1997 (4) TMI 482 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Commercial Taxes Officer.
2. Interpretation of notifications regarding tax exemptions.
3. Imposition of penalty and interest.
4. Rejection of stay application by the Deputy Commissioner (Appeals).

Detailed Analysis:

1. Jurisdiction of the Commercial Taxes Officer:
The petitioner challenged the jurisdiction of the Commercial Taxes Officer (Anti-evasion I, Jaipur) to survey and inspect the factory premises, arguing that the officer was not specifically authorized by the Commissioner under section 77(1) of the Rajasthan Sales Tax Act, 1994. The respondent contended that the officer was authorized under Notification No. F.3(A)(14)Tax/CCT/95/24 dated 19th July, 1995, which conferred jurisdiction on all Assistant Commissioners/Commercial Tax Officers in anti-evasion circles. The Tribunal did not find it necessary to decide on this jurisdictional issue as the appeals were still pending.

2. Interpretation of Notifications Regarding Tax Exemptions:
The petitioner relied on two notifications issued by the State Government under the Rajasthan Sales Tax Act, 1954, which exempted the sale or purchase of edible oil and hydrogenated vegetable oil from tax under certain conditions. The petitioner argued that hydrogenated vegetable oil is included in the category of edible oil, as supported by the Supreme Court's judgment in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827 (SC). The respondent argued that hydrogenated vegetable oil and edible oil are different commodities. The Tribunal referred to the Supreme Court's judgment, which held that hydrogenated oil remains an oil and should be considered as edible oil for tax exemption purposes.

3. Imposition of Penalty and Interest:
The petitioner contended that mens rea is necessary for imposing a penalty under section 16(1)(e) of the 1954 Act and that no penalty should be imposed when the interpretation of rules or notifications is involved. The Tribunal agreed, citing the Supreme Court's judgment in Tungabhadra Industries Ltd. v. Commercial Tax Officer, which stated that no penalty arises when the interpretation of a notification is involved. Additionally, the petitioner argued that interest cannot be levied unless the amount of tax is quantified, supported by the Supreme Court's ruling in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422 (SC). The Tribunal upheld this view, stating that interest is not payable when the tax has not been ascertained.

4. Rejection of Stay Application by the Deputy Commissioner (Appeals):
The petitioner argued that the stay application was rejected arbitrarily and illegally without providing reasons as required under rule 47 of the Rajasthan Sales Tax Rules, 1995. The Tribunal found that the order dated 17th December 1996, rejecting the stay application, did not provide any reasons. The Tribunal observed that the petitioner had a prima facie case and that the balance of convenience was in its favor. The Tribunal noted that the petitioner would suffer irreparable loss if the stay was not granted. Consequently, the Tribunal set aside the order dated 17th December 1996 and restrained the Commercial Taxes Officer from taking coercive steps for the recovery of the disputed demands until the final disposal of the appeals.

Conclusion:
The Tribunal allowed both original applications, set aside the orders dated 17th December 1996, and restrained the Commercial Taxes Officer from taking any coercive steps against the petitioner for the recovery of the disputed demands until the final disposal of the appeals by the Deputy Commissioner (Appeals). The Tribunal emphasized that any observations made regarding the merits of the cases would not prejudice either party. No order as to costs was made.

Applications Allowed.