Fwd: PRIOR APPROVAL VS POST FACTO APPROVAL - Supreme Court latest judgment dated 13th March 2016 in the matter of Bajaj Hindustan Ltd.
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CS Thirupal Gorige
Aug 10, 2016, 11:04:30 AM8/10/16
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FYI
Thanks & Regards,
CS Thirupal Gorige
Practising Company Secretary
No. 87, 2nd Floor,21st Cross,
7th Main, N S. Palya, BTM 2nd Stage,
Bangalore-560076, India
Cell +91 94483 84064
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7th Main, N S. Palya, BTM 2nd Stage,
Bangalore-560076, India
Cell +91 94483 84064
LL +91 80 6532 2360
---------- Forwarded message ----------
From: Manoj Singh Bisht <csmano...@gmail.com>
Date: 10 August 2016 at 19:55
Subject: PRIOR APPROVAL VS POST FACTO APPROVAL - Supreme Court latest judgment dated 13th March 2016 in the matter of Bajaj Hindustan Ltd.
To: CS Thirupal Gorige <gthi...@gmail.com>,
From: Manoj Singh Bisht <csmano...@gmail.com>
Date: 10 August 2016 at 19:55
Subject: PRIOR APPROVAL VS POST FACTO APPROVAL - Supreme Court latest judgment dated 13th March 2016 in the matter of Bajaj Hindustan Ltd.
To: CS Thirupal Gorige <gthi...@gmail.com>,
Dear friends,
Supreme Court 2 Judge bench recently on 13th March 2016, in the matter of Bajaj Hindustan Ltd. Vs.State of U.P. and Ors. dealt with ex-post facto approval. This is quite relevant when we talk about prior approval in context of corporate laws as well. This judgment beautifully, yet again reiterate mild difference between permission and approval. This being one of the latest judgment, may be very useful, for forming opinion on matters of your professional interest.
Copy of judgment is attached.
Brief note is as under:
Case Note:
Other Taxes - Ex-post facto approval - Penalty - Depositing of commodity - Rented storage - Appellant had stored commodity in some Godown outside factory premises due to storing problem - After verification and payment of tax before removal of commodity, Assessing Authority granted order giving tax ex-post facto approval - After taking over tax assignment, District Magistrate and Tax Assessing Officer issued show cause notice imposing penalty for not taking prior approval for depositing commodity in rented Godown situated outside factory premises - Appellant unsuccessfully submitted that it had been granted approval ex-post facto and pleaded that even ex-post facto approval was amounted to sufficient compliance of provisions of proviso to Sub-section (1) of Section 3A of Act - High Court dismissed Appellant's writ petition by taking view that "prior approval" was required and since no such prior approval was taken ex-post facto approval was of no consequence and could not be taken advantage by Appellant - Hence, present appeal - Whether ex-post facto approval amount to sufficient compliance of proviso to Sub-section (1) of Section 3A of Uttar Pradesh Sugarcane Purchase Tax Act, 1961
Facts:
The Appellant had faced the problem of storing sugar in the factory premises and had stored the sugar in some Godown outside the factory premises. When this was pointed out to the Appellant by the Inspector by making entry in this behalf on the inspection, the Appellant made an application to the Tax Assessment Officer/Collector for giving approval for storage of sugar in rented Godown outside the factory. The Appellant also furnished the details of the sugar which was stored in the aforesaid Godown outside the factory premises. It was emphasized that whenever sugar bags were removed from the said Godown, tax which is payable Under Section 3 of the Act was deposited. After verifying the aforesaid bags and the stand of the Appellant that it had paid the tax before removal of the sugar from the godown where the same was stored, the Assessing Authority granted order giving tax ex-post facto approval. In the said order the Assessing Authority also warned the Appellant to take such permission in time, in future. The tax assessment, was thereafter assigned to the District Magistrate. After few days of the passing of the order, after taking over the said assignment, the District Magistrate and tax Assessing Officer issued show cause notice calling upon the Appellant to show cause within one week as to why penalty should not be imposed for not taking prior approval for depositing the sugar bags in the rented Godown situated outside the factory premises. The Appellant contested the notice by submitting that it had been granted approval ex-post facto and pleaded that even ex-post facto approval was amounted to sufficient compliance of the provisions of proviso to Sub-section (1) of Section 3A of the Act. This contention of the Appellant was not accepted by the Assessing Authority which imposed penalty equivalent to cent percent of the tax that was payable and in fact already paid by the Appellant at the time of the /removal of the sugar bags. Challenging that order the Appellant filed an Appeal which was also dismissed. Thereafter he approached the High Court by way of writ petition. This writ petition was also dismissed by the High Court taking a view that "prior approval" was required and since no such prior approval was taken ex-post facto approval was of no consequence and could not be taken advantage by the Appellant.
