Accordingly, the writ petition 71/2008 is allowed. No order as cost. ( R.B. Misra ), J ( Dev Darshan Sud), J. November,3,2009. (sl)