2016 (8) TMI 1296 - HC - VAT and Sales Tax

DEPB Licenses - jurisdiction to levy tax on local sales - Chandigarh to the States situated outside the State of Punjab - Whether the ld. Tribunal has erred in law in declaring the sale of DEPB licenses, made by Chandigarh Head Office of Petitioner outside the Punjab State, as sales made in Punjab State merely because the DEPB licences were received on account of sale proceeds made for the goods manufactured in Punjab State? Held that - the goods in question were sold by the petitioner from its Chandigarh office to the buyers located in the States outside State of Punjab. It is relevant for the purpose as to whether the Commissioner could get jurisdiction to assess the transaction under the Act. It is not in dispute that no notice had been issued to the petitioner for seeking to revise the order under the Central Sales Tax Act, 1956. The matter is remitted back to the revisional authority for recording finding as regards the buyers of the DEPB sold by the petitioner from its Chandigarh office and thereafter examine the consequence thereof - petition allowed by way of remand.

Issues:
1. Jurisdiction to tax sale of DEPB licenses made outside Punjab State.
2. Set off proceeds of sales on account of DEPB licenses.
3. Mere escaped turnover and initiation of Revisional proceedings.
4. Validity of Revisional proceedings initiated after the expiry of three years.

Analysis:
1. The petitioner, a company with its registered office in Chandigarh and factory in Punjab, challenged the assessment of tax on the sale of DEPB licenses made outside Punjab. The petitioner argued that the transaction was in the course of inter-State trade and not liable to tax under the Punjab General Sales Tax Act, 1948. Despite this, the revisional authority and Tribunal upheld the tax assessment. The court emphasized the need for a specific finding on whether the goods were sold to buyers outside Punjab to determine the jurisdiction of the Commissioner to assess the transaction under the Act. The court set aside the impugned orders and remitted the matter back to the revisional authority for further examination.

2. The petitioner contended that the State had jurisdiction to tax only on sales within Punjab, whereas the sale of DEPB licenses from Chandigarh to buyers in other states fell under inter-State trade. The State argued that the transaction was rightly taxed as DEPB is a taxable commodity received due to goods manufactured and exported from Punjab. However, the State did not dispute that the authorities did not examine whether the goods were sold to buyers outside Punjab. The court highlighted the need for a thorough examination of this aspect and directed the revisional authority to issue a notice to the petitioner for further proceedings.

3. The court addressed the issue of whether the revisional proceedings were validly initiated after the expiry of three years from the last date of filing the return. The court emphasized the importance of recording specific findings on the buyers of the DEPB sold by the petitioner from Chandigarh to determine the jurisdiction of the Commissioner. The court noted the absence of a notice under the Central Sales Tax Act, 1956 and directed the revisional authority to reexamine the matter and issue a notice to the petitioner for appearance.

4. In conclusion, the court set aside the previous orders and remitted the matter back to the revisional authority for a detailed examination of the buyers of the DEPB licenses sold by the petitioner and to determine the jurisdiction for tax assessment. The court directed the revisional authority to issue a notice to the petitioner for appearance in October 2016, disposing of the revision accordingly.

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