# M/s Birla Corp. Ltd v. The State of U.P

- **Citation:** (2021) 11 ILRA 406
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-11-16
- **Case number:** Writ Tax No. 748 of 2020
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-birla-corp-ltd-v-the-state-of-u-p-46567
- **Pages:** 10

## Headnote

Act, 1948 - U.P. V.A.T. Act, 2008: Section 40 -
U.P. Tax on Entry of Goods into Local Areas Act,
2007: Section 13(xv) - Section 40 of the Vat
Act does not provide for recovery of any
amount of tax that may have been due under
the Entry Tax Act. (Para 29) (E-10)

Writ Petition Allowed. (E-10)

List of Cases cited:

## Text

406 INDIAN LAW REPORTS ALLAHABAD SERIES
collapse". However, as the order has been
obtained by practising fraud and suppressing
material fact before a court of law to gain
advantage, the said order cannot be allowed to
stand." (emphasis supplied)

12. In a recent judgment in ABCD v.
Union of India & Ors., (2020) 2 SCC 52,
Hon'ble the Supreme Court in matter where
material facts had been concealed, while issuing
notice to the petitioner therein, exercising its
suo-motu contempt power observed as under :

"15. Making a false statement on oath is an
offence punishable under Section 181 of the IPC
while furnishing false information with intent to
cause public servant to use his lawful power to
the injury of another person is punishable under
Section 182 of the IPC. These offences by virtue
of Section 195(1)(a)(i) of the Code can be taken
cognizance of by any court only upon a proper
complaint in writing as stated in said Section. In
respect of matters coming under Section
195(1)(b)(i) of the Code, in Pushpadevi M. Jatia
v. M.L. Wadhawan etc., (1987) 3 SCC 367
prosecution was directed to be launched after
prima facie satisfaction was recorded by this
Court.

16. It has also been laid down by this Court
in Chandra Shashi v. Anil Kumar Verma, (1995)
1 SCC 421 that a person who makes an attempt
to deceive the court, interferes with the
administration of justice and can be held guilty
of contempt of court. In that case a husband who
had filed a fabricated document to oppose the
prayer
of
his
wife
seeking
transfer
of
matrimonial proceedings was found guilty of
contempt of court and sentenced to two weeks
imprisonment. It was observed as under:

"1. The stream of administration of justice
has to remain unpolluted so that purity of court's
atmosphere may give vitality to all the organs of
the State. Polluters of judicial firmament are,
therefore, required to be well taken care of to
maintain the sublimity of court's environment;
so also to enable it to administer justice fairly
and to the satisfaction of all concerned.

2. Anyone who takes recourse to fraud,
deflects the course of judicial proceedings; or if
anything is done with oblique motive, the same
interferes with the administration of justice.
Such persons are required to be properly dealt
with, not only to punish them for the wrong
done, but also to deter others from indulging in
similar acts which shake the faith of people in
the system of administration of justice.

The legal position thus is that if the
publication be with intent to deceive the court or
one made with an intention to defraud, the same
would be contempt, as it would interfere with
administration of justice. It would, in any case,
tend to interfere with the same. This would
definitely be so if a fabricated document is filed
with the aforesaid mens rea. In the case at hand
the fabricated document was apparently to
deceive the court; the intention to defraud is writ
large. Anil Kumar is, therefore, guilty of
contempt."

13. Thus, for the aforesaid reasons, the
petition deserves to be dismissed.

14. Accordingly, the petition is dismissed,
however, in the facts and circumstances, there
shall be no order as to costs.
----------

(2021)12ILR A406
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 16.11.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 748 of 2020

M/s Birla Corp. Ltd. ...Petitioner
Versus
The State of U.P. & Ors. ...Respondents
11 All. M/s Birla Corp. Ltd. Vs. The State of U.P. & Ors.
407
Counsel for the Petitioner:
Sri Sujeet Kumar, Ms. Chhya Gupta, Sri Santosh
Kumar Bagaria

Counsel for the Respondents:
C.S.C., Sri C.B. Tripathi

A. Interpretation of Statute - U.P. Trade Tax
Act, 1948 - U.P. V.A.T. Act, 2008: Section 40 -
U.P. Tax on Entry of Goods into Local Areas Act,
2007: Section 13(xv) - Section 40 of the Vat
Act does not provide for recovery of any
amount of tax that may have been due under
the Entry Tax Act. (Para 29) (E-10)

Writ Petition Allowed. (E-10)

List of Cases cited:

1. Ashok Service Centre Vs St. of Orissa (1983) 2 SCC 82

2. Paresh Chand Chatterjee Vs The State of Assam &
ors. AIR 1962 SC 167

3. M/s Eastern Spinning & Textiles Mills Vs St. of U.P.
2010 TLD 41

4. Siddhartha Viyas & anr. Vs Ravi Nath Misra & ors.
(2015) 2 SCC 701
(Delivered by Hon'ble Naheed Ara Moonis, J. &
Hon'ble Saumitra Dayal Singh, J.)

