2005 (9) TMI 605 - HC - VAT and Sales Tax

Summary

Issues: Challenge to revisionary order under article 226/227 of the Constitution of India regarding liability to pay sales tax/commercial tax on a transaction.

The judgment pertains to a writ filed challenging a revisionary order passed by the Additional Commissioner, Commercial Tax, Indore, in relation to a transaction period from April 1, 1989, to December 11, 1994. The main issue revolves around the liability of the petitioner, acting as a financier in a transaction, to pay sales tax/commercial tax under the State Sales Tax Act. The petitioner contested the tax liability, citing judicial precedents like K.L. Johar's case, Sundaram Finance Ltd., Jay Bharat's case, and Charanjit Singh Chadha v. Sudhir Mehra. The court noted that the revisionary authority failed to consider these precedents, which is essential for decision-making. The judgment emphasized the obligation of all courts to follow the law laid down by the Supreme Court of India under Article 141 of the Constitution. It highlighted that deciding an issue without reference to Supreme Court decisions vitiates the order, necessitating its setting aside. The court clarified that the factual inquiry to determine liability should be conducted by the authorities below first, and only then can the writ court assess the decision's compliance with Supreme Court precedents.

In conclusion, the court allowed the writ, quashed the impugned order, and remanded the case to the revisionary authority for a fresh decision within six months, emphasizing adherence to the law and Supreme Court precedents. The judgment underscored the importance of following legal precedents and conducting factual inquiries in line with established legal principles before determining liability in tax matters.