2005 (1) TMI 661 - HC - VAT and Sales Tax

Summary

Issues:
1. Eligibility for sales tax deferment under industrial policy.
2. Dispute regarding the product classification.
3. Jurisdiction of Commercial Tax Officer.
4. Finality of eligibility certificate.
5. Writ petition maintainability.

Eligibility for sales tax deferment under industrial policy:
The petitioner, a fruit-based juice company manufacturing "Frooti," claimed eligibility for sales tax deferment based on a certificate granted by the State Level Committee (S.L.C.) under the industrial policy "Target 2000." The Commercial Tax Department disputed the eligibility, leading to a writ petition challenging the denial of deferment.

Dispute regarding the product classification:
The Commercial Tax Officer contended that "Frooti" did not qualify as a fruit-based juice for the sales tax deferment, as it was categorized as a soft drink. The petitioner argued that the deferment was granted for fruit-based juices, not fresh fruit juices, and relied on a previous judgment to support their claim.

Jurisdiction of Commercial Tax Officer:
The key issue was whether the Commercial Tax Officer had the authority to demand payment of sales tax despite the existence of a final eligibility certificate issued by the S.L.C. The court considered the maintainability of a writ petition challenging such demands during the validity of the certificate.

Finality of eligibility certificate:
Citing a previous case, the court emphasized that tax authorities could not demand payment disregarding a final eligibility certificate. The court highlighted that the Commercial Tax Department lacked the power to cancel or modify such certificates, and any dispute on eligibility should be addressed by the issuing authority.

Writ petition maintainability:
The court concluded that the writ petition was maintainable to address the jurisdictional issue of demanding tax payment during the validity of the eligibility certificate. The court directed that coercive steps for tax recovery should not be taken while allowing the Commercial Tax Officer to pursue cancellation or modification of the certificate through appropriate channels.

In summary, the judgment clarified the scope of authority of the Commercial Tax Officer in demanding tax payment, upheld the finality of eligibility certificates, and deemed the writ petition maintainable for resolving jurisdictional disputes. The decision protected the petitioner from coercive tax recovery measures while allowing further actions for certificate cancellation or modification.