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2009 (8) TMI 1080 - HC - VAT and Sales TaxPurchase tax on gold purchased from MMTC under a replenishment licence under section 13AA of the Bombay Sales Tax Act, 1959 demanded Held that - Considering the Government notification earlier referred to, the petitioner is exempted from payment both of sales tax and purchase tax. It is not possible to accept the contention of the respondents that the tax referred to in the notification is only sales tax and not purchase tax. Once we hold that purchase tax was not payable the question of the petitioner being liable for interest under section 36(3)(b) in so far as gold is concerned will not arise and neither would interest on purchase tax. To that extent, the interest will have to be set aside. The penalty imposed under section 36(4A) is in a sum of ₹ 200. Though it is true that in so far as gold is concerned we have held that no tax was payable nevertheless considering that we have held that tax was payable on purchase of capital asset, namely, motor vehicle, we find that no interference with the penalty under section 36(4A) is called for. Thus penalty under section 36(4A) is upheld.
Issues Involved:
1. Liability to pay purchase tax on gold purchased from MMTC under a replenishment license. 2. Liability to pay purchase tax on a vehicle purchased for employee use. 3. Charging of interest under section 36(3)(b). 4. Penalty under section 36(2)(c) (Explanation 1) and section 36(4A). 5. Constitutionality of section 13AA of the Bombay Sales Tax Act, 1959. Issue-wise Detailed Analysis: 1. Liability to Pay Purchase Tax on Gold Purchased from MMTC: The petitioners challenged the order of assessment holding them liable to pay purchase tax on gold purchased from MMTC under a replenishment license, as per section 13AA of the Bombay Sales Tax Act, 1959. The appellate authority noted that the Sales Tax Officer did not levy purchase tax under section 13AA, despite the goods falling under Part I of Schedule C. The petitioners argued that the purchase tax was not payable and alternatively sought set-off under section 42(1). The court examined the Government notification dated June 25, 1990, which exempted sales of gold bullion by MMTC to SEEPZ units from the whole of the tax, including purchase tax. The court concluded that the petitioners were exempted from paying both sales tax and purchase tax on gold purchased from MMTC. 2. Liability to Pay Purchase Tax on a Vehicle Purchased for Employee Use: The petitioners contended that purchase tax was not payable under section 13 on the purchase of a vehicle, arguing that they were not a dealer and that the purchase did not form part of their business. The appellate authority found that the petitioners failed to prove that the purchases were made from a non-dealer. The court held that the petitioners did not provide sufficient material to support their claim and upheld the appellate authority's finding that the purchase tax on the vehicle was payable. 3. Charging of Interest under Section 36(3)(b): The assessing officer and the Appellate Tribunal determined interest under section 36(3)(b). Since the court held that purchase tax was not payable on gold, the question of interest on purchase tax for gold did not arise. The court remanded the matter back to the Sales Tax Officer to rework the interest amount only on the purchase of the vehicle. 4. Penalty under Section 36(2)(c) (Explanation 1) and Section 36(4A): - Section 36(2)(c) (Explanation 1): The court noted that Explanation 1 to section 36(2)(b) deems a dealer to have concealed particulars if the tax paid with returns is less than eighty percent of the assessed tax. Since the petitioners were not liable to pay purchase tax on gold, Explanation 1 was not applicable. The court also observed that the petitioners had disclosed all particulars, and thus, the penalty under this section was set aside. - Section 36(4A): The penalty imposed under section 36(4A) was Rs. 200. The court upheld this penalty, noting that despite no tax being payable on gold, tax was payable on the vehicle purchase. 5. Constitutionality of Section 13AA: The petitioners sought a declaration that section 13AA, as in force between April 1, 1990, and September 13, 1995, was unconstitutional. The court decided to examine the matter on merits first and only consider the constitutional challenge if necessary. The court noted that the Bombay Sales Tax Act was enacted under the State Legislature's power under entry 54, List II of the Constitution of India, and found the challenge debatable. Conclusion: - The order to pay purchase tax on gold was set aside. - The matter was remanded back to the Sales Tax Officer to re-compute interest only on the vehicle purchase. - Penalty under section 36(2)(c) was set aside. - Penalty under section 36(4A) was upheld. - No order as to costs.
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