9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2008 (1) TMI 844 - HC - VAT and Sales TaxTax on bearing - Held that - This court is of the further opinion that the writ petitioner is not liable to pay tax more than four per cent on bearing before the amendment of VAT Act, 2004 came, as by that amendment only, the Legislature clarified the rate of tax on bearing . However, in the instant case, as it is admitted from the pleadings of the petitioner that before amendment of the Tripura Value Added Tax Act, 2004, the petitioner could not collect value added tax at 12.5 per cent on selling of bearing but after clarification by the Revenue authority, the petitioner collected tax at 12.5 per cent from July 1, 2006. Therefore, the petitioner is liable to deposit the value added tax collected by it from the purchasers at 12.5 per cent on and from July 1, 2006 to the Revenue authority, i.e., the Commissioner of Taxes, Tripura and consequent thereto, the impugned decisions/communications, dated May 15, 2006, June 20, 2006 and October 20/26, 2006, annexures C, E and G respectively, are hereby quashed. Accordingly, the writ petition is allowed.
Issues Involved:
1. Legality of the decisions by the Assistant Commissioner of Taxes regarding VAT on bearings. 2. Interpretation of VAT rates on bearings under the Tripura Value Added Tax Act, 2004. 3. Applicability of amendments to the VAT Act, 2004, and their impact on tax rates. 4. The authority of revenue officials to impose different VAT rates based on the use of bearings. Issue-wise Detailed Analysis: 1. Legality of the Decisions by the Assistant Commissioner of Taxes Regarding VAT on Bearings: The petitioner, a registered dealer selling motor vehicle parts including bearings, challenged the decisions of the Assistant Commissioner of Taxes communicated on May 15, 2006, June 20, 2006, and October 20/26, 2006. The petitioner argued that these decisions were inconsistent with the statutory provisions of the Tripura Value Added Tax Act, 2004 (VAT Act, 2004). The court noted that the Assistant Commissioner's communications created confusion among the business community and were not issued in accordance with the statutory provisions of the TVAT Act, 2007. 2. Interpretation of VAT Rates on Bearings Under the Tripura Value Added Tax Act, 2004: The petitioner collected VAT at four percent on bearings based on entry No. 15 of Schedule II(a) of the VAT Act, 2004. However, the Assistant Commissioner of Taxes informed the petitioner that if bearings were used as automobile parts, they were taxable at 12.5 percent under entry No. 117 of Schedule II(b). The court observed that the VAT Act, 2004, specifically prescribed a four percent tax rate on bearings under entry No. 15 of Schedule II(a). The court emphasized that taxing statutes should be interpreted based on the clear language used in the statute without external aids. 3. Applicability of Amendments to the VAT Act, 2004, and Their Impact on Tax Rates: The Tripura Value Added Tax (Amendment) Act, 2007, clarified the classification and tax rates for bearings, which were previously ambiguous. The amendment specified that bearings used as motor parts were taxable under entry No. 117 of Schedule II(b) at 12.5 percent, while bearings used as machine parts were taxable under entry No. 106 of Schedule II(b) and those used as bicycle/rickshaw parts under entry No. 18 of Schedule II(a). The court noted that the amendment was made to clear doubts and protect revenue, indicating that prior to the amendment, the statutory provisions were unclear. 4. Authority of Revenue Officials to Impose Different VAT Rates Based on the Use of Bearings: The court held that the revenue authority could not impose different VAT rates on the same item based on its use. The court emphasized that it is impractical for a seller to determine the purpose for which a purchaser buys bearings. The court cited the Supreme Court's decision in Hindustan Poles Corporation v. Commissioner of Central Excise, Calcutta, which stated that when an item is covered by a specific entry, the revenue authority cannot resort to a residuary entry. The court concluded that the revenue authority must adhere to the specific rate prescribed in the statute, which was four percent for bearings under entry No. 15 of Schedule II(a) before the amendment. Conclusion: The court quashed the impugned decisions/communications dated May 15, 2006, June 20, 2006, and October 20/26, 2006, and allowed the writ petition. The court held that the petitioner was not liable to pay more than four percent VAT on bearings before the amendment of the VAT Act, 2004. However, the petitioner was required to deposit VAT at 12.5 percent on bearings collected from July 1, 2006, after the clarification by the revenue authority. The court emphasized that the revenue authority must follow the specific entries in the statute and cannot impose varying tax rates based on the use of the item.
|
