2008 (9) TMI 974 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of respondent No. 3 to issue notice u/s 59 of the VAT Act, 2003.
2. Interpretation of "tax payable" under the Scheme of 2003.
3. Legality of the impugned order dated May 15, 2008.

Summary:

Jurisdiction of respondent No. 3 to issue notice u/s 59 of the VAT Act, 2003:
The petitioner challenged the jurisdiction of respondent No. 3 to issue notice u/s 59 of the VAT Act, 2003, arguing that section 17 of the VAT Act does not confer the authority to initiate proceedings for review. The court found that section 59 was improperly invoked by respondent No. 3, as the correct procedure under clause 11 of the Scheme of 2003 was not followed. The court emphasized that any dispute regarding the interpretation of the Scheme should be referred to the Finance Department of the State Government.

Interpretation of "tax payable" under the Scheme of 2003:
The petitioner argued that the term "tax payable" in clause 7(1)(b) of the Scheme of 2003 should include input-tax credit, meaning the tax payable stands deposited after adjustment of input-tax credit. The court noted that the respondent's interpretation of "net tax payable" was incorrect and a misreading of the Scheme. The court highlighted that the Scheme's intention was to promote industrial growth, and the interpretation by respondent No. 3 was contrary to this objective.

Legality of the impugned order dated May 15, 2008:
The court found that the impugned order dated May 15, 2008, was passed without jurisdiction and in violation of the principles of natural justice, as no opportunity of hearing was afforded to the petitioner. The court held that the order was ex facie illegal and contrary to the provisions of the Scheme of 2003 and the Rajasthan VAT Act, 2003. The court emphasized that the power of review must be expressly provided by law, and in the absence of such provision, the order dated August 4, 2007, could not be reviewed. The court quashed the impugned order and restored the order dated August 4, 2007.

Conclusion:
The court quashed the impugned order dated May 15, 2008, and restored the order dated August 4, 2007, granting interest subsidy to the petitioner. The court emphasized the need for adherence to the correct legal provisions and procedures, and the importance of promoting industrial growth in the State of Rajasthan. There was no order as to costs.