1. H eard Shri Santosh Kumar Bagaria,
learned Senior Advocate assisted by Shri Sujeet
Kumar and Ms. Chhaya Gupta, learned counsel
for the petitioner and Shri C.B. Tripathi, learned
Special Counsel for the revenue.

2. Present petition has been filed to quash
the communications dated 07.07.2020 and
11.08.2020 issued by the Deputy Commissioner,
Commercial Tax, Sector 3, Prayagraj and for a
further direction in the nature of Mandamus to
refund Rs. 17,45,68,741/- along with interest at
the rate of 15% from 04.07.2020.

3. In short, undisputedly, the aforesaid
amount of refund was found due to the petitioner
under the provisions of the U.P. Trade Tax Act,
1948 (hereinafter referred to as the "Erstwhile
Act") for the A.Y. 2004-05 to 2007-08. Owing
to legislative changes, that claim was made and
considered
under
UP
VAT
Act,
2008
(hereinafter referred to as the "VAT Act"). The
refund payment has been denied on a solitary
ground of the entire amount Rs. 17,45,68,741/-
adjusted against the dues of interest on Entry
Tax claimed against the petitioner, being Rs.
18,10,01,347/- arising under the U.P. Tax on
Entry of Goods into Local Areas Act, 2007
(hereinafter referred to as the "Entry Tax Act").

4. The core issue to be addressed is,
whether by virtue of section 13(xv) of the Entry
Tax Act read with section 40 of the VAT Act,
the amount of refund under the VAT Act could
be adjusted against the dues arising under the
Entry Tax Act.

5. In brief, the petitioner set up a unit to
manufacture cement using fly ash as a raw
material. At the relevant time, on 18.06.1997,
the Government of U.P. (in exercise of its power
under section 5 of the Erstwhile Act), had issued
a rebate notification granting rebate on payment
of tax under the Erstwhile Act, to eligible units,
for a period of ten years. Admittedly, the
petitioner was granted that benefit for the period
14.12.1998 to 13.12.2008. Mid-way into that
scheme, the said rebate notification came to be
rescinded
on
14.10.2004,
by
the
State
Government. Consequently, for the period
14.10.2004 to 13.12.2008, no rebate was
allowed to the petitioner under the Erstwhile
Act. Consequently, tax payments were made.

6. The notification dated 14.10.2004
rescinding
the
rebate
notification
dated
18.06.1997 was challenged by the petitioner and
others before this Court. First, writ petition M/s
Jai Prakash Associates Ltd. vs. State of U.P.
and Another 2010 UPTC 757, came to be
decided by the judgment dated 29.03.2010.
408 INDIAN LAW REPORTS ALLAHABAD SERIES
Paragraph 125 of the said decision reads as
under:-

"125. The writ petition is allowed in part to
the extent petitioner's entitlement for tax
exemption for the period available under the
original notification dated 27th February, 1998.
Accordingly, a writ in the nature of mandamus
is issued directing the opposite parties to
provide tax exemption to the petitioner industry
from the date of production for the period of
entitlement under original notification dated
27th February, 1998."

7. On 16.04.2010, the petition filed by the
present petitioner being Writ Petition (Misc.
Bench)
No.
6176
of
2004,
M/s
Birla
Corporation Ltd. vs. State of U.P and others
came to be decided by the order dated
16.04.2020 on the following terms:-

"Keeping in view the fact that the
controversy has been set at rest, present writ
petitions too are decided finally in terms of the
judgment and order dated 29.3.2010, passed in
writ petition No. 5861(M/B) of 2010.

No order as to costs."

