WP/443/2007 of M/s Vamshi Art Printers (P)Ltd., Vs Commercial Tax Officer, on 31 December 2007

Conclusion

IN THE HIGH COURT OF JUDICATUREANDHRA PRADESH AT HYDERABAD

THE HON’BLE THEACTING CHIEF JUSTICEBILAL NAZKIANDTHE HON’BLE SRI JUSTICE NOOTY RAMAMOHANARAO

W.P. No. 443 of 2007

Dated:31st December 2007.

Between:

M/s. Vamshi Art Printers (P) Ltd., 6-1-628/4/6,Khairatabad, Hyderabad, represented by its ManagingDirector, Sri G.Venugopala Krishna.

AND

..... PETITIONER

Commercial Tax Officer, Basheerbagh Circle, Hyderabadand others.

.....RESPONDENTS

THE HON’BLE THEACTING CHIEF JUSTICEBILAL NAZKIAND

THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANARAOW.P. No. 443 of 2007

JUDGMENT :(per NRR,J)

The writ petitioner company is an assesseeon the rolls of the 1[st] respondent. The 1[st] respondent on21.11.2002 completed the final assessment proceedingsfor the assessment year 2001-2002 under AndhraPradesh General Sales Tax Act, henceforth referred to as`Act’. In exercise of the power available under Section20 of the Act, the 2[nd] respondent had revised theseassessment proceedings on 13.11.2006 and brought totax the entire exempted turnover of Rs.58,85,843/- to taxat 4%. The said turnover is related to the supplies madeby the petitioner to United Nations International ChildrensEmergency Fund Organisation (henceforth referred to asUNICEF) and the charges received from the A.P.TextBook Press belonging to the State Government, forPrinting the Text Books on the paper supplied by theState Government. When the 2[nd] respondent put thepetitioner on show-cause notice through her proceedingsdated 26.10.2006 proposing to revise the assessmentorder, the assessee had raised objection for the same ontwo counts. One is that, the turnover on the materialsupplied to UNICEF is not liable to be subjected totaxation and that the service charges received from theState Government for undertaking printing of books onthe paper supplied by it are exempted from taxation and hence the proposed revision has been objected to. The2[nd] respondent had concluded the revision proceedingsin the following manner :

“The above reply of theassessee is examined. Asalready stated in the noticethe assessee had opted topay tax under Section 5-G ofthe APGST Act, 1957 whichis a special scheme of taxpayable on composition at areduced rate of 4%. As thisscheme is optional and as theassessee himself cameforward to pay tax under thisscheme, the Department isnot bound by the compulsionssuch as generally exemptedgoods shall not be taxed. Section 5-G does not providefor any exemption on thedeemed sale of generallyexempted goods. Thereforethe claim of the assessee thatthey executed printing work ofgenerally exempted “Readingbooks” and “Unicef literature”and hence they are not liableto tax is not tenable.”

It is this order which has been challenged in thiswrit petition.

Heard Sri S.Krishna Murthy, learned counsel forthe petitioner and Sri Krishna Koundinya, learnedSpecial Government Pleader for Commercial Taxes.

Learned counsel for the petitioner would urge thatthat the Parliament enacted the United Nations(Privileges and Immunities) Act, 1947 (Act 46 of 1947) to give affect to the convention on the privileges andimmunities of the United Nations. Section 3 of the aboveAct 46 enables certain privileges and immunities to beconferred on international organizations and theirrepresentatives and officers and in particular Article II ofthe Schedule to the said Act, Section 8 requires theMember States of the United Nations to make appropriateadministrative arrangements for the remission or return ofthe amount of duty or tax. According to the learnedcounsel for the petitioner, the State Government passedorders granting exemption from sales tax in this respect. Similarly, for the charges paid by the State Governmentfor getting the text books printed on the paper supplied byit to the petitioner is also exempted from taxation.

Analysis

Per contra, learned Special Government Pleaderfor Commercial Taxes Department would urge thatSection 5-G of the Act is a special provision whichenables an assessee to opt for payment of tax at auniform rate of 4% on the total turnover whereas in termsof Section 5-F though certain components that go into theworks contract are exempted, the rest are liable to besubjected to taxation at 8% and since the writ petitioner-assessee had opted for payment of taxation at theuniform slab rate of 4% in terms of Section 5-G of the Act,he cannot now seek any exemptions further. Therefore,the order of revision passed by the 2[nd] respondent isperfectly legitimate and correct. The learned GovernmentPleader would also urge that in terms of Section 21 of theact, A.P. Sales Tax Appellate Tribunal is the final fact finding authority whom the petitioner – assessee couldhave moved by way of an Appeal against the orders ofthe 2[nd] respondent revising the final assessment andwithout exhausting such an efficacious alternativestatutory remedy of Appeal, the petitioner assesseecannot straightaway invoke the extraordinary jurisdictionof this Court under Article 226 of the Constitution of India.

