2003 (1) TMI 677 - HC - VAT and Sales Tax

Summary

Issues:
Challenge of order of assessment in sales tax matter under Rajasthan Sales Tax Act, 1994 - Availability of statutory remedy of appeal - Requirement of depositing assessed amount for appeal - Interpretation of section 2(38) and section 4(1) of the Act regarding job-work involving explosives and levy of sales tax.

Analysis:

1. Statutory Remedy of Appeal and Deposit Requirement:
The appeal was filed against the order of assessment in a sales tax matter under the Rajasthan Sales Tax Act, 1994. The appellant argued that the appeal remedy required an onerous condition of depositing the assessed amount before the appeal could be entertained. Reference was made to a Supreme Court decision emphasizing that the right of appeal is a vested right and cannot be taken away except by express provision. Another case highlighted the ineffectiveness of an appeal when a large penalty must be deposited first. The appellant contended that the condition for depositing the amount restricted the right of appeal. However, the respondent argued that the condition was not onerous as only 10% of the dues needed to be deposited for availing the appeal remedy. The Supreme Court's decision in Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of the City of Ahmedabad was cited to support the argument that the right to appeal is a statutory right subject to conditions set by the legislature.

2. Interpretation of Sales Tax Provisions for Job-Work with Explosives:
The appellant's job-work involved blasting using explosives, leading to the exhaustion of the explosives in the process. The appellant contended that no effective sale of explosives occurred, thus challenging the assessment order. Section 2(38) of the Rajasthan Sales Tax Act, 1994 defines 'sale' and includes various scenarios of property transfer for consideration. The charging section, section 4(1), stipulates the tax payable by dealers. The appellant argued that the use of explosives in the job-work did not constitute a sale under the Act, hence not subject to tax. The respondent argued that the job-work involved a transfer of property in goods, supported by the purchase of explosives using a form "C" for concession. However, the Court held that the job-work did not amount to a sale under the Act, and therefore, the levy of sales tax was not applicable.

3. Court Decision:
The Court found in favor of the appellant, setting aside the order of the learned single Judge and quashing the assessment order. The appeal and writ petition were allowed, and the assessment order was annulled. Each party was directed to bear its own costs.

In conclusion, the judgment addressed the availability of statutory appeal remedies, the deposit requirement for appeal, and the interpretation of sales tax provisions regarding job-work involving explosives. The Court's decision favored the appellant, emphasizing that the job-work did not constitute a sale under the Act, leading to the quashing of the assessment order.