2010 (8) TMI 877 - HC - VAT and Sales Tax

Summary

Issues involved:
Dispute over exemption of goods on second sale under Punjab Value Added Tax Act, 2005; Reopening of assessment by revisional authority under Punjab General Sales Tax Act, 1948; Verification of first sale and tax payment; Opportunity to present evidence before assessing authority; Legal validity of revisional authority and Tribunal's decisions.

Analysis:
The case involves a dispute regarding the turnover of goods claimed to be exempted on second sale by a registered dealer under the Punjab Value Added Tax Act, 2005. The petitioner contended that the goods were liable to be taxed at the first stage of sales, as the first sale was made to another entity which had already paid the tax. The Assessing Authority initially accepted this stand, but the revisional authority, exercising suo motu powers under the Punjab General Sales Tax Act, 1948, reopened the assessment. The revisional authority held that the turnover pertained to purchases made by the petitioner from a different entity, not the second sale in Punjab, leading to a demand for additional tax. The petitioner challenged this decision before the Tribunal, which upheld the revisional authority's decision, prompting the filing of the present petition.

The petitioner argued that despite raising the plea that the turnover represented second sales with the first sale made to the other entity, this fact was not verified. It was assumed that the sales were made by the petitioner directly to the other entity, leading to the incorrect imposition of additional tax. The petitioner claimed that evidence in the form of declarations and bills supported their contention that the first sale had already taken place, but they were not given the opportunity to present this evidence before the assessing authority. The Revenue's counsel failed to provide any observation verifying the correctness of the contention that the first sale had occurred as claimed by the petitioner.

The High Court, in its judgment, noted that the assessing authority should have examined whether the first sale indeed took place with the other entity and tax had been paid on the goods in question. Without this verification, the decisions of the revisional authority and the Tribunal could not be legally sustained. Consequently, the Court found in favor of the petitioner-dealer, allowing the petition, quashing the impugned orders, and remanding the matter for a fresh decision in accordance with the law. The petitioner was directed to appear before the Assistant Excise and Taxation Commissioner for further proceedings.