8. The above judgments, were carried in
appeal by the revenue, to the Supreme Court.
Vide judgment dated 12.11.2019, in State of
Uttar
Pradesh
and
Another
vs.
Birla
Corporation Ltd. (2019) SCC OnLine SC 1569,
the Supreme Court dismissed the revenue's
appeal with certain observations. Relevant to our
issue, paragraph nos. 34 and 36 of the said
decisions read as below:-

"34. A priori, the respondents and similarly
placed persons would be entitled to rebate for
the relevant period prescribed in the notification
dated 27th February, 1998 which would
continue to remain in vogue until the expiry of
the specified period, namely, ten years. In the
case of BCL up to 13 th December, 2008 and in
the case of JPAL up to 17th September, 2014
respectively. The amount of rebate, however,
would depend on the verification of their refund
claim pending before the concerned authorities
and would be subject to just exceptions
including the principle of unjust enrichment. The
respondents should be able to substantiate that
the amount claimed by them has not been passed
on to their consumers. Only then, they would be
entitled for refund. The competent authority may
verify the claim for refund of each of the
respondent(s) in accordance with law and pass
appropriate orders, including about the interest
for the relevant period.

35. ................................

36. In view of the above, these appeals must
fail. Hence, the same are dismissed with
observations. There shall be no order as to
costs. All pending applications are also disposed
of."

 (emphasis supplied)

9. As was noted in the order of the
Supreme Court, upon the petitioner's writ
petition being allowed by this Court, the
petitioner
had
filed
applications
dated
20.11.2010 claiming refund Rs. 17,90,61,418/-
being the total amount of rebate denied to the
petitioner during pendency of its writ petition
before this Court, for different Assessment
Years,
during
the
period
14.10.2004
to
31.12.2007. It may be noted, no refund was
claimed for the period beyond 01.01.2008 when
the VAT Act was enforced.

10. Separate orders were passed by the
respondent no. 4 on the petitioner's applications
claiming refund, all on 29.06.2020. Thus,
instead of granting the refund of the amount
claimed, the respondent-assessing authority of
the petitioner only quantified the total amount of
trade tax refundable at Rs. 17,45,68,741/- for
A.Y.s 1998 (from 14.12.2008)-1999 to 20072008 (upto 31.12.2007). It is also undisputed, at
that stage, the assessing authority of the
11 All. M/s Birla Corp. Ltd. Vs. The State of U.P. & Ors.
409
petitioner found the petitioner had not passed on
that liability (of disputed trade tax). Thus,
neither the principle of unjust enrichment was
found applicable nor any other ground was
found existing to deprive the petitioner of the
refund claimed. At the same time, the assessing
authority found, no interest was payable to the
petitioner on the delayed refund. Thereafter, on
07.07.2020, instead of paying out the refund, the
assessment authority of the petitioner issued a
further ex-parte communication to the petitioner
informing adjustment of the entire amount of
refund
Rs.
17,45,68,741/-
against
the
outstanding demand of dues of interest on Entry
Tax Rs. 18,10,01,347/-, for the A.Ys. 2003-04 to
2009-10.

11. A similar communication giving full
details of such adjustments made was issued to
the
petitioner
on
11.08.2020.
In
such
circumstances, the petitioner again wrote to its
assessing authority on 31.08.2020 stating, no
amount of tax was due against him either under
the erstwhile Act or the VAT Act or the Central
Sales Tax Act, 1956 (hereinafter referred to as
the "Central Act"). It reiterated its demand for
payment of refund due. In the present writ
petition in paragraph 3, it has been specifically
stated, there is no amount of tax outstanding or
due against the petitioner under the provisions of
the Erstwhile Act or the VAT Act or the Central
Act. In reply thereto in paragraph 29 of the
counter affidavit, only this much has been stated,
on the date of the refund order dated 29.06.2020
being passed, interest on Entry Tax Rs.
18,10,01,347/- was outstanding against the
petitioner for the A.Ys. 2003-04 to 2009-10.

12. Referring to the provisions of Section
29 of the Erstwhile Act and Section 40 of the
VAT Act read with Section 2(k) thereof, it has
been submitted, the VAT Act only authorizes
adjustment of an amount of refund due against
any outstanding amount of tax either under (i)
the Erstwhile Act or (ii) the VAT Act or (iii) the
Central Sales Tax Act. By virtue of Section
13(xv) of the Entry Tax Act, the provisions of
Section 40 of the VAT Act have been
incorporated in the Entry Tax Act on the
principle, mutatis mutandis. Referring to the
decision of the Supreme Court in Ashok Service
Centre vs. State of Orissa (1983) 2 SCC 82 as
followed by the Supreme Court in Mariyappa
and others vs. State of Karnataka and others
(1998) 3 SCC 276 and in Indian Oil
Corporation Ltd. Vs. State of Uttar Pradesh
and others (2019) 16 SCC 482, it has been
urged - that principle applies with limitations
inherently attached to it. Thus, a statutory law
borrowed on the principle mutatis mutandis may
be applied to the enactment to which it has been
borrowed, with necessary changes only. That
principle may not allow for a new provision or
legal effect to be created, de hors the language
of the borrowed provision of law-here section 40
of the VAT Act.

