2011 (4) TMI 1025 - HC - VAT and Sales Tax

Sales tax on works contract - composition of tax - section 67 of the Gujarat Sales Tax Act, 1969 - notice dated March 14, 2001 issued in form 45, the petitioner was informed that the petitioner was liable to pay sales tax and additional tax of 20 per cent and interest under section 47(4) (a) of the Act and penalty under section 45(6) as the petitioner was not granted permission for composition under section 55A in the assessment period 1990-91 - notice is barred by limitation as the same has been issued beyond the period prescribed under section 67(1)(a) of the Act, even otherwise on merits also, the said notice cannot be sustained - decided in favor of assessee.

Issues Involved:
1. Validity of notice issued under Section 67 of the Gujarat Sales Tax Act, 1969.
2. Limitation period for revising the composition order under Section 67.
3. Legitimacy of the composition order granted under Section 55A of the Act.
4. Approval and revision of assessment orders by the Assistant Commissioner.
5. Estoppel and conduct of the Sales Tax Department regarding the composition applications.

Issue-wise Detailed Analysis:

1. Validity of Notice Issued Under Section 67:
The petitioner challenged the notice dated September 25, 2001, issued by the Assistant Commissioner of Sales Tax under Section 67 of the Gujarat Sales Tax Act, 1969, for revising an order dated March 31, 1998. The petitioner argued that the notice was invalid as it was issued beyond the prescribed limitation period of three years from the date of the order.

2. Limitation Period for Revising the Composition Order Under Section 67:
Section 67 of the Act allows the Commissioner to revise any order within three years from the date of the order. The court found that the notice issued on September 25, 2001, was clearly beyond the three-year limitation period from the order dated March 31, 1998. Therefore, the notice was barred by limitation.

3. Legitimacy of the Composition Order Granted Under Section 55A:
The petitioner had applied for composition of tax under Section 55A of the Act for four works contracts. Despite the applications not being found on record, the Sales Tax Officer passed a composition order on March 31, 1998. The court noted that the petitioner had submitted Xerox copies of the applications during assessment proceedings and was not informed that the original applications were missing. The Sales Tax Officer accepted the Xerox copies and passed the composition order, indicating the legitimacy of the applications.

4. Approval and Revision of Assessment Orders by the Assistant Commissioner:
The assessment order based on the composition order was approved by the Assistant Commissioner. The court held that once the assessment order was approved by the Assistant Commissioner, another Assistant Commissioner could not revise the composition order. This was supported by the precedent set in RPG Life Sciences Ltd. v. Commissioner of Sales Tax, where the court held that an authority approving an order cannot exercise powers of revision over it.

5. Estoppel and Conduct of the Sales Tax Department:
The court found that the Sales Tax Department's conduct estopped them from challenging the composition order. The department did not inform the petitioner that the original applications were missing and accepted Xerox copies during assessment. The department's failure to inform the petitioner and their subsequent acceptance of the applications indicated that the composition order was valid. The court held that the department could not now claim that the order was invalid due to missing original applications.

Conclusion:
The court concluded that the impugned notice was barred by limitation and could not be sustained on merits. The petition was allowed, and the notice dated September 25, 2001, was quashed and set aside. The rule was made absolute with no order as to costs.

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