2009 (8) TMI 1073 - HC - VAT and Sales Tax

Whether the Tribunal was correct in sustaining the higher rate of tax on the sales of sulphate alumina made by the petitioner against Form-XVII for the manufacture of Benzoin which is not falling under the First Schedule and is liable to tax under Section 3(1) of the Act? Held that - As there is a specific column in column-b which is required to be filled in and the requirement is description of the goods to be manufactured with serial number of first schedule . In so far as the petitioner is concerned, admittedly the said column was not filled-in either by the purchaser or by the assessee at the time when the same was produced for availing the benefit under Section 3(3) of the Act. It was in those circumstances, the Assessing Authority was forced to revise the turnover and make the assessment for a sum of ₹ 1,03,600/-. In fact it is also not in dispute that the ultimate product manufactured by the purchaser who supplied Form-XVII to the petitioner was Benzion (Sambirani) which is not one of the item mentioned in the First Schedule. In as much as Form-XVII relied upon by the petitioner having not satisfied the statutory prescription of fulfilling all the required particulars to be filled-in in the said format, the assessee cannot be heard to say irrespective of such defects in the production of Form-XVII, the assessee should be conferred with the concessional rate of tax as prescribed under Section 3(3) of the Act and that any other consequential liability should be fastened only on the purchaser. Since the alleged Form-XVII cannot be construed as Form-XVII at all, the said principle will have no application to the facts of this case. The revision therefore fails and the same is dismissed

Summary

Issues:
1. Correctness of sustaining higher tax rate on sales of sulphate alumina against Form-XVII for manufacturing Benzoin.
2. Applicability of tax and penalty against seller for invalid Form-XVII.
3. Interpretation of statutory requirements for concessional tax rate under Section 3(3) of the Act.

Analysis:
1. The case involved a revision where the petitioner challenged the Tribunal's decision to levy a higher tax rate on sales of Sulphate of Alumina against Form-XVII for Benzoin manufacturing. The petitioner was initially assessed at a lower rate but later faced a revised assessment with a penalty. The Tribunal upheld the higher tax rate and penalty, leading to the petitioner's appeal.

2. The petitioner argued, citing legal precedents, that tax and penalty for Form-XVII violations should apply only to the purchasing dealer, not the seller. The petitioner contended that they were not responsible for verifying the actual use of the materials by the purchaser. On the contrary, the respondent asserted that if the Form-XVII was invalid, the seller could be liable, irrespective of past decisions.

3. The Court examined the statutory requirements for availing the concessional tax rate under Section 3(3) of the Act. It was established that to qualify for the lower tax rate, the seller must produce a duly filled-in Form-XVII meeting specific criteria. The Form should detail the goods sold for use in manufacturing goods listed in the First Schedule. However, in this case, the Form-XVII provided did not meet these requirements, leading to the assessment revision.

4. The Court emphasized that the seller's duty ends once a valid Form-XVII is submitted. As the petitioner's Form did not meet the prescribed format, the principles regarding tax and penalty liabilities against the seller were deemed inapplicable. The Court dismissed the revision, ruling against the petitioner due to the inadequacy of the Form-XVII presented, which failed to fulfill statutory obligations for concessional tax rates.

5. Ultimately, the judgment highlighted the importance of adhering to statutory requirements, especially in submitting necessary documentation like Form-XVII for concessional tax rates. The Court's decision rested on the specific details provided in the Form and the seller's responsibility in ensuring compliance with legal provisions to benefit from lower tax rates.