2014 (7) TMI 1094 - HC - VAT and Sales Tax

Whether in the facts and circumstances of the case, the Hon ble Tribunal was justified in holding that the sales return are allowed to be deducted only in the year to which it relates and not in the period during which it has been returned back ignoring Rule 22(4) read with Section 9(2) of the CST Act, 1956 - Held that - A plain reading of Rule 22(4) of the Rules shows that a dealer is entitled to make claim of return of goods sold to any person in the return for the quarter in which the goods had been returned and the same shall be admissible in that quarter only. To put it differently, the assessee is not entitled to claim the benefit of return of goods sold to any person in any other quarter except the quarter in which the goods have been returned. In our opinion, no other meaning can be assigned to the said rule. - since the authorities have failed to consider the issue with regard to Rule 22(4) of the rules relating to question No.(i), it would be appropriate that the matter is remanded to the Assessing Officer to examine the same and re-decide it in accordance with law. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Rule 22(4) of the Haryana Value Added Tax Rules, 2003 regarding the admissibility of the claim of return of goods sold.
2. Justification of upholding tax at the maximum rate despite furnishing 'C' forms for the entire turnover.

Issue 1: Interpretation of Rule 22(4) of the Haryana Value Added Tax Rules, 2003
The appellant, a registered dealer under the HVAT Act, filed an appeal against the rejection of sales return by the Assessing authority. The dispute arose when the Assessing authority rejected the sales return as it belonged to the preceding year. The appellant argued that Rule 22(4) of the Rules allows the claim of return of goods sold only in the quarter in which the goods were returned. The Tribunal partly accepted the appeal and remanded the case back to the assessing authority for further consideration. The Tribunal upheld the disallowance of the claim of the returned goods. The appellant filed review applications under relevant sections of the CST Act, which were dismissed by the Tribunal. The High Court observed that Rule 22(4) clearly states that the claim of return of goods sold must be made in the quarter in which the goods were returned, and it shall be admissible only in that quarter. The Court held that the authorities failed to consider this rule, and thus remanded the matter to the Assessing Officer for re-examination and decision in accordance with the law.

Issue 2: Justification of upholding tax at the maximum rate
The second substantial question of law raised was whether the Tribunal was justified in upholding tax at the maximum rate despite the appellant furnishing 'C' forms for the entire turnover. However, due to the decision on the first issue and the remand order, the High Court deemed the second question as academic. The Court disposed of the matter accordingly.

In conclusion, the High Court's judgment focused on the interpretation of Rule 22(4) of the HVAT Rules regarding the admissibility of the claim of return of goods sold. The Court emphasized that the claim must be made in the quarter in which the goods were returned, and it shall be admissible only in that quarter. The Court remanded the matter for reassessment based on this rule. The issue regarding upholding tax at the maximum rate was considered academic due to the decision on the first issue.