2001 (10) TMI 1128 - HC - VAT and Sales Tax

Summary

Issues:
- Liability of a registered dealer for sales tax on vegetable ghee
- Special mode of recovery under section 26 of the Act
- Applicability of promissory estoppel in reimbursement by the State

Analysis:

Issue 1: Liability of a registered dealer for sales tax on vegetable ghee
The petitioner, a registered dealer under the Assam General Sales Tax Act, was assessed for not paying tax on the sale of vegetable ghee for the period from March 1, 1993, to March 31, 1994. The petitioner challenged the assessment order, claiming that the liability to pay sales tax was on the supplier based on a letter of exemption provided by the supplier, Statfed. However, the court held that the liability to pay tax rests with the registered dealer under the Act. The court emphasized that the registered dealer, in this case, the petitioner, was required to pay sales tax on the vegetable ghee sold by them, regardless of any promises of reimbursement by the supplier.

Issue 2: Special mode of recovery under section 26 of the Act
The court examined the provisions of section 26 of the Act, which provide a special mode of recovery for the assessing officer to realize arrear dues or taxes from a dealer. It was clarified that this mode of recovery is not a general mechanism to shift the liability from the dealer to a third party, such as the government or a supplier. The court emphasized that the special mode of recovery is intended to facilitate the recovery of dues from the registered dealer directly and not from other entities unless specified by law.

Issue 3: Applicability of promissory estoppel in reimbursement by the State
The petitioner argued that the supplier, Statfed, was bound by the principle of promissory estoppel to reimburse the tax amount based on a letter promising reimbursement. However, the court noted that the letter of exemption provided by Statfed was valid only for a specific period, which did not cover the entire liability period of the petitioner. As a result, the court held that the petitioner is liable to pay the assessed taxes and cannot claim reimbursement beyond the period specified in the letter. The court allowed the petitioner to seek reimbursement for the specific period covered by the letter from the competent forum.

In conclusion, the court dismissed the petition, stating that the petitioner is liable to pay the assessed taxes and can only seek reimbursement for the period specified in the letter of exemption. The judgment clarified the responsibilities of registered dealers under the Act and the limitations of recovery mechanisms available to the assessing authority.