2004 (9) TMI 627 - AT - VAT and Sales Tax

Issues Involved:
1. Legality of the assessment order dated June 30, 1989.
2. Legality of the appellate order dated March 8, 1994.
3. Legality of the revisional order dated November 8, 2000.
4. Liability of the petitioner to pay tax under section 6D of the Bengal Finance (Sales Tax) Act, 1941.
5. Divisibility of the contracts for supply of goods and services.
6. Rate of tax levied.
7. Non-production of books of account and other records.
8. Shifting of tax liability to the sub-contractor.

Detailed Analysis:

1. Legality of the assessment order dated June 30, 1989:
The petitioner sought to set aside the assessment order dated June 30, 1989, passed by the Commercial Tax Officer (C.T.O.), Durgapur Charge, for the period ending March 31, 1985. The petitioner argued that the assessment was unlawful as it included the amount paid to the sub-contractor for services rendered, which should not attract sales tax. The Tribunal found that the petitioner failed to produce the original contracts that could clarify whether the contracts were divisible or indivisible. Therefore, the assessment order did not reflect the true nature of the contracts and was set aside for rehearing.

2. Legality of the appellate order dated March 8, 1994:
The appellate order dated March 8, 1994, by the Assistant Commissioner (A.C.) of Commercial Taxes, Durgapur Circle, was challenged on the grounds that it raised irrelevant issues about the non-production of books of account and nonpayment of tax. The Tribunal noted that the appellate forum did not provide the petitioner with an opportunity to produce the necessary documents and records. Consequently, the appellate order was also set aside.

3. Legality of the revisional order dated November 8, 2000:
The revisional order dated November 8, 2000, by the West Bengal Commercial Taxes Appellate and Revisional Board, which affirmed the assessment order, was contested. The Tribunal found that the Board did not examine the books of account and other records, thereby affirming the appellate order without proper scrutiny. This order was also set aside.

4. Liability of the petitioner to pay tax under section 6D of the Bengal Finance (Sales Tax) Act, 1941:
The petitioner argued that they were not liable to pay tax under section 6D as the sub-contractor had already been assessed and subjected to tax. The Tribunal observed that section 6D did not provide for shifting tax liability to the sub-contractor at the relevant time. Sub-section (3A) of section 6D, which allowed for such a shift, was introduced only in 1994. Therefore, the petitioner could not shift the tax liability to the sub-contractor for the period in question.

5. Divisibility of the contracts for supply of goods and services:
The petitioner claimed that the contracts were divisible into one for supply of goods and another for erection and installation services. The Tribunal noted that the petitioner did not produce the original contracts to substantiate this claim. The assessment was based on an invoice rather than the actual terms of the contracts, leading to an erroneous conclusion. The Tribunal directed a rehearing to determine the true nature of the contracts.

6. Rate of tax levied:
The petitioner contended that the rate of tax levied was imaginary. The Tribunal found that the rate of tax at 4 percent was correctly charged, although the section cited in the assessment was incorrect. This issue was to be reconsidered during the rehearing.

7. Non-production of books of account and other records:
The petitioner argued that the assessment and appellate authorities did not entertain their request for time to produce books of account and other records. The Tribunal acknowledged this lapse and directed that the petitioner be given another opportunity to produce the necessary documents during the rehearing.

8. Shifting of tax liability to the sub-contractor:
The Tribunal found that at the relevant time, there was no provision for shifting tax liability to the sub-contractor. The authorities below found that the sub-contractor had not paid the tax, and the petitioner could not shift the liability based on the sub-contractor's involvement.

Conclusion:
The Tribunal set aside the assessment order dated June 30, 1989, the appellate order dated March 8, 1994, and the revisional order dated November 8, 2000. The case was remanded to the C.T.O., Durgapur Charge, for rehearing, allowing the petitioner to produce original contracts and other relevant documents. The reassessment was to be conducted following the principles of law and after giving the petitioner an opportunity to be heard. The application was disposed of without any order as to costs.

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