It is a well recognized principle that anyState, may by way of agreements, conventions or treatiesincur certain obligations which in International Law arebinding on such a State. International Treaty obligationsare needed to be given effect to even without there beingany legislative measures taken, so long as suchobligations are not effecting the justiciable rights of it’scitizens or others. The Indian Constitution hasrecognized these concepts and accordingly incorporatedthe necessary provisions under Article 51 and Article 253of our Constitution. Exclusive power has been reservedfor the Parliament to make laws with regard toInternational Treaty obligations etc., in terms of the Entry10, 12 and 13 of List I of the VII Schedule to theConstitution. It is therefore manifestly clear that the lawsmade by the Parliament for giving effect to the privilegesand immunities towards the United Nations Organisationand its various institutions is based upon a high principlethat India being a Member Nation of the United NationsOrganisation, it should strive to promote internationalpeace and provide the necessary legal environment forenforcing the international treaty and covenant

obligations amongst the comity of Nations. India has tonecessarily present itself before intermational for a as anation, where the right environment for securing thebenefits of development to percolate down exist. As apart of these policy preferences and principles, exclusivepower has been conferred upon the Parliament to makelaws and they bind all other organs of the State. TheMunicipal laws made by any Member State of the Unionof India have to necessarily be read in the context of thelaw made by the Parliament with particular reference toArticle 253 of the Constitution. If there is any law ornotification issued by the Government of India, grantingimmunity or imposing a blanket ban in favour of UNICEF,a UN institution from Municipal Taxation, then the Actmade by the State Legislature must be construed in termsthereof. In other words, the APGST Act should not beunderstood in such a manner as to render the exemptionfrom taxation, granted in favour of United NationsOrganisation and various other institutions of it, nugatoryor illusory. In the instant case, the APGST Act must beunderstood to have been made only for subjecting to taxsuch cases of sales or purchases which are otherwisecapable of such local or municipal taxation. If sales orpurchases made by United Nations Organisation or itssister institutions are not liable to suffer any taxation at allas a part of international treaty or convention obligations,such sales or purchases are incapable of beingsubjected to taxation.

The distinction between Section 5-F and 5-G of the Act, with regard to levy of Tax on transfer of propertyin goods involved in execution of works contract, is onlywith regard to the mode and method of collection of salestax. The distinction in between the two being, whether itshould be collected at a fixed slab rate on the entireturnover or the same should be subjected to taxation at ahigher rate, on certain components of the workscontracts. But the philosophy and the common themeenshrined behind both the provisions is that the sales orpurchases which are otherwise liable to suffer taxationare alone subjected to such taxation and to the extent ofsales or purchases which are not liable to suffer taxationcannot be brought into the dragnet of Section 5-F or 5-Gof the APGST Act.

However, the above stated principles will getattracted only upon a factual finding that the CentralGovernment, in exercise of power available to it underSection 3 of Act 46 of 1947 had notified UNICEF also asentitled for tax immunity. It is a contestable fact. Further,whether tax immunity has been granted or it is onlyremission or return of tax paid has been accorded has gotto be ascertained. Therefore, the more appropriatecourse would have been to avail the Appellate remedyavailable against the impugned order under Section 21 ofthe Act.

It is only a self imposed restraint by the Courts notto entertain writ petitions when there is an effectivealternative remedy. Availability of an effective alternativeremedy is therefore not liable to be construed as an absolute bar of exercise of jurisdiction under Article 226. When any contestable question of fact is liable to beascertained, in such cases as a rule of prudence, courtshave been declining to entertain the writ petitions withoutthe alternative statutory remedies being exhausted. Thefindings of fact can be recorded by the alternative foraafter a proper and thorough adjudication so that the HighCourt will be saved of the bother to determine them at thefirst instance. In cases like the present one, where thefacts are contestable and they need to be ascertainedfirst, after an opportunity is accorded to both sides, it isinappropriate to examine these very questions in this writpetition. Hence, the objection raised by the learnedSpecial Government Pleader is worthy of restraining usfrom examining the question that has fallen forconsideration in this writ petition.

Conclusion

We, therefore, permit the petitioner to avail theremedy available under Section 21 of the Act, providedhe approaches the Sales Tax Appellate Tribunal within30 days from today. The original of the impugned orderpassed by the 2[nd] respondent be returned to thepetitioner while retaining a copy thereof on record of thiscase.

The writ petition stands disposed of accordingly. No costs.

----------------------------------------------------

--ACTING CHIEF JUSTICE BILAL NAZKI

knkDt :31[st] December 2007.

--

---------------------------------------------------- JUSTICE NOOTY RAMAMOHANA RAO