2008 (6) TMI 569 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the initiation of suo motu revisional proceedings under section 85 of the West Bengal VAT Act, 2003.
2. Entitlement of the petitioner dealer to enjoy the benefit of section 16(3) of the West Bengal VAT Act, 2003.

Issue-wise Detailed Analysis:

1. Legality of the initiation of suo motu revisional proceedings under section 85 of the West Bengal VAT Act, 2003:

The petitioner challenged the show-cause notice dated February 9, 2007, and the suo motu revisional order dated April 23, 2007, issued by the Deputy Commissioner of Commercial Taxes, Burrabazar Circle. The petitioners argued that the notice did not specify the order proposed to be revised and claimed that no such order existed, making the proceedings speculative and liable to be quashed.

The State Representative contended that the acceptance of tax at a compounded rate was deemed, similar to deemed assessment, and thus could be reopened. However, the Tribunal found that section 85 of the VAT Act, 2003, read with rule 143 of the West Bengal VAT Rules, 2005, requires the existence of an order passed by a subordinate authority to be revised. No such order was produced, and the suo motu revisional authority did not specify any order in the revisional proceedings.

The Tribunal concluded that invoking section 85 was unnecessary for such proceedings. Rule 38(6) of the West Bengal VAT Rules, 2005, is self-sufficient for informing a petitioner of ineligibility for the compounded rate of tax. The Tribunal quashed the suo motu revision proceedings initiated under case No. SMR/DC/BB/RJ-04/06-07.

2. Entitlement of the petitioner dealer to enjoy the benefit of section 16(3) of the West Bengal VAT Act, 2003:

Section 16(3) allows registered dealers to opt for a compounded rate of tax under certain conditions. The petitioner-dealer applied for this benefit for the year 2006-07. The State Representative argued that once a dealer becomes an importer, they are ineligible for the compounded rate benefit for subsequent years as well.

The Tribunal noted that section 16(3) and rule 38(2)(a) of the West Bengal VAT Rules, 2005, disqualify a dealer from the compounded rate benefit if they have stock of imported goods at the beginning of the year or import goods during the year. Each year's eligibility must be determined independently, and disqualification for one year does not imply disqualification for subsequent years.

The Tribunal directed the Deputy Commissioner to conduct an enquiry to determine if the petitioner-dealer had any stock of imported goods as of April 1, 2006, or imported goods during 2006-07. If such stock or imports existed, the petitioner-dealer would be ineligible for the compounded rate benefit. The enquiry was to be completed within three months from the date of the order.

Conclusion:

The Tribunal quashed the suo motu revision proceedings and directed an enquiry to determine the eligibility of the petitioner-dealer for the compounded rate benefit under section 16(3) of the West Bengal VAT Act, 2003, based on the presence of imported goods stock or imports during the relevant period. The application was disposed of without any order as to costs.