2016 (9) TMI 1315 - HC - VAT and Sales Tax

Levy of purchase tax - interest - penalty - Whether the VAT Tribunal Punjab Chandigarh has grossly erred in upholding the order of the Excise & Taxation Officer-cum-Notified Authority as upheld by the Deputy Excise & Taxation Commissioner (Appeals) Patiala imposing penalty under Section 53 under Section 60 and levying interest under Section 32(1) of the Punjab VAT Act? - Held that - There is no justification for levy of penalty for the period recovery of tax remained stayed by this Court - petition allowed.

Summary

Issues Involved:
1. Legality of orders passed by VAT Tribunal
2. Correctness of purchase tax levy and input tax credit
3. Penalty imposition under Punjab VAT Act

Analysis:

1. The appellant raised substantial questions of law regarding the legality of orders passed by the VAT Tribunal. Questions (i), (ii), and (iv) were challenged, but the counsel for the appellant conceded that the issues had already been settled by a previous judgment. The High Court noted the settlement and did not entertain these questions.

2. Regarding the correctness of the purchase tax levy and input tax credit, the appellant contended that input tax credit should have been granted even though the purchase tax was not paid. The High Court disagreed, stating that if the tax was not paid, the benefit of input tax credit could not be availed. Thus, the claim for input tax credit was denied.

3. The issue of penalty imposition under the Punjab VAT Act was also raised. The appellant challenged the levy of purchase tax and penalty, citing a previous writ petition where recovery of tax was stayed by the Court. The Court noted the history of the writ petition and restrained the respondents from taking coercive steps for tax recovery. The Court accepted the argument that there was no justification for imposing a penalty during the period when tax recovery was stayed. A notice was accepted on behalf of the respondents regarding the levy of penalty under Section 53 of the Act.

In conclusion, the High Court addressed the substantial questions of law raised by the appellant, clarifying the legal positions on the issues of orders passed by the VAT Tribunal, purchase tax levy and input tax credit, and penalty imposition under the Punjab VAT Act. The judgment provided detailed reasoning for each issue, ultimately deciding on the legality and correctness of the actions taken by the authorities involved.