2007 (1) TMI 524 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the respondents were entitled to deduct the purchase tax from the bills of the petitioners in respect of supplies made pursuant to the supply orders.
2. Whether the petitioner-firm or the respondent-Corporation is liable to pay the purchase tax under the Assam General Sales Tax Act, 1993.
3. Interpretation of the term "inclusive of tax" in the context of the supply orders and contract agreements.

Issue-wise Detailed Analysis:

1. Entitlement to Deduct Purchase Tax:
The primary issue in the writ petitions was whether the respondents were entitled to deduct the purchase tax from the bills of the petitioners for the supplies made. The petitioner-firm argued that the respondent-Corporation, being the last purchaser of the bamboos, was liable to pay the tax under the Assam General Sales Tax Act, 1993, and not the petitioner-firm. The respondents countered this by stating that the rates quoted by the petitioner were inclusive of "purchase tax" as per the notice inviting tenders (NIT) and the contract agreements. The court found that the deductions made by the respondent-Corporation were in accordance with the terms of the NIT and the contract agreements, which specified that the quoted rates were inclusive of all taxes, including purchase tax.

2. Liability to Pay Purchase Tax:
The petitioner-firm contended that the respondent-Corporation, as the last purchaser, was liable to pay the purchase tax under the Assam General Sales Tax Act, 1993. The respondents, however, maintained that the petitioner had included the purchase tax in the quoted rates while offering tenders. The court agreed with the respondents, noting that the contract agreements and supply orders clearly indicated that the rates offered by the petitioner were inclusive of all taxes. Therefore, the court concluded that the petitioner-firm was liable for the deduction of the purchase tax from its bills, as the tax component was already included in the quoted rates.

3. Interpretation of "Inclusive of Tax":
The petitioner-firm argued that the term "inclusive of tax" in the supply orders should not be interpreted to mean that the tax was recoverable from the petitioner's bills. The respondents, on the other hand, asserted that the quoted rates were inclusive of all taxes, including purchase tax, as specified in the NIT and the contract agreements. The court examined the relevant documents and found that the rates offered by the petitioner were indeed inclusive of all taxes. The court referred to clause 4 of the contract agreement, which explicitly stated that the quoted rate should be for supply and delivery per metric ton of bamboo and inclusive of all charges like taxes, including purchase tax or sales tax. The court concluded that the petitioner's contention was not sustainable, as the deductions made were in line with the agreed terms of the contract.

Conclusion:
The court dismissed the writ petitions, holding that the deductions made by the respondent-Corporation were in accordance with the terms of the NIT and the contract agreements. The court found that the rates quoted by the petitioner were inclusive of all taxes, including purchase tax, and that the petitioner-firm was liable for the deduction of the purchase tax from its bills. The court also noted that the amounts deducted were deposited in the Government Treasury in the name of the respondent-Corporation and reflected in the returns submitted to the taxing authority. The court concluded that no case for interference with the actions of the respondents had been made out, and the interim orders passed in each of the writ petitions were vacated. The writ petitions were dismissed, with each party bearing its own costs.