Petitioners disallowed from claiming any 'input tax credit' in respect of VAT paid by them on their purchase of 'Coal' & 'Furnace Oil'. HC held, impugned notification, limited to declaring 'coal & 'furnace oil' as goods at serial 1 & 2 thereof is illegal & therefore declare that said notification would not have any application & will stand quashed, since impugned notification is ultra virus Sec. 20(3) (b) & Sec. 2(25) & 2(27) of OVAT Act.-900265
Facts in Brief:
1. The petitioners herein have filed the present batch of writ petitions seeking to challenge the legality and validity of the Notification S.R.O. No.34/2009 dated 27.1.2009 issued by the State of Orissa in the Finance Department published in the Orissa Gazette dated 27.1.2009 in terms of which the petitioners, who are registered dealers under the Orissa Value Added Tax Act, 2004 have been disallowed from claiming any 'input tax credit' in respect of VAT paid by them on their purchase of 'Coal' and 'Furnace Oil', on the basis of the impugned notification issued under Section 20(8), clause(m) of the Orissa Value Added Tax Act, 2004 on the ground that the OVAT Act does not vest in the Finance Department of the Government of Orissa with the necessary authority in law for issue of such a notification and a further prayer has been made seeking a writ declaring clause(m) of sub-Section 8 of the Section 20 of the OVAT Act as ultra-virus the Constitution of India as it suffers from the vice of excessive delegation.
On appeal HC held,
2. In the case at hand, we are clearly of the considered view that both the judgments cited by the petitioners in the case of Collector of Central Excise Bombay v. Maharashtra Fur Fabric Ltd. as well as in the case of State of Karnataka and others -V- Kempaiah (supra) clearly cover the field. The principle of ejusdem generis shall apply to the scope and ambit of clause-(m) of sub-section (8) of Section 20 of the OVAT Act, 2004. Clearly clauses- (a) to (l) of sub-section (8) of Section 20 are circumstances specified by the legislature under which no input tax credit can be claimed nor allowed to a registered dealer. Only such additional circumstance may be specified by a notification of the State Government, but the nature of such notification has to satisfy the requirement of sub- section (8) of Section 20 of the OVAT Act.
3. We are afraid that we cannot accept the contention raised by the State that under section 20(8) (m) the State is vested with "plenary power" and not limited to the type of circumstances similar to those spelt out under clauses- (a) to (l) of sub-section (8) of Section 20 of the OVAT Act.
4. The principle of ejusdem generis has been well settled by the Hon'ble Supreme Court of India in various judgments, including the judgments referred by us hereinabove and for this purpose we cannot do better than what has been said by the Hon'ble Supreme Court in the case of State of Karnataka and others v. Kempaiah (supra), particularly in para-8 thereof and in the case of Collector of Central Excise Bombay v. Maharashtra Fur Fabric Ltd.(supra) particularly in para-6 thereof. Paragraph-8 of the judgment of the Honble Supreme Court in the case of State of Karnataka and others -V- Kempaiah reads as follows:-
"The definition of the word "action" in Section 2(1) read as under:-
"2. (1) 'action' means administrative action taken by way of decision, recommendation or finding or in any other manner and includes willful failure or omission to act and all other expressions [relating to] such action shall be construed accordingly."
5. A perusal of the definition indicates that it encompasses administrative action taken in any form whether by way of recommendation or finding or "in any other manner", e.g., granting licences or privileges, awarding contract, distributing government land under statutory rules or otherwise or withholding decision on any matter etc.
6. The expression "in any other manner" takes it in fold the last-mentioned categories of administrative actions. Mr. Nagaraja has argued that the expression "in any other manner" will have to be given a wider meaning so as to include other actions of the public servants such as the action of the respondent in amassing wealth, otherwise the very purpose of the Act will be frustrated. We are afraid we cannot accede to the contention of the learned counsel as it would not only be contrary to the principle of construction of statutes but will also be repugnant to the object of the Act, pointed out above.
7. The expression "in any other manner" contains general words which construed literally, should receive their full and natural meaning but when they follow specific and particular words of the same genus, it will be presumed that the legislature has used the general words in a limited sense to convey the meaning implied by specific and particular words. This follows from application of the rule of ejusdem generis. That rule which is an exception to the rule of construction that general words should be given their full and natural meaning, was enunciated by Lord Campbell in R. v. Edmundson "1... where there are general words following particular and specific words, the general words must be confined to things of the same kind as those specified". (Craies on Statute Law, 6th Edn., p.179.) These rules of interpretation are so well settled that they hardly need any authority to support our conclusion. Now in the definition of action, the expression "in any other manner" follows "decision", "recommendation" or "finding". So it connotes other categories of administrative action; it cannot be interpreted to mean actions which have no nexus to any administrative action."
Paragraph-6 of the judgment of the Hon'ble Supreme Court in the case of Collector of Central Excise Bombay v. Maharashtra Fur Fabric Ltd.(supra) reads as follows:-
"A careful reading of the proviso to the notification would show that by resorting not only to the process of bleaching, dyeing, printing, shrink-proofing,, tentering, heat- setting, crease-resistant processing, but also to "any other process or any two or more of these processes", the respondent would lose the benefit of the exemption. It is well-established principle that general terms following particular expressions take their colour and meaning as that of the preceding expression, applying the principle of ejusdem generis rule, therefore, in construing the words "or any other process", the import of the specific expressions will have to be kept in mind. It follows that the words "or any other process" would have to be understood in the same sense in which the process, including tentering, would be understood. Thus understood, a process akin to stentering/tentering would fall within the meaning of the proviso and, consequently, the benefit of the notification cannot be availed by the respondent."
8. In view of the aforesaid law laid down by the Hon'ble Supreme court we apply the principle of ejusdem generis to clause (m) of sub-section (8) of Section 20 and are of the considered view that the present notification impugned hereinabove cannot stand the test of application of the principle of ejusdem generis.
9. Accordingly, we are of the considered view that the impugned notification vide S.R.O. No.34/2009 dated 27.1.2009, limited to declaring 'coal and 'furnace oil' as goods at serial 1 and 2 thereof is illegal and therefore declare that the said notification would not have any application and will stand quashed to the aforesaid extent, since the impugned notification is ultra virus Section 20(3) (b) read with Section 2(25) and 2(27) of the OVAT Act. 2004 and consequently purchase made by the petitioner manufacturers of the aforesaid item, i.e., coal and furnace oil within the State from a registered dealer holding a valid registration certificate in respect of goods intended for the purpose of use as input and/or consumable directly used in respect of manufacture of finished product is clearly contrary to the legislative mandate.
10. Accordingly, the impugned notification S.R.O. No. 34/2009 dated 27.1.2009, to the extent noted hereinabove, stands quashed.
11. Insofar as the alternative prayer made by the petitioners seeking to challenge the provision of Section-20(8) (m) of the OVAT Act, 2004 is unconstitutional. We are of the considered view that such power does not suffer from the vice of excessive delegation of the legislative power, since sub-section (8) itself as well as the OVAT Act, 2004 contains the necessary guidelines and limits under which power under clause (m) thereof can be exercised by the State. Therefore such prayer of the petitioners fails and the said provision cannot be held to be excessive or unguided.
12. In view of the conclusion reached by us in Paragraph-18 as noted hereinabove, we are of the considered view that the other contentions raised by the parties are merely academic and therefore, need not be answered in the present case. Writ application is allowed in terms of the direction noted hereinabove.
Case Reference - In The Matter Of Applications ... vs Coal Except When Purchased.