2017 (1) TMI 1555 - HC - VAT and Sales Tax

Levy of entry tax - Coal - Held that - it is evident that petitioner was required to purchase coal from Meghalaya and thereafter to resale the same to respondent No. 3. Coal is a declared good under Section 14 of the Central Sales Tax Act, 1956. Therefore, under Entry 23 of the Second Schedule to the VAT Act the rate of VAT within the State of Assam on each point of sale of the declared good would be 4%. If VAT is levied on a specified good, no Entry Tax would be leviable thereon. Section 2 (43) of the VAT Act defines sale - As per Section 2 (43)(i), sale would include a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration. Section 10 deals with levy of VAT on sales - Therefore, since VAT was paid by the petitioner on the purchase of coal, Entry Tax thereon was not required to be paid in view of Section 5 of the Assam Entry Tax Act, 2001. Petition allowed.

Summary

Issues:
Petitioner seeking refund of deducted amount under VAT Act from respondent Nos. 3 & 4.

Analysis:
The petitioner, a partnership firm dealing in coal supply, sought a refund of ?9,38,140.00 deducted by respondent Nos. 3 & 4 from the bills. Respondent No. 3, a government enterprise, purchased coal from the petitioner under a Gate Purchase Scheme. The petitioner agreed to supply coal at ?2450.00 per Metric Ton plus 4% VAT. Despite receiving payments, a significant shortfall of ?9,38,140.00 remained unexplained. The deduction was allegedly related to the Assam Entry Tax Act, 2008, declared unconstitutional by the Court. The petitioner's representations were unanswered, leading to the filing of a writ petition seeking relief.

The Court noted the absence of responses from respondent Nos. 3 & 4 over the years. Notices were deemed served, and efforts were made to secure representation. With uncontroverted averments, the Court proceeded based on the petitioner's claims. Central to the dispute was a clause in respondent No. 3's communication, indicating that the rate offered included all taxes except VAT, with provisions for VAT payment post withdrawal of Entry Tax. The petitioner's obligation to purchase coal from Meghalaya and resell it to respondent No. 3 was highlighted, with VAT levied at 4% under the VAT Act.

An analysis of relevant laws revealed that VAT payment on coal purchase exempted the petitioner from Entry Tax liability. The Court emphasized that the declaration of the Assam Entry Tax Act, 2001 as unconstitutional did not justify the deduction made by respondent Nos. 3 & 4. Additionally, the validation of prior acts under the Act further supported the petitioner's position. Consequently, the Court deemed the deduction unjustified and directed respondent Nos. 3 & 4 to refund the deducted amount within two months, allowing the writ petition without costs.