13. Thus, it has been submitted, read into
the Entry Tax Act, section 40 of the VAT Act
only provides, in case any amount is found
refundable under the Entry Tax Act, the same
may first be applied to any tax dues under (i) the
Entry Tax Act (ii) U.P. Trade Tax Act (iii)
Central Sales Tax Act. However, the amount
refundable under the Entry Tax Act may not be
applied or be adjusted against any tax due under
the VAT Act. Since, in the present case, the
amount is refundable not under the Entry Tax
Act but under the VAT Act read with erstwhile
Act, section 13(xv) of the Entry Tax Act read
with section 40 of the VAT Act, would have no
application.
The
authorities
have
wholly
misconstrued the law and have illegally adjusted
the refund due to the petitioner.

14. As to the decision of the Constitutionbench of the Supreme Court in Paresh Chand
Chatterjee vs. The State of Assam and Ors. AIR
1962 SC 167, it has been submitted, rather than
helping the case of the revenue, that decision
410 INDIAN LAW REPORTS ALLAHABAD SERIES
only makes clear the proposition - the principle
mutatis mutandis cannot introduce a completely
new legislative provision, to the borrowerenactment as may not be found specifically
existing in the parent enactment of which the
borrowed provision is a part. Neither the
Erstwhile Act nor the VAT Act provided for a
scheme whereby an amount due by way of
refund could be adjusted against dues of Entry
Tax Act, such a provision of law cannot be
imagined and thus created or introduced in the
Entry Tax Act. In Paresh Chand (Supra), a
question arose whether under Section 8(1) of the
Assam Land (Requisition and Acquisition) Act,
1948, by use of words mutatis mutandis, any
right existed or duty arose to value the land
requisitioned under that enactment. Explaining
the principle mutatis mutandis, it was held, once
the provision of Land Acquisition Act, 1894 had
been made applicable on a mutatis mutandis
principle, to the provisions of the Assam Land
(Requisition and Acquisition) Act, 1948 with
respect to determination of compensation under
that Act, clearly the word 'acquisition' used
under the Land Acquisition Act, 1894 would
have to be read to include within its ambit and
sphere the word 'requisition' used under the
Assam Land (Requisition and Acquisition) Act,
1948. That due alteration of detail or that
appropriate modification was necessary to give
life to the borrowed provision of law, in the
context of the borrower-enactment.

15. Opposing the petition, learned Special
Counsel for the revenue has first fairly brought
on record a decision of the division bench of this
Court in M/s Eastern Spinning and Textiles
Mills vs. State of U.P. 2010 TLD 41. Though
that decision records a conclusion in favour of
the petitioner, at the same time, the decision in
that case did not adjudicate the issue arising
herein. The said direction was issued without
reference to the provision of Section 13(xv) of
the Entry Tax Act.

16. Next, heavy reliance has been placed
on the language of the proviso to Section 40 of
the VAT Act applied mutatis mutandis to the
provisions of Entry Tax Act, by virtue of Section
13(xv) of the Entry Tax Act. Relying on the
five-Judge Constitution Bench decision of the
Supreme Court in the case of Paresh Chand
Chatterjee vs. The State of Assam and Ors.
(supra), it has been submitted, appropriate
modifications to the provisions of section 40 of
the VAT Act are necessary and due alternation
of details must be made to that provision of law
in the context of the Entry Tax Act. It would
necessarily mean, the proviso to section 40(1) of
the VAT Act refers to any amount that may be
refundable be first applied to satisfy an
outstanding demand of tax under the Entry Tax
Act or under the Central Act or the VAT Act.
Unless that full effect is given to the proviso in
the manner suggested by the learned counsel for
the revenue, that plain effect of the borrowed
provision would remain from being enforced.

17. Thus, according to learned counsel for
the revenue, the proviso as to Section 40 of the
VAT Act, as applied to the provisions of Entry
Tax Act has to be given free play to carry out the
object of that (latter) Act. To that end, he would
also rely on a three-judge bench decision of the
Supreme Court in Siddhartha Viyas and
another vs. Ravi Nath Misra and others (2015)
2 SCC 701. Heavy reliance has been placed to
the ratio contained in that decision to the effectproviso cannot be read to nullify or not to set at
naught the real object of the main enactment.
Insofar as, it is an object of the Entry Tax Act to
seek recovery of the admitted/assessed amount
of Entry Tax, the same cannot be defeated by
giving a restricted meaning to the proviso to
include therein, the outstanding demands under
the VAT Act or the Central Sales Tax Act but to
exclude the demand under the Entry Tax Act.
Thus, Shri Tripathi has also invoked the
principle of purposive interpretation.
11 All. M/s Birla Corp. Ltd. Vs. The State of U.P. & Ors.
411

18. Having heard learned counsel for the
parties and having perused the record, the
controversy involved in the present case is
neither to the entitlement of refund or its
quantification. Insofar as the Erstwhile Act is
concerned, the petitioner claims it became
entitled to refund of Rs. 17,45,68,741/- by virtue
of the decision of this Court in Writ Petition
(Misc. Bench) No. 6176 of 2004 decided on
16.04.2010 as affirmed by the Supreme Court
(on certain conditions) in State of U.P. vs. Birla
Corporation Ltd. (Supra). That entitlement to
refund was preserved and protected under UP
VAT Act. To that effect, orders of refund have
also been passed on 29.06.2020. Those have
attained finality. As to the demand of Entry Tax
Act, again there is no dispute that Entry Tax
demands were raised for the A.Ys. 2003-04 to
2009-10. Though, those demands were later
discharged, owing to the delay on part of the
petitioner in discharging that liability, interest
liability Rs. 18,10,01,347/- had arisen thereon.

19. Examined in that light, what survives
for our consideration is whether the amount of
refund due under the Erstwhile Act could be
adjusted against the demand of interest on Entry
Tax. Since no issue of competance of the
proceedings for refund has been raised by either
party, the provisions to which reference is
necessary are-section 13(xv) of the Entry Tax
Act and section 40 of the VAT Act. Section
13(xv) of the Entry Tax Act reads as below:-

Section
13.
Applicability
of
certain
provisions of the Uttar Pradesh Value Added
Tax Act, 2008.

The following provisions of the Uttar
Pradesh Value Added Tax Act, 2008 shall
mutatis mutandis apply to all dealers and
proceedings under this Act:-

(xv)

Section 40

Refund
and
adjustment

20. Then, section 40(1) of the VAT Act
reads as below:-

Section 40. Refund and adjustment-

(1) Subject to other provisions of this Act,
the assessing authority shall in the manner
prescribed, refund to the dealer an amount of
tax, fee, or other dues paid in excess of the
amount due from him under this Act.

PROVIDED that amount found to be
refundable shall first be adjusted towards tax or
any other amount outstanding against the dealer
under this Act or under The Central Sales Tax
Act, 1956 or under the erstwhile Act and only
the balance if any shall be refunded.

21. Thus, the Entry Tax Act itself does not
contain a separate provision for refund and
adjustment. It borrows that provision from the
VAT Act. Legislation by incorporation is a
fairly common and well established legislative
practice. Clearly, it is a rule of brevity in
legislative action. Thereby the legislative
directly borrows and applies a time-tested fully
mature provision of law to a new/later
enactment. In Ashok Service Centre (Supra)
dealing with the expression mutatis mutandis it
was held as under:-

