2014 (5) TMI 535 - HC - VAT and Sales Tax

Writ petition - Against default assessment of tax and interest issued u/s 32 of the Delhi VAT Act, 2004 - Held that - Judgment in RICOH INDIA LTD. Versus COMMISSIONER OF C. EX., DELHI 2010 (9) TMI 293 - CESTAT, NEW DELHