2014 (5) TMI 1025 - HC - VAT and Sales Tax

Determination of rate of tax - At what rate the item Aluminum conductors was liable to be taxed under the provisions of The Assam Value Added tax Act 2003 - Held that - Mere perusal of section 105 and specially sub section 2 read with proviso to sub section (1) would indicate that Commissioner is invested with quasi judicial powers to determine the question/s specified in sub section (a) to (j). A right to raise the questions for its determination is given to those specified in Sub Section (2). This sub-section equally cast a duty on the Commissioner to afford a reasonable opportunity of hearing to the person who has applied for determination. Similarly, proviso to sub section (1) empowers the Commissioner to hold an inquiry at his discretion and while holding such inquiry, he is empowered to take assistance of an officer appointed for the purpose to enable him to decide the question. Commissioner did not keep these requirements in mind while passing the impugned order, in as much as, he neither held any inquiry nor sought any assistance from any officer and nor assigned his reasons for coming to a conclusion. In other words, the impugned decision did not appear to have been rendered after following the procedure prescribed in Section 105 because it did not contain any reason/justification as to how and on what basis and material, the Commissioner could come to a conclusion that the Aluminum Conductor was taxable at the rate of 12%. The so-called reason assigned cannot be said to be reasons much less justifiable to sustain the order. We cannot uphold the impugned order. - Decided in favour of assessee.

Summary

Issues:
Challenge to order of Commissioner of Taxes under Assam Value Added Tax Act 2003 regarding tax rate on Aluminum conductors.

Analysis:
The petitioner, an association of trade, challenged the order of the Commissioner of Taxes Assam regarding the tax rate applicable to "Aluminum conductors" under the Assam Value Added Tax Act 2003. The petitioner contended that the item should be taxed at 4%, while the Commissioner held it taxable at 12.5%. The Commissioner's decision was based on the item being classified under entry SL. 1 of the fifth schedule, contrary to the petitioner's claim under entry 26 or 37 of the Second Schedule. The High Court analyzed Section 105 of the Act, which empowers the Commissioner to determine disputed tax-related questions. The Court emphasized that the Commissioner must conduct an inquiry, collect relevant material, allow participation, seek assistance if necessary, and provide reasoned justifications for the decision.

The High Court found that the Commissioner did not adhere to the procedural requirements of Section 105 while passing the impugned order. The Court noted the absence of an inquiry, lack of officer assistance, and the absence of reasons justifying the decision to tax "Aluminum conductors" at 12.5%. Consequently, the Court quashed the Commissioner's order through a writ of certiorari. The case was remanded to the Commissioner for a fresh determination, emphasizing the need for a proper inquiry, opportunity for the petitioner to present material, and a reasoned decision based on the law and evidence presented.

The High Court clarified that its decision did not delve into the merits of the tax rate question, and the Commissioner should decide independently based on the law and material presented during the inquiry. The Court set a timeline of 6 months for the Commissioner to decide on the matter, urging prompt action from both parties. The judgment concluded without imposing any costs on either party.