"17. Section 3 (2) of the Act which makes
the provisions of the principal Act mutatis
mutandis applicable to the levy of additional tax
is a part of the charging provision of the Act and
it does not say that only those provisions of the
Principal Act which relate to assessment and
collection of tax will be applicable to the
proceedings under the Act. Before considering
what provisions of the Principal Act should be
read as part of the Act, we have to understand
the
meaning
of
the
expression
'mutatis
mutandis'. Earl Jowitt's 'The Dictionary of
English Law (1959)' defines 'mutatis mutandis'
as 'with the necessary changes in points of
detail'. Black's Law Dictionary (Revised 4th
Edn. 1968) defines 'mutatis mutandis' as 'with
412 INDIAN LAW REPORTS ALLAHABAD SERIES
the necessary changes in point of detail,
meaning that matters or things are generally the
same, but to be altered when necessary as to
names, offices, and the like. Houseman v.
Waterhouse. In Bouvier's Law Dictionary (3rd
Revision, Vol. II), the expression 'mutatis
mutandis' in defined as "[T]he necessary
changes. This is a phrase of frequent practical
occurrence, meaning that matters or things are
generally the same, but to be altered when
necessary, as to names, offices, and the like.
Extension of an 'earlier Act mutatis mutandis to
a later Act brings in the idea of adaptation, but
so far only as it is necessary for the purpose,
making a change without altering the essential
nature of the thing changed, subject of course to
express provisions made in the later Act. Section
3 (2) of the Act shows that the State Legislature
intended not to depart substantially from the
Principal Act except with regard in matters in
respect of which express provision had been
made in the Act. The assumption made by the
High Court that the Act was an independent Act
having nothing to do with the Principal Act is
not correct. The Act only levied some extra sales
tax in addition to what had been levied by the
Principal Act. The nature of the taxes levied
under the Act and under the Principal Act was
the same and the Legislature expressly made the
provisions of the Principal Act mutatis mutandis
applicable to the levy under the Act. The
additional sales tax was in the nature of a
surcharge over and above what was due and
payable by assessee under the Principal Act.
The Act, though it had a long title, a short title
and other usual features of every statute, could
not be, considered as an independent statute. It
had to be read together with the Principal Act to
be effective. In the circumstances the conclusion
reached by the High Court that the two Acts
were independent of each other was wrong. We
are of the view that it is necessary to read and to
construe the two Acts together as if the two Acts
are one, and while doing so to give effect to the
provision, of the Act which is a later one in
preference to the provisions of the Principal Act
wherever the Act has manifested an intention to
modify the Principal Act. The following
Observations of Lord Simonds in Fendoch
Investment Trust Co. v. Inland Revenue
Commissioners(1) made in connection with the
construction of certain fiscal statutes are
relevant here."

"My Lords, I do not doubt that in
construing the latest of a series of Acts dealing
with a specific subject matter, particularly
where all such Acts are to be read as one, great
weight should be attached to any scheme which
can be seen in clear outline and amendments in
later Acts should if possible be construed
consistently with that scheme".

(emphasis supplied)

22. That principle was then applied in
Mariyappa and others vs. State of Karnataka
and others (supra). It was again followed by
later decision of the Supreme Court in IOCL vs
State of U.P. And others (supra), wherein, in
paragraphs 54 and 57 of the decision, reached in
the context of Entry Tax Act.

54. What is the nature of the provision
of Section 33 of the VAT Act, 2008 which has
been made applicable by virtue of Section 13 of
the 2007 Act is the question to be answered.
Section 13 "mutatis mutandis" applies certain
provisions of the VAT Act, 2008 as mentioned in
Section 13. The words "mutatis mutandis" came
to be considered in Ashok Service Centre v.
State of Orissa. In the aforesaid case, this Court
had occasion to consider the provisions of the
Orissa Additional Sales Tax Act, 1975. Section
2(2) of which provision mutatis mutandis applies
the provisions of the Orissa Sales Tax Act, 1947.

57. Thus, application of the provisions of
the VAT Act, 2008 is provided by Section 13 of
the 2007 Act with certain changes in points of
details. Section 33 of the VAT Act, 2008 which
has been mentioned to apply under Section 13
11 All. M/s Birla Corp. Ltd. Vs. The State of U.P. & Ors.
413
has to be applied with respect to payment and
recovery of tax. Thus, the payment of interest
which is contemplated under Section 33 on the
amount of tax has to be applied with regard to
the payment of entry tax and the interest
thereon. Even if provision of Section 33 of the
VAT Act, 2008 to be treated as machinery
provision which is to be applied by virtue of
Section 13 of the 2007 Act, the machinery
provision has to be interpreted in a manner so
as to make the liability effective and treated to
be substantive law."

23. In borrowing a provision, some change
of language or meaning to terms and phrases
used in the statutory provision being borrowed
may become necessary to give effect to the same
in the different context of the statute to which it
is borrowed. Since, section 13 of the Entry Tax
Act borrows, amongst others the provisions of
Section 40 of the VAT Act on the principle
"mutatis mutandis", we may first try and read
that provision as it is, into the provisions of the
Entry Tax Act. Any incongruity or conflict that
may arise upon that language of the borrowed
provision as read into the Entry Tax Act, may be
identified and resolved, thereafter. If however,
there exists no incongruity or conflict, that
provision may be applied without offering any
intervention or alteration or modification to the
original language of the borrowed provision. No
rule of interpretation would be attracted to give
full effect to the meaning of the provision,
except the rule of literal interpretation.

