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2014 (1) TMI 828 - SC - VAT and Sales TaxEnhancement in composition rates - Dealing in hides and skins - Tax liability - Held that - A perusal of the Section 5A of the Act would indicate that the composition benefit is available to a dealer under the Act in case it is liable to pay either the sales tax under Section 4 of the Act or the purchase tax under Section 4-B of the Act. If that is so, since the assessee claims that it is not liable to pay any tax under Sections 4 and 4-B, it cannot take the benefit or the advantage of the composition scheme under the impugned notifications issued by the State Government and hence could not have challenged the said notifications in the Writ Petition before the High Court - assessee was not properly advised when he questioned the notifications before the High Court - Decided against assessee.
Issues:
Challenge to notifications imposing composition tax on sale of raw skin under Jammu and Kashmir Sales Tax Act, 1962. Analysis: The appellant, a partnership firm engaged in the business of manufacturing and selling finished products from raw hides and skin, challenged two notifications issued by the State Government under the Jammu and Kashmir Sales Tax Act, 1962. The notifications allowed dealers in hides and skins to pay a composition amount per skin. The appellant, registered under the Act and the Central Sales Tax Act, was initially levied a tax of Rs. 4,00,000 under the first notification, which was paid by the assessee. The appellant contended that since they were not liable to pay sales tax or purchase tax within Jammu and Kashmir, they should not be subject to the compounded tax rates prescribed in the notifications. The High Court dismissed the writ petition, finding it devoid of merit. The Supreme Court, upon hearing both parties and examining the notifications and the High Court's judgment, focused on the issue raised in the appeal. The Court noted the provisions of the Act, particularly Sections 4, 4-B, and 5-A. Section 5-A allows the Commissioner to permit assessees to pay a lump sum by way of composition in lieu of the tax payable under the Act, subject to prescribed conditions. The Court emphasized that the composition benefit is available to dealers liable to pay sales tax under Section 4 or purchase tax under Section 4-B. Since the appellant claimed not to be liable under these sections, they could not avail the composition scheme and challenge the notifications. Ultimately, the Court dismissed the Civil Appeal, stating that the appellant was not advised properly when challenging the notifications. The Court clarified that it did not accept the High Court's observations. However, it permitted the appellant to file appeals against any Demand Notices issued by the authorities within a month, directing the authorities to consider the appeals on merits without reference to the High Court's observations. All contentions of both parties were left open by the Court. In conclusion, the Supreme Court upheld the dismissal of the appeal, emphasizing the inapplicability of the composition scheme to the appellant due to their non-liability under the relevant sections of the Act. The Court provided the appellant with the opportunity to appeal against any Demand Notices within a specified timeframe, ensuring a fair consideration of the appeals without regard to the High Court's observations.
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