2011 (8) TMI 1222 - HC - VAT and Sales Tax

Summary

Issues involved: Challenge to the validity of sub-section (5) of Section 59 of the U.P. VAT Act, 2008 as amended by U.P. Act No.11 of 2009, and quashing of related orders passed by the Commissioner under Section 59.

Summary:
The petitioner, engaged in selling 'Super Plasticizer' used in concrete, filed a writ petition seeking to declare the amendment to sub-section (5) of Section 59 of the U.P. VAT Act, 2008 as arbitrary and ultra vires to the Constitution of India. The petitioner also sought to quash certain orders passed by the Commissioner under Section 59, affecting the taxation on the sale of 'Super Plasticizer'. The Commissioner had classified the goods as falling under the residuary clause of Schedule V, subject to a tax rate of 12.5%.

The petitioner contended that the amended provision making the Commissioner's orders binding on all assessing and appellate authorities violated constitutional principles of natural justice, as affected parties were not given a hearing or provided with copies of the orders. The petitioner also argued that the provisional assessment was influenced by the Commissioner's order under Section 59(5), which was legally flawed.

The Court, while refraining from delving into the merits of the case, stayed the operation of the impugned amendment to Section 59(5) of the U.P. VAT Act, 2008. It directed that orders passed under Section 59(1) would only be binding on the applicant who made the representation to the Commissioner, and not on all assessing and appellate authorities. The assessing authority was given the discretion to determine whether the goods sold by the petitioner fell within Schedule V for taxation as a residuary item.