2009 (2) TMI 775 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the assessee is liable to pay tax under compounded rate under section 7(1) by reckoning liability under section 5A.

Analysis:
The judgment addressed the issue of whether the assessee is liable to pay tax under a compounded rate by considering the liability under section 5A. The court noted that a notification referred to in a previous decision was not applicable as it pertained to a separate exemption for dealers paying tax at a compounded rate. The court highlighted that an Explanation introduced to section 7(1)(a) by the Finance Act, 1997, fixed the liability for payment of tax at a compounded rate by including tax payable for preceding years under section 5A. Despite this amendment, the Tribunal had allowed the assessee's claim for exemption of purchase tax liability for certain years. The court cited a previous decision where a similar issue was decided in favor of the Revenue. The court dismissed the revision for the assessment year 1998-99 but allowed the tax revision cases for the years 1999-2000 and 2000-01, directing the assessing officer to re-fix liability under section 7(1)(a) by considering the liability under section 5A for preceding years. It was also clarified that no interest should be charged for any excess demand of tax under the compounded scheme until the assessment is revised following the judgment.