2009 (11) TMI 855 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the erection of body on the chassis would amount to sale contrary to the judgment of the honourable Supreme Court in State of Gujarat (Commissioner of Sales Tax Ahmedabad) v. Variety Body Builders 1976 (4) TMI 190 - SUPREME COURT OF INDIA ? Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that there would be no effect with regard to tax liability of the dealer even if the transaction is held to be inter-State sale? Held that - The first question of law does not survive as it has already been answered against the dealer-appellant by the honourable Supreme Court in the case of Commissioner of Commercial Taxes Mysore v. M.G. Brothers 1974 (10) TMI 81 - SUPREME COURT OF INDIA On the issue of inter-State sale the Tribunal has opined that even if the contention raised by the dealer-appellant is accepted and it was treated as an inter-State sale on account of movement of goods from Punjab to Haryana still the fact remains that the tax was assessable at four per cent which has been charged by the respondent-State. Accordingly the Tribunal has concluded that no useful purpose would be served by remanding the matter for fresh assessment especially when the dealer-appellant did not show the transaction to be inter-State sale. Therefore we are of the view that there would be no tax effect on the dealer-appellant in the facts and circumstances of the present case. Accordingly while leaving the question of law open we dismiss the appeal.

Summary

Issues:
Appeal challenging VAT Tribunal's order on assessment year 1993-94.

Analysis:
The appeal under section 68 of the Punjab Value Added Tax Act, 2005, contested the Tribunal's order on assessment year 1993-94. The dealer-appellant, engaged in manufacturing bus bodies on chassis as per customer specifications, faced a surprise check in 1998 leading to an assessment order in 1999 raising a substantial demand under the Punjab General Sales Tax Act, 1948. Subsequent appeals and remands resulted in fresh assessment orders under the Central Sales Tax Act, 1956, imposing penalties and interest. The dealer-appellant's appeals were remanded multiple times for fresh assessments, leading to a final order in 2005 determining tax liability and penalties. The Tribunal, in 2008, upheld the tax due but set aside a penalty under section 10(7) of the Act.

The first question of law raised by the dealer-appellant, regarding whether the erection of body on the chassis constitutes a sale, was dismissed as per precedents set by the Supreme Court and other judgments. The second question pertained to tax liability in case of an inter-State sale. The dealer-appellant argued that if goods move outside Punjab, it should be considered an inter-State sale not assessable to sales tax. However, the Tribunal found that the transaction was within Punjab based on the agreement terms and the issuance of "D" forms, indicating a sale liable to tax. Even if considered inter-State, the tax would still be four percent, as charged by the state, leading the Tribunal to conclude that no tax effect existed for the dealer-appellant.

The Tribunal's findings on the agreement terms and the nature of the transaction within Punjab led to the dismissal of the appeal. The judgment highlighted that even if the transaction was deemed inter-State, the tax rate would remain the same, making a fresh assessment unnecessary. Therefore, the appeal was dismissed, with no other issues raised.

In conclusion, the appeal challenging the VAT Tribunal's order on assessment year 1993-94 was dismissed based on the Tribunal's findings regarding the nature of the transaction and tax liability, ultimately resulting in no tax effect for the dealer-appellant.