Held, by allowing the appeal:
(i) There was no evasion of any tax. The claim of the Appellant that it had paid the tax at the time of removal of the bags from the Godown was not disputed by the Assessing Authority. While granting ex-post facto approval, the Assessing Authority had satisfied itself about the due payment of the entire tax at the time of removal of the bags and that there was no evasion of tax. The issue in question is no more res-integra and has been authoritatively determined by a series of judgment of present Court. [3]
(ii) The dictionary meaning of the word 'approval' includes ratifying of the action, ratification obviously can be given ex-post facto approval. Another highlighted aspect was a difference between approval and permission by Assessing Authority that in the case of approval, the action holds until it is disapproved while in other case until permission is obtained. In the present case, the action was approved by the Assessing Authority. If in those cases where prior approval is required, expression 'prior' has to be in the particular provision. In the proviso to Sub-section (1) of Section 3-A word 'prior' is conspicuous. Therefore, it was not a case for levying any penalty upon the Appellant. Impugned judgment of the High Court as well as the penalty were set aside. [4]
Other Taxes - Ex-post facto approval - Penalty - Depositing of commodity - Rented storage - Appellant had stored commodity in some Godown outside factory premises due to storing problem - After verification and payment of tax before removal of commodity, Assessing Authority granted order giving tax ex-post facto approval - After taking over tax assignment, District Magistrate and Tax Assessing Officer issued show cause notice imposing penalty for not taking prior approval for depositing commodity in rented Godown situated outside factory premises - Appellant unsuccessfully submitted that it had been granted approval ex-post facto and pleaded that even ex-post facto approval was amounted to sufficient compliance of provisions of proviso to Sub-section (1) of Section 3A of Act - High Court dismissed Appellant's writ petition by taking view that "prior approval" was required and since no such prior approval was taken ex-post facto approval was of no consequence and could not be taken advantage by Appellant - Hence, present appeal - Whether ex-post facto approval amount to sufficient compliance of proviso to Sub-section (1) of Section 3A of Uttar Pradesh Sugarcane Purchase Tax Act, 1961
Facts:
The Appellant had faced the problem of storing sugar in the factory premises and had stored the sugar in some Godown outside the factory premises. When this was pointed out to the Appellant by the Inspector by making entry in this behalf on the inspection, the Appellant made an application to the Tax Assessment Officer/Collector for giving approval for storage of sugar in rented Godown outside the factory. The Appellant also furnished the details of the sugar which was stored in the aforesaid Godown outside the factory premises. It was emphasized that whenever sugar bags were removed from the said Godown, tax which is payable Under Section 3 of the Act was deposited. After verifying the aforesaid bags and the stand of the Appellant that it had paid the tax before removal of the sugar from the godown where the same was stored, the Assessing Authority granted order giving tax ex-post facto approval. In the said order the Assessing Authority also warned the Appellant to take such permission in time, in future. The tax assessment, was thereafter assigned to the District Magistrate. After few days of the passing of the order, after taking over the said assignment, the District Magistrate and tax Assessing Officer issued show cause notice calling upon the Appellant to show cause within one week as to why penalty should not be imposed for not taking prior approval for depositing the sugar bags in the rented Godown situated outside the factory premises. The Appellant contested the notice by submitting that it had been granted approval ex-post facto and pleaded that even ex-post facto approval was amounted to sufficient compliance of the provisions of proviso to Sub-section (1) of Section 3A of the Act. This contention of the Appellant was not accepted by the Assessing Authority which imposed penalty equivalent to cent percent of the tax that was payable and in fact already paid by the Appellant at the time of the /removal of the sugar bags. Challenging that order the Appellant filed an Appeal which was also dismissed. Thereafter he approached the High Court by way of writ petition. This writ petition was also dismissed by the High Court taking a view that "prior approval" was required and since no such prior approval was taken ex-post facto approval was of no consequence and could not be taken advantage by the Appellant.
Held, by allowing the appeal:
(i) There was no evasion of any tax. The claim of the Appellant that it had paid the tax at the time of removal of the bags from the Godown was not disputed by the Assessing Authority. While granting ex-post facto approval, the Assessing Authority had satisfied itself about the due payment of the entire tax at the time of removal of the bags and that there was no evasion of tax. The issue in question is no more res-integra and has been authoritatively determined by a series of judgment of present Court. [3]
(ii) The dictionary meaning of the word 'approval' includes ratifying of the action, ratification obviously can be given ex-post facto approval. Another highlighted aspect was a difference between approval and permission by Assessing Authority that in the case of approval, the action holds until it is disapproved while in other case until permission is obtained. In the present case, the action was approved by the Assessing Authority. If in those cases where prior approval is required, expression 'prior' has to be in the particular provision. In the proviso to Sub-section (1) of Section 3-A word 'prior' is conspicuous. Therefore, it was not a case for levying any penalty upon the Appellant. Impugned judgment of the High Court as well as the penalty were set aside. [4]
Best Regards
Manoj
Jayashree Chandrasekaran
Aug 11, 2016, 5:13:22 AM8/11/16
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Very interesting.....thanks for sharing
Jayashree--
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Rakesh Sharma
Aug 12, 2016, 1:23:00 AM8/12/16
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Thanks for sharing....
Regards,
Rakesh
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CS Harshal Gandhi
Aug 12, 2016, 3:02:02 AM8/12/16
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very nice judgement
Lalit Tiwari
Aug 12, 2016, 3:05:18 AM8/12/16
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Dear Sir,
It is indeed an excellent judgement.
Approval includes ratification and hence the thin line of difference between approval and permission.
Regards,
Lalit.
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