2010 (2) TMI 1103 - HC - VAT and Sales Tax

Whether the assessing officer is correct in levying tax on I.T. product at ten per cent on software ATM and UPS without form C? Whether the penalty is leviable under section 13(3) of the Pondicherry General Sales Tax Act 1967 read with section 9(2) of the Central Sales Tax Act? Whether under section 8(5)(b) of the Central Sales Tax Act 1956 the Government still has power to issue notification without the requirement of form C in respect of sales to any persons or class of persons who are non-dealers? Held that - The petitioner ought to have filed an appeal under section 34 of the Tamil Nadu General Sales Tax Act. Accordingly we direct the petitioner to file an appeal before the appellate forum within a period of three weeks from the date of receipt of a copy of this order. The respondents are also directed not to take any coercive or further proceeding against the petitioner till that time. The first issue is answered accordingly. Both legally and factually the assessing officer is not justified in levying penalty which amounts to non-application of mind. In these circumstances we set aside the order of levying penalty by the assessing officer and remit the matter with a direction to re-hear the matter afresh and dispose of the same in accordance with law after giving opportunity to the petitioner. The second issue is disposed of accordingly. The State Government still has the power to issue specified notification if it is necessary to do so in the public interest during the relevant period as law stands. The third issue is answered accordingly.

Issues Involved:
1. Levy of tax on IT products at ten per cent without form C.
2. Levy of penalty under section 13(3) of the Pondicherry General Sales Tax Act, 1967 read with section 9(2) of the Central Sales Tax Act.
3. Power of the State Government under section 8(5)(b) of the Central Sales Tax Act, 1956 to issue notifications without the requirement of form C for sales to non-dealers.

Issue-wise Detailed Analysis:

1. Levy of Tax on IT Products at Ten Per Cent Without Form C:
The petitioner challenged the assessment orders levying ten per cent tax on IT products without form C, arguing that they were entitled to a reduced rate of two per cent based on a notification dated October 1, 2001. The court noted that there is an effective remedy of appeal under section 34 of the Pondicherry General Sales Tax Act. The petitioner was directed to file an appeal before the appellate forum within three weeks, and the respondents were instructed not to take any coercive actions until then. Thus, the court did not interfere with the assessment of tax levied by the first respondent.

2. Levy of Penalty Under Section 13(3) of the Pondicherry General Sales Tax Act, 1967 Read with Section 9(2) of the Central Sales Tax Act:
The court examined whether the penalty was justifiable under section 13(3), which allows for a penalty if there is non-disclosure of turnover. The court found that the assessee had disclosed the total taxable turnover in their returns, which were accepted by the assessing officer. The court noted that the assessing officer's reasoning for the penalty-claiming concessional rates and not disclosing tax due-did not align with the requirements of section 13(3). Citing precedents, the court ruled that the penalty was unjustified and set aside the order, remitting the matter for re-hearing with proper consideration of the law.

3. Power of the State Government Under Section 8(5)(b) of the Central Sales Tax Act, 1956:
The court analyzed whether the State Government retained the power to issue notifications for concessional tax rates without form C for sales to non-dealers after the amendment of section 8(5) by the Finance Act, 2002. The court noted that the amended provision still allowed the State Government to issue notifications for sales to "any person or class of persons." The court referenced notifications from other states granting similar concessions to non-dealers, concluding that the State Government still had the power to issue such notifications in the public interest. The third issue was thus resolved affirmatively, recognizing the State Government's authority to grant exemptions or reduced rates without form C for non-dealers.

Conclusion:
The court disposed of the writ petitions, directing the petitioner to seek appellate remedies for the tax levy issue, setting aside the penalty, and affirming the State Government's power to issue concessional rate notifications for non-dealers. The observations in the judgment were stated to be specific to the writ petitions and not to influence the authorities' independent consideration of the issues.

← Previous Next →