2005 (1) TMI 640 - HC - VAT and Sales Tax

Issues Involved:

1. Whether the supply of line card testers to the Indian Telephone Industries Limited (I.T.I.) constituted a sale under Section 2(l) of the Haryana General Sales Tax Act, 1973.
2. Whether the assessment of tax on the transaction was justified.
3. Whether the notice issued under Section 40(1) of the 1973 Act was valid.
4. Whether the petitioner's plea that the sale was incomplete due to non-acceptance of goods by I.T.I. was tenable.

Issue-wise Detailed Analysis:

1. Whether the supply of line card testers to the Indian Telephone Industries Limited (I.T.I.) constituted a sale under Section 2(l) of the Haryana General Sales Tax Act, 1973:

The court examined whether the transaction involving the supply of line card testers amounted to a sale under Section 2(l) of the 1973 Act. The definition of "sale" under Section 2(l) includes any transfer of property in goods for cash or deferred payment or other valuable consideration. The court noted that for a transaction to be considered a sale, there must be an agreement between the parties, a transfer of goods by the seller to the purchaser in furtherance of such agreement, and such transfer should be for cash or deferred payment or other valuable consideration.

In this case, the petitioner supplied line card testers to I.T.I. in furtherance of a purchase order, and the I.T.I. had given an advance towards the price of the goods. The goods were despatched by the petitioner and received by the I.T.I. authorities after a workability test was conducted. The goods were not returned by I.T.I. within six months, and the petitioner had filed a claim for the price of the goods and damages. Therefore, the court concluded that all the necessary elements for constituting a sale were fulfilled, and the transaction amounted to a sale under Section 2(l) of the 1973 Act.

2. Whether the assessment of tax on the transaction was justified:

The court upheld the assessment of tax on the transaction. The Excise and Taxation Officer (Inspection) Gurgaon-cum-Revisional Authority and the Sales Tax Tribunal had both concluded that the transaction amounted to a sale and was taxable. The court found that the concurrent findings of the authorities were based on a correct appreciation of the material placed on record and did not call for interference. The court emphasized that the mere possibility of forming a different opinion on re-evaluation of the facts could not be a ground for nullifying the impugned orders.

3. Whether the notice issued under Section 40(1) of the 1973 Act was valid:

The petitioner challenged the notice issued under Section 40(1) of the 1973 Act, arguing that it did not indicate the application of mind by the officer concerned. The court rejected this argument, noting that the notice clearly indicated the intention to revise the assessment order. The petitioner did not contest the notice on the grounds of it being laconic or ultra vires to Section 40(1) before the authorities or the Tribunal. Therefore, the court held that the petitioner could not raise this plea for the first time in the writ petition and deemed the petitioner to have waived the right to challenge the notice.

4. Whether the petitioner's plea that the sale was incomplete due to non-acceptance of goods by I.T.I. was tenable:

The petitioner argued that the sale was incomplete because the I.T.I. authorities had not accepted the goods. The court found this plea to be untenable, noting that the petitioner had treated the sale as complete in its affidavit filed in the Allahabad High Court. The petitioner had demanded the price and claimed damages, indicating that it considered the sale to be complete. Additionally, the court noted that the goods were not returned within six months, and the I.T.I. initially wanted rectification of the equipment but later decided to cancel the supply order. Therefore, the court concluded that the petitioner's plea was falsified by its own actions and statements.

Conclusion:

The court dismissed the writ petition, upholding the assessment of tax on the transaction and rejecting the petitioner's arguments against the validity of the notice issued under Section 40(1) and the completeness of the sale. The court emphasized that all necessary elements for constituting a sale were fulfilled, and the findings of the authorities were based on a correct appreciation of the material placed on record.

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