2002 (9) TMI 811 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the penalties imposed by the disciplinary authority.
2. Validity of the certificates issued by the petitioner.
3. Authority of the Commissioner of Taxes to issue directives.
4. Whether the petitioner caused pecuniary loss to the State exchequer.
5. Applicability of sales tax on casual sales by a Government organization.

Detailed Analysis:

1. Legality of the penalties imposed by the disciplinary authority:
The petitioner challenged the order dated February 5, 1998, by the disciplinary authority imposing penalties of withholding promotion for five years and recovery of Rs. 1,30,900. The Assam Administrative Tribunal modified the penalties to withholding promotion for five years from the date of the original order and monthly recovery of Rs. 2,000 from the petitioner's salary.

2. Validity of the certificates issued by the petitioner:
The disciplinary authority charged the petitioner for issuing certificates exempting certain sales from tax, causing a pecuniary loss to the State. The enquiry officer found that the petitioner violated directives by issuing these certificates. The petitioner argued that the certificates were issued bona fide and in line with the Assam General Sales Tax Act provisions, which exempted casual sales by a Central Government organization from tax.

3. Authority of the Commissioner of Taxes to issue directives:
The petitioner contended that the Commissioner of Taxes had no authority under the Act to issue a circular restraining the Superintendent of Taxes from clarifying or interpreting the law. The court noted that the circular issued in 1985 lacked statutory force and could only be considered an administrative direction. The insertion of section 73A in the Assam General Sales Tax (Amendment) Act, 2000, which empowered the Commissioner to issue such directives, indicated that the 1985 circular was without legal authority.

4. Whether the petitioner caused pecuniary loss to the State exchequer:
The court examined whether the certificates issued by the petitioner resulted in a loss to the State. It was established that Project Vartak, a Government of India organization, was not engaged in the business of selling or purchasing scrap materials with a profit motive. Therefore, the sale of scrap materials by Project Vartak was not exigible to sales tax, and no pecuniary loss was caused to the State.

5. Applicability of sales tax on casual sales by a Government organization:
The court referred to the definition of "dealer" and "business" under the Assam General Sales Tax Act, 1993, and relevant case law. It concluded that casual sales by a Government organization not engaged in the business of selling or purchasing goods were not subject to sales tax. The insertion of clause (10a) by the Assam General Sales Tax (Amendment) Act, 2000, which taxed casual transactions, clarified that such sales were not taxable before the amendment.

Conclusion:
The court found that the petitioner issued the certificates in good faith and in line with the law as it stood at the time. The penalties imposed were not justified, and the Tribunal's judgment was based on an erroneous interpretation of the law. Consequently, the writ petition was allowed, the Tribunal's judgment was reversed, and the penalties were quashed.