2016 (5) TMI 1382 - HC - VAT and Sales Tax

Valuation - sales tax - includibility - customs duty - whether the Customs Duty amount is to be included in the sales price? - Held that - In the present case beyond referring to what transpired before the Settlement Commission and making a sweeping observation that the petitioners/appellants had adopted a modus operandi of under invoicing which was subsequently unearthed by the Directorate of Revenue Intelligence (DRI) that the Tribunal concludes that the quantum of customs duty which should have been part of the sale price of the goods imported and sold by the petitioners cannot be said to be inclusive of the quantum of customs duty evaded and subsequently unearthed by the DRI. We are at a loss and are left to guess as to which Section or provision of the Maharashtra Value Added Tax Act 2002 the Tribunal had in mind. Is it the definition of the term Sale Price as referred by Mr. Sonpal or some other which would support the prima facie view in law has not been explained at all. Yet crores of rupees are determined as deposit at an interim stage. This prima facie is no discussion much less even an answer to the contentions raised before the Tribunal - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenging an interim order passed by the Tribunal under Article 226 of the Constitution of India.

Analysis:
The petitioners challenged an interim order passed by the Tribunal on 12-2-2016, arguing that the Tribunal failed to consider all aspects of the case. The first aspect involved Duty Paid Transactions related to the import and trading of alcoholic beverages. The petitioners imported goods and cleared them under various transactions, including Duty Paid Transactions, Bond-to-Bond Transactions, and SFIS/DFCES transactions. The Tribunal focused on the customs duty paid by the petitioners and its impact on the sales tax, ignoring other arguments presented by the petitioners.

The Tribunal's order raised concerns as it did not provide a clear view on all contentions raised by both parties. The Tribunal calculated part-payments without explaining the basis for these amounts or how they related to the arguments presented. It was emphasized that even at the prima facie stage, the Tribunal should demonstrate understanding of the issues and provide some indication of how they are being considered. The lack of clarity in the order, especially regarding the application of relevant legal provisions, led to the quashing of the impugned order.

The High Court allowed the writ petitions, quashed the impugned order, and restored the VAT Appeals to the Tribunal for a fresh decision. The Court clarified that it had not expressed any opinion on the rival contentions and left all arguments open for reconsideration by the Tribunal. The decision emphasized that the Tribunal should decide the Appeals in accordance with the law, without being influenced by its previous tentative conclusions.