24. Thus, we may first read Section 40 of
the VAT Act as a part of the Entry Tax Act by
reading the words "this Act" used in Section 40
of the VAT Act to be a reference made to the
Entry Tax Act as that presumption is selfapparent from section 13(xv) of the Entry Tax
Act. Applying this first principle, Section 40 of
the VAT Act as borrowed by the Entry Tax Act
would read as under:-

Refund and adjustment-

(1) Subject to other provisions of this Act
(i.e. Entry Tax Act), the assessing authority shall
in the manner prescribed, refund to the dealer
an amount of tax, fee, or other dues paid in
excess of the amount due from him under this
Act (i.e. Entry Tax Act).

PROVIDED that amount found to be
refundable shall first be adjusted towards tax or
any other amount outstanding against the dealer
under this Act (i.e. Entry Tax Act) or under The
Central Sales Tax Act, 1956 or under the
erstwhile Act and only the balance if any shall
be refunded.

25. Clearly, no incongruity or ambiguity or
doubt emerges from the above exercise. Under
the VAT Act, the main part of section 40(1)
provided for adjustment of any amount found
refundable under that Act against specified dues
under other enactments namely under that Act,
i.e. the U.P. VAT Act, 2008, the Central Sales
Tax Act, 1956 and, the U.P. Trade Tax Act,
1948 (i.e. The "Erstwhile Act" defined under
Section 2(k) of the VAT Act). It did not
contemplate adjustment of a refund against any
dues under the Entry Tax Act. Read into the
Entry Tax Act, that provision only allows for
adjustment of any amount of tax due, either
under that Act, i.e. the Entry Tax Act or the
Central Tax Act or the "erstwhile Act". Only
ambiguity may exist as to the true meaning of
the term "erstwhile Act". In absence of any
contrary intention shown, it may be given the
same meaning as assigned under the VAT Act.
Therefore, it may be read to mean the UP Trade
Act, 1948 only. To read the words "this Act"
(appearing in the later part of section 40 of the
VAT Act), as "VAT Act" in the Entry Tax Act,
would be without any basis, logic or reasoning.
It would be a passionate interpretation made in
favour of the revenue i.e. a construction made
devoid of reasoning and therefore unacceptable
in law.
414 INDIAN LAW REPORTS ALLAHABAD SERIES

26. Then, as explained in the decision
relied upon by the learned counsel for the
revenue in Siddhartha Viyas and another Vs.
Ravi Nath Misra and others (Supra), a proviso
may principally serve any of the three purposes
namely, to provide an extension to the main
provision or an exception to the main provision
or it may contain substantively, a new provision.
In any case, the proviso may not be read to
defeat the object of the main enactment.

27. Accepting and applying that test
invoked by learned counsel for the revenue, we
find it difficult to sustain the submission based
thereon. In the present case, we have examined
Section 40 of the VAT Act as it existed in that
enactment. Here, we find, the first proviso to
sub-section 1 of Section 40 is merely an
exception to the main provision. Thus, the main
provision mandated the authorities under the
VAT Act to refund to an assessee any amount of
tax, fee or other dues paid in excess of the
amount due from him under that Act for any
assessment year. At the same time, the proviso
restricted that refund payment to only such
amount as may remain in excess after
adjustment of any outstanding dues (for any
Assessment Year or tax period) either under the
VAT Act or the Central Act or the Erstwhile Act
i.e. the Trade Tax Act.

28. Besides the fact that it is the plain
grammatical meaning of the language used, it
can never be said that the proviso thus
interpreted would defeat the object of the VAT
Act. We find that the object of the VAT Act
could only be to impose, determine and
recover VAT in accordance with that Act.
There is no legislative intent shown to exist,
under that Act, to recover dues of Entry Tax
Act. In the context of a fiscal legislation, an
exception to that principle has been offered by
the first proviso to Section 40(1) by allowing
for recoveries of other dues of tax, specified
therein, namely, Central Sales Tax and the
U.P. Trade Tax from any amount of VAT that
may be found refundable.

29. Section 40 of the VAT Act does not
provide for recovery of any amount of tax that
may have been due under the Entry Tax Act.
That interpretation and plain grammatical
sense cannot be read to defeat the object of the
VAT Act, to any extent. The VAT Act does
not provide and it does not contemplate
imposition of Entry Tax on any goods or
transactions. Then, it provides for assessment
and recovery of amounts of VAT assessed or
due, from individual assessees. Therefore, by
way of reasoning even if any amount of Entry
Tax imposed under another enactment may
remain unpaid while a refund under the VAT
Act may be allowed or be granted, would be a
factor extraneous to the scheme, object and
purpose of the VAT Act.

30. In absence of express words used to
that effect, it is neither permissible nor
required to read into the language of section
40 of the VAT Act, any word or introduce any
meaning as may allow for recovery of dues of
Entry Tax. That provision, read as it is, is
wholly complete, meaningful and functional.
It does not lead to any ambiguity, doubt,
conflict,
absurdity
or
unworkability.
Therefore, there is no room to apply the rule
of purposive construction invoked by the
revenue. The objection raised by the revenue
to that effect is misconceived.

31. Applied Section 40 of the VAT Act,
mutatis mutandis to the Entry Tax Act, it would
provide for refund of excess amount of Entry
tax, fees or other dues deposited by a dealer
under the Entry Tax Act, after adjustment of any
other amount due either under the Entry Tax Act
or the Central Tax Act or the Trade Tax Act,
1948. Correspondingly, the fact that any amount
of VAT may remain unpaid upon such refund of
Entry Tax being paid would remain an
11 All. M/S Maa Geeta Traders Vs. Comm. Commercial Tax & Anr.
415
extraneous consideration to a refund claim made
under the Entry Tax Act. The provision of
section 40 having been applied mutatis mutandis
to the provision of the Entry Tax Act it would
require, no amount of Entry Tax be refunded to
an assessee unless other specified tax amounts
due against that assessee were first adjusted.

32. However, in the present case, the
petitioner was not seeking any refund under the
Entry Tax Act. Therefore, the provisions of that
Act could not be invoked while rejecting a claim
for refund made under the VAT Act. It is for that
reason, we have chosen to first consider the
interpretation to be given to Section 40(1) of the
VAT Act in the context of a refund claimed
arising under the VAT Act as that is the only
factual and legal context that exists in the
present case. The petitioner has neither claimed
nor appears to be entitled (at this stage) to any
refund under the Entry Tax Act. Therefore, the
submission advanced by learned counsel for the
revenue appears to be totally misconceived and
it cannot therefore be accepted.

33. It is only to deal with the merits of the
submissions advanced by the revenue, we have
chosen to consider the effect of Section 40(1) of
the VAT Act as applied in the statutory context
of the Entry Tax Act. At the same time we
reiterate, the fact situation to apply that
provision to in the context of Entry Tax Act is
plainly non-existent.

34. Thus in the above conspectus the
communications
dated
7.07.2020
and
11.08.2020 are hereby quashed to the extent they
seek to adjust the amount of refund claimed
under the VAT Act, against dues of interest
claimed under the Entry Tax Act. The
respondent is directed to pay out the refund Rs.
17,45,68,741/-, in accordance with law together
with statutory interest due from the date of the
impugned order dated 07.07.2020 till the date of
actual payment.

35. Thus, the writ petition succeeds and is
accordingly allowed. No order as to costs.
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(2021)12ILR A415
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 15.11.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 760 of 2021

M/S Maa Geeta Traders ...Petitioner
Versus
Comm. Commercial Tax & Anr.
 ...Respondents

Counsel for the Petitioner:
Pooja Talwar

Counsel for the Respondents:
C.S.C.

A. Interpretation of Statute - U.P. Goods and
Services Tax Act, 2017: Section 2(24), 2(91),
5(3) - Section 5(3) of the Act provides the source of
power to be exercised by the Commissioner for the
purpose of Section 4 read with section 2(91) of the
Act. The power under section 5(3) of the Act is a
general power of sub-delegation vested in the
Commissioner, by the legislature. It is not the
requirement of law that the source of power
must necessarily be recited in the order passed
in exercise of that power to validate the power
exercised. It is enough that the source of
power exercised and it is exercised in the
manner prescribed by law. (Para 25 -27)

There are two different methods to create function
assignment/delegation in favour of officers of "State
tax" and officers of "Central tax" (i.e., officers
appointed
under
the
Central
Act).
Function
assignment/jurisdiction in favour of officers of the
"State tax" may be created by the "Commissioner" by
issuing an order/communication in exercise of his
powers of sub-delegation vested under Section 5(3)
of the Act. However, function assignment/ jurisdiction
in favour of the officers of the Central Act, may be
notified by the State Government which alone has