2013 (10) TMI 1458 - HC - VAT and Sales Tax

Summary

Issues involved: Challenge to order u/s 77 of Bihar Value Added Tax Act, 2005 and demand for VAT for Financial Year 2011-12 based on Entry tax adjustment.

Summary:
The petition was filed by Indian Oil Corporation Ltd. challenging the order of Dy. Commissioner of Commercial Taxes, Patna regarding Entry tax adjustment against VAT for Diesel imported from West Bengal to Bihar. The Corporation imported Diesel attracting Entry tax under Bihar Tax on Entry of Goods into Local Areas Act, 1993. Corporation paid Entry tax and incurred VAT liability on sale to retail suppliers, not on sales to Oil Marketing Companies. Corporation adjusted entire Entry tax against VAT, but authorities demanded arrears of VAT. The dispute was whether Entry tax adjustment is only for stock exigible to VAT or for entire stock. Corporation argued for adjustment of Entry tax on entire stock, citing Supreme Court judgments. Respondent authorities contended adjustment is only for VAT-exigible stock, not for sales to Oil Marketing Companies not attracting VAT. High Court agreed with respondents, dismissing the petition as Corporation did not incur VAT liability on sales to Oil Marketing Companies.

The judgment clarified that set off of Entry tax against VAT is only for goods attracting VAT under Bihar Value Added Tax Act, 2005. Corporation's sale of Diesel to Oil Marketing Companies, not attracting VAT, did not qualify for Entry tax adjustment. The judgment referenced a similar case where set off was allowed only for goods liable to sales tax. In this case, the High Court upheld the authorities' decision to deny set off for Diesel sales to Oil Marketing Companies. The judgment concluded that the petition lacked merit and dismissed it, advising any further disputes to be raised in statutory appeal under the 2005 Act.