2010 (2) TMI 1107 - HC - VAT and Sales Tax

Whether or not vacuum cleaner is an unspecified item within the meaning of section 12(1) of the Act, or is covered by entry 33 of the notification under section 11, or is covered by entry 81 of the notification under section 12? Held that - There is no doubt or difficulty in concluding that the petitioner s product is covered by entry 81 of the notification under section 12. The position would have been different had any doubt or difficulty arisen about the applicability of any other entry, in the absence of which there is no doubt or difficulty in our minds that entry 81 of the notification under section 12 is attracted. Entry 33 of the notification under section 11, on which heavy reliance has been placed by learned counsel for the petitioner, is indeed a misleading argument. The scope of section 11, as indicated hereinabove, is very different and not relevant in the present context. As noticed hereinabove, the notification under section 12 states that taxation at the rate of twelve percentum on the assessee s turnover shall be applied with effect from April 1, 1982. The four periods in question are obviously covered by this entry.

Issues Involved:
1. Quashing of notice under section 27 of the Bihar Finance Act, 1981.
2. Quashing of the Commercial Taxes Tribunal's order dated April 15, 2004.
3. Direction to dispose of the petitioner's review and reference petitions pending before the Tribunal.

Detailed Analysis:

Issue 1: Quashing of Notice under Section 27 of the Bihar Finance Act, 1981
The petitioner, a public limited company engaged in the marketing, distribution, and sales of vacuum cleaners, sought to quash the notice under section 27 of the Bihar Finance Act, 1981, for recovery of sales tax during the pendency of a review petition before the Commercial Taxes Tribunal. The petitioner argued that the assessment should be at the rate of 8% as opposed to 12%, as the vacuum cleaner should not be classified as "electrical goods" under entry No. 81 of the Sales Tax Notification No. 1026/77-14541, dated December 26, 1977. The State Government later issued Notification No. S.O. 134 on July 27, 2000, specifying "vacuum cleaner" to be taxed at 12%, effective from the date of publication.

Issue 2: Quashing of the Commercial Taxes Tribunal's Order Dated April 15, 2004
The petitioner challenged the Tribunal's order which upheld the assessment at 12%. The petitioner contended that the notification dated July 27, 2000, is prospective and should not apply to the periods in question (1990-91 to 1993-94). The Additional Advocate-General agreed that the notification was prospective. The petitioner further argued that the authorities had consistently taxed the product at 8% in previous years, citing the principle of consistency in tax assessments and referring to the case of Eureka Forbes Ltd. v. State of Bihar, where the Ranchi Bench had set aside a similar assessment at 12%.

Issue 3: Direction to Dispose of Pending Review and Reference Petitions
The petitioner sought a direction for the Tribunal to dispose of the pending review and reference petitions, arguing that the writ petition was maintainable despite the pending review application and reference case. The court noted that section 47 of the Act provides for review on account of apparent mistakes and that the review jurisdiction is limited. The court decided to proceed with the hearing, emphasizing that the primary relief sought was to set aside the Tribunal's order.

Court's Findings:
1. Maintainability of the Writ Petition: The court rejected the respondents' contention that the writ petition was not maintainable, noting that the dominant relief sought was to set aside the Tribunal's order and that pure questions of law were raised.

2. Assessment Rate: The court examined sections 11 and 12 of the Act and concluded that the vacuum cleaner falls under entry 81 of the notification under section 12, which prescribes a tax rate of 12%. The court found no competing entry that could apply, thus affirming the Tribunal's assessment.

3. Previous Judgment (Eureka Forbes Ltd. v. State of Bihar): The court distinguished the present case from the earlier judgment, which dealt with the reopening of assessment based on an audit report, not the classification of the product under tax entries.

Conclusion:
The court dismissed the writ petition, upholding the Tribunal's decision to tax the vacuum cleaner at 12% for the periods in question. The court found no merit in the petitioner's arguments regarding the prospective nature of the notification or the consistency of previous assessments. The principles of law and judgments cited by the petitioner were deemed inapplicable to the case at hand. The court did not award costs.

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