2009 (1) TMI 808 - HC - VAT and Sales Tax

Liability to pay the entry tax on the purchase and import of motor vehicles viz. chassis of a truck under the provisions of the Rajasthan Tax on Entry of Motor Vehicles into Local Areas Act 1988 denied by Deputy Commissioner (Appeals) to assessee asconfirmrd by Tax Board - Held that - This court is at loss to understand how the Tax Board could treat the respondent-assessee as a casual trader just for askance without any evidence being there in this regard and hold the assessment to be time-barred. The impugned order of the Tax Board therefore cannot be sustained. Accordingly this revision petition is allowed and setting aside the order of the learned Deputy Commissioner (Appeals) as well as Tax Board the assessment order is restored subject to rate of tax being corrected from 12 per cent to four per cent as per notification dated March 26 1999. The learned CTO will be at liberty to pass fresh order accordingly within a period of three months from today.

Summary

Issues:
1. Interpretation of the term "casual trader" under the Rajasthan Sales Tax Act, 1994.
2. Application of the limitation period for passing assessment orders against a casual trader.
3. Requirement of furnishing form No. ET-1 for establishing personal use.
4. Correct determination of the rate of tax applicable.

Analysis:
1. The High Court analyzed the definition of a "casual trader" under section 2(9) of the 1994 Act, emphasizing that a casual trader must have "occasional transactions of a business nature." The court noted that the respondent-assessee's single transaction of purchasing a motor vehicle for personal use did not qualify as being in the nature of business, thus rejecting the Tax Board's classification of the assessee as a casual trader.

2. Regarding the application of the limitation period under section 31(5) of the Act for casual traders, the court held that since the respondent-assessee was not engaged in a business transaction and did not furnish form No. ET-1 to establish personal use, the two-year limitation did not apply. The court emphasized that the assessing authority was justified in framing the assessment within the five-year limitation period provided under section 30 of the Act.

3. The court highlighted the significance of furnishing form No. ET-1 to establish personal use by the assessee. As the respondent failed to provide this form, the court concluded that there was no basis for granting an exemption from the levy of entry tax. The failure to furnish the required form also contributed to the court's decision to set aside the Tax Board's order.

4. In terms of the rate of tax, the court noted discrepancies between the date of purchase of the vehicle and the date of the assessment order. The court directed the correction of the tax rate from 12 percent to four percent, aligning it with the applicable rate at the time of purchase as per the relevant notification.

In conclusion, the High Court allowed the revision petition, setting aside the orders of the Deputy Commissioner (Appeals) and the Tax Board. The court restored the assessment order, with a directive to correct the tax rate to four percent and instructed the assessing authority to pass fresh orders within three months.