2005 (9) TMI 595 - HC - VAT and Sales Tax

Summary

Issues:
1. Demand for payment of estimated tax for the fourth quarter (January to March, 2005).
2. Demand of advance tax for the financial year 2005-06.

Analysis:
1. The petitioner, a registered dealer under the Bihar Finance Act and the Central Sales Tax Act, challenged a notice demanding payment of estimated tax for the fourth quarter of 2005. The petitioner argued that all taxes up to February 2005 were already paid, including the estimated tax for March 2005, hence no further payment was due. The State contended that the estimate for March did not include taxes for January and February, anticipating increased sales. The court examined Section 3(10) of the Act, which allows tax estimation and collection in advance each financial year. The court ruled that the demand for advance tax for the financial year 2005-06 in 2004-05 was not authorized by the Act, quashing that part of the notice.

2. Regarding the demand for advance tax for the financial year 2005-06, the court found it contrary to Section 3(10) of the Act, which specifies tax collection in advance for the respective financial year only. As the notice demanded advance tax for the following financial year in the current financial year, the court deemed it unlawful and quashed that portion of the notice. However, the court upheld the demand for payment of Rs. 11 lakhs for the fourth quarter of the current financial year, as it was permissible under the Act.

3. The court noted that the issue raised had become academic due to the implementation of the Value Added Tax Act, which now governs such matters. Consequently, the court partially allowed the application, quashing the demand for advance tax for the financial year 2005-06 made in the financial year 2004-05, but upholding the demand for payment of Rs. 11 lakhs for the fourth quarter of the current financial year.