2015 (4) TMI 1155 - HC - VAT and Sales Tax

Classification of goods - roof cladding and steel sheets - levy of sales tax - taxed at the rate 12.5% or 4% - jurisdiction of AO - Held that - It is well settled that the Assessing Officer is a quasi-judicial authority and in exercising his quasi-judicial function of completing the assessment he is not bound by the instructions or direction of the higher authorities - the first respondent failed to appreciate that throughout the State of Tamil Nadu the goods namely corrugated sheet and steel structures are assessed and levied tax at 5% only as declared goods falling under Entry 41 of the First Schedule to the TNVAT Act read with Section 14 of CST Act - since the first respondent failed to grant an opportunity of hearing before enhancing the turnover from 6, 32, 89, 746/- to 7, 38, 45, 800/- without notice to the petitioner the impugned orders are liable to be set aside - petition allowed - matter on remand.

Summary

Issues:
Challenge to impugned orders of Assistant Commissioner regarding levy of Sales Tax at 12.5%, failure to consider Advance Ruling, abdication of quasi-judicial functions, statutory provisions vs. departmental instructions, lack of opportunity before enhancing turnover.

Analysis:
The petitioner, M/s. G.K. Roofings India Private Limited, sought to quash orders of the Assistant Commissioner levying Sales Tax at 12.5% on specific turnovers. The petitioner argued that the Assistant Commissioner disregarded the statutory binding Advance Ruling in favor of a non-statutory report, indicating an abdication of quasi-judicial functions. The petitioner emphasized that the Advance Ruling from 2013, applicable to their case, was overlooked by the respondent. Additionally, the petitioner highlighted discrepancies in VAT charges on invoices and the lack of notice before turnover enhancement.

The respondent contended that the goods in question were taxable at 12.5%/14.5% under a residual entry, which the petitioner disputed. The Enforcement Wing Officials' inspection report led to show cause notices, objections, and submissions by the petitioner citing the Advance Ruling as a basis for dropping the tax levy proposal. Despite forwarding the deviation report supporting the petitioner's stance, the request was rejected, leading to the matter being escalated to different assessing officers due to reorganization.

The Court recognized the quasi-judicial authority of the Assessing Officer but noted the failure to consider that similar goods were taxed at 5% in Tamil Nadu. Due to the lack of a hearing opportunity before enhancing turnover, the Court set aside the impugned orders and remitted the matter for a fresh consideration with a personal hearing for the petitioner.

In conclusion, the Court allowed both writ petitions, directing a re-consideration of the matter with a hearing for the petitioner. The connected miscellaneous petitions were closed without any costs imposed.