2013 (3) TMI 109 - HC - VAT and Sales Tax

Classification of the goods - Determination of rate of tax - under Entry 163 of Schedule IV of the RVAT Act (4% ad valorem) OR Entry (residual) under Schedule V of the RVAT Act (12.5% as valorem) - Held that - A bare look at the order dismissing an application filed by the petitioner for grant of stay indicates that it is non-speaking order. No reason whatsoever has been advanced by the Tax Board while refusing to exercise its discretion to protect the petitioner company from its liability (under challenge) to pay the interest in respect of demand raised by the department in spite of the fact that the petitioner company had already paid differential but disputed tax during the pendency of appeal under protest. The dispute arises on the issue of classification of goods manufactured by the petitioner company. The petitioner company is a well known and reputed company, thus exercise of Jurisdiction for interim protection vested in courts and Tribunals has to be balanced taking into consideration the facts and circumstances of a given case. This has not been done by the Tribunal. Thus direct the Tax Board to decide the appeal of the petitioner within a period of twenty days from today & petitioner is directed to move an application before the Tax Board, for preponement of the date of hearing of the appeal pending before the Tax Board, on or before February 26, 2013. During pendency of appeal before the Tax Board, there would be a stay on the deposit of interest on the amount different tax demanded by the department and already deposited by the petitioner company.

Issues:
1. Dispute over the classification of goods for tax purposes under the RVAT Act.
2. Petitioner's application for stay of order dismissed by Rajasthan Tax Board.
3. Failure of Tax Board to provide reasons for dismissing the application.
4. Jurisdiction of courts and Tribunals in granting interim protection.
5. Direction for expeditious decision on the appeal.

Analysis:
1. The dispute in the case revolves around the classification of goods manufactured by the petitioner company under different entries of the RVAT Act. The petitioner treated its goods under Entry 163 of Schedule IV, while the department classified them under the residual Entry of Schedule V, resulting in a tax discrepancy.

2. The petitioner filed an application for stay of the order passed by the Dy. Commissioner Appeals, Commercial Taxes Department, Ajmer, which was dismissed by the Rajasthan Tax Board. The petitioner contended that the dispute was about the rate of tax based on the classification of goods, not tax evasion.

3. The High Court noted that the order of the Tax Board was non-speaking, lacking any reasons for denying the stay. The court emphasized that the dispute did not involve tax evasion but centered on the classification of goods. The petitioner, a reputable company, had already paid the disputed tax amount under protest.

4. The court highlighted the need for a balanced exercise of jurisdiction by courts and Tribunals in granting interim protection, considering the facts of each case. It directed the Tax Board to decide the appeal within twenty days and instructed the petitioner to request an expedited hearing, with a decision to be made within fifteen days thereafter.

5. Pending the appeal before the Tax Board, the court ordered a stay on the deposit of interest on the differential tax amount demanded by the department and already paid by the petitioner company. The writ petition was disposed of accordingly, providing relief to the petitioner during the appeal process.

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