2013 (4) TMI 688 - HC - VAT and Sales Tax

Summary

Issues Involved:
The writ petition seeks quashing of assessment order and liability under the Haryana General Sales Tax Act, 1973, including interest under section 25(5) of the Act.

Comprehensive details of the judgment for each issue involved:

1. Challenge to tax liability under section 9 of the Act:
The contention raised was regarding the creation of purchase tax liability under section 9 of the Act for raw material purchased in the State and used in manufacturing goods sent out from the State. It was argued that this was in the nature of tax on consignment of goods covered by entry 92B of List I. The petitioners relied on the judgment in Goodyear India Limited v. State of Haryana [1983] 53 STC 163 (P&H). However, it was acknowledged that the matter is covered against the petitioner by the judgment of the Supreme Court in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 (SC); AIR 1993 SC 1048.

2. Levy of interest prior to assessment order:
The petitioners contended that the liability to pay interest under the Act arises in respect of additional liability created under the assessment order, not on the date of the transaction or filing of return. They cited the judgment of the Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422 (SC); AIR 1994 SC 2393 in support of their argument. The court acknowledged this contention and allowed the writ petition to the extent of levying interest for the period before the assessment order. The Assessing Authority was directed to issue a fresh notice of demand modifying the interest component in accordance with the principles laid down in J.K. Synthetics Ltd.'s case [1994] 94 STC 422 (SC); AIR 1994 SC 2393.