2011 (1) TMI 1301 - HC - VAT and Sales Tax

Summary

Issues:
Petition to quash reassessment order imposing VAT on transportation charges for food supply; Interpretation of VAT Act regarding transportation charges as part of sale consideration; Applicability of service tax on transportation; Disputed question of law and fact between VAT Act and Service Tax Act.

Analysis:
The petitioner, a caterer supplying food items through an airport catering company, challenged a reassessment order imposing VAT on transportation charges for food supply. The petitioner argued that transportation charges should be exempt from sales tax as they are incidental to the sale of goods. The Government Pleader, citing VAT Act definitions and a court decision, contended that transportation charges are part of the sale consideration if paid before delivery. On the other hand, the Commissioner of Service Tax argued that transportation is an outdoor service liable for service tax, referencing a Supreme Court decision. The petitioner's counsel countered by citing another Supreme Court decision, asserting transportation should be treated as an independent sale of goods not subject to service tax.

In light of conflicting interpretations and the involvement of disputed questions of law and fact, the court advised the petitioner to approach the Karnataka Appellate Tribunal for resolution. The court acknowledged the complexity of the legal issues involved and the potential challenge in obtaining a different view from the Department's representative. The court emphasized the need for expeditious resolution and directed the petitioner to pursue the matter at the appellate level, leaving all contentions open for further argument.