1991 (4) TMI 416 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the turnover of Rs. 1,39,658.98 was exigible to tax as a sale or service.
2. Whether the Tribunal erred in setting aside the orders of the assessing authority and the Appellate Assistant Commissioner.

Analysis:

1. The High Court considered a case where the assessing authority initially exempted a turnover from sales tax, deeming it as service and not a sale, based on a Supreme Court judgment. However, after new facts emerged and a clarification was issued on the Supreme Court judgment, the assessing authority proposed to tax the turnover as an escaped assessment. The Appellate Authority upheld the tax liability, stating that the sale of food was the predominant object, not the service. On further appeal, the Tribunal found insufficient evidence to determine the dominant object of the transaction and set aside the previous orders. The High Court, citing the Supreme Court's stance on determining the nature of transactions, concluded that the Tribunal erred in not remanding the case to the assessing authority for further investigation. The Court set aside the Tribunal's order and remitted the case for fresh disposal in line with the Supreme Court's observations.

2. The Additional Government Pleader argued that the Tribunal should have remitted the case to the assessing authority for factual investigation, as per the Supreme Court's guidance on determining the substance of transactions. The Court agreed, emphasizing that it is the assessing authority's responsibility to ascertain facts and decide whether a sale or service was intended in each case. Therefore, the Tribunal's decision to set aside the previous orders was deemed erroneous, and the case was directed to be remanded to the assessing authority for proper disposal based on the nature of the transaction and the Supreme Court's directives.

3. The respondent's counsel raised a constitutional point post the 46th Amendment to the Indian Constitution, indicating potential non-liability of the assessee. The Court allowed the petition, directing the respondent to raise all relevant points during the fresh assessment proceedings without awarding costs.

In conclusion, the High Court allowed the petition, setting aside the Tribunal's order and remitting the case to the assessing authority for a fresh decision in accordance with the law and the Supreme Court's guidelines on determining the nature of transactions for tax purposes.