2014 (7) TMI 1088 - HC - VAT and Sales Tax

Denial of reference to High Court - revenue contended that when the Tribunal does not indicate as to how in the facts and circumstances of the present case, the judgment of this Court in the case of Commissioner of Sales Tax, Maharashtra State, Mumbai V/s. M.R. F. Limited 2010 (2) TMI 1090 - BOMBAY HIGH COURT would apply, that this application deserves to be granted - Held that - The Division Bench in the impugned case has held that the section as amended (section 41) makes it clear that if the dealer was not entitled to issue the declaration, then, he would be liable to pay the tax. The express language of section 41(2) puts the burden on the purchaser and hence the seller could not be cast with the duty to pay the tax or satisfy the authorities that the goods qualify and are eligible for the exemption. - In the light of the clear pronouncement of this Court in the above judgment and nothing contrary being brought to our notice or the Tribunal that we are of the opinion that the order passed in the Reference Application does not suffer from any error of law apparent on the face of the record or perversity warranting our interference therewith - Decided against Revenue.

Summary

Issues:
- Refusal by the Tribunal to make a reference to the High Court for a question of law under section 61(1) of the Bombay Sales Tax Act, 1959.
- Interpretation of section 41 of the Act, particularly sub-section (2), regarding the applicability of exemption for plant and machinery.
- Disallowance of sales against Form-A and imposition of tax at 13% by the assessing authority.
- Disagreement between the assessing authority and the respondent on the eligibility for exemption under notification entry A-88.
- Burden of tax liability on the purchaser as per section 41(2) and the seller not being obligated to pay tax if the declaration is valid.

Analysis:

1. The petitioner sought a reference to the High Court under section 61(1) of the Bombay Sales Tax Act, 1959, challenging the Tribunal's refusal to make the reference. The petitioner argued that the Tribunal erred in law by not forwarding the question of law for the High Court's opinion. The product in question, Pneumatically operated filling head for LPG, Tee Connector, control panel, and cut off valve, was claimed not to qualify as plant and machinery under notification entry A88, leading to the denial of exemption.

2. Upon review, the High Court found no merit in the application. The Tribunal determined the respondent to be a dealer and manufacturer of machinery items, selling goods disallowed for exemption under entry A-88. The respondent's sales against Form-A were taxed at 13% due to the goods not meeting the plant and machinery criteria. The Tribunal's decision in favor of the respondent was based on the argument that the burden of tax liability falls on the purchaser, and sellers are not obliged to pay tax if the declaration is valid.

3. The Division Bench, relying on the judgment in M.R.F. Limited, clarified that section 41(2) places the tax burden on the purchaser, not the seller. The Tribunal's decision was deemed legally sound, with no apparent errors or perversity warranting interference. The High Court dismissed the Sales Tax Application, emphasizing that authorities can act under section 41 if the goods do not qualify for exemption under the notification, maintaining avenues for further action if needed.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the purchaser's responsibility for tax liability under section 41(2) and dismissing the petitioner's application for lack of merit.