2009 (9) TMI 892 - HC - VAT and Sales Tax

Dispute between a Government undertaking and a Government Department of U.P. - Held that - Without going into the merits of the present litigation, it may be mentioned that it is neither appropriate nor permissible for two Departments of a State or the Union of India to fight litigation in a court of law. Thus direct that the revisionist and the Trade Tax Department should sort out the dispute involved in the present revisions through Secretary Level Committee at the earliest in view of abovementioned G. O. dated January 16, 1991. Until final decision taken by the Committee, the recovery proceedings shall remain stayed pertaining to the present revision

Summary

Issues:
Revisions filed under section 11 of the U.P. Trade Tax Act, 1948 against Tribunal orders for assessment years. Dispute between a Government undertaking and a Government Department of U.P.

Analysis:
The assessee, a Government entity known as "U.P. Bridge Corporation," was assessed for engaging in business activities through contract work, leading to tax imposition by the assessing officer. This decision was upheld by the first appellate authority and the Tribunal, prompting the assessee to approach the High Court through revisions. The High Court highlighted the inappropriateness of two Government departments litigating against each other in court, emphasizing the need to resolve such disputes internally to avoid wastage of public resources and time.

The High Court referenced previous Supreme Court judgments, such as Oil and Natural Gas Commission v. CCE, emphasizing the establishment of committees to handle inter-departmental disputes within the Government. It stressed the importance of avoiding frivolous litigation and ensuring that disputes are resolved or rejected at the committee level before reaching the courts. The High Court underscored that the purpose of these mechanisms was to prevent unnecessary legal battles and promote coordination among Government entities.

Furthermore, the High Court directed the revisionist and the Trade Tax Department to resolve their dispute through a Secretary Level Committee as per the government order dated January 16, 1991. It ordered a stay on recovery proceedings until the Committee reaches a final decision, emphasizing the need to follow the established process for resolving inter-departmental disagreements. The High Court concluded by disposing of all revisions in accordance with the directives provided.

In summary, the judgment addressed the issues surrounding tax imposition on a Government entity, highlighting the importance of internal dispute resolution mechanisms to prevent unnecessary litigation and promote coordination among Government departments. The High Court's decision emphasized the need for adherence to established procedures for resolving inter-departmental disputes and directed the parties involved to seek resolution through a designated committee to avoid wastage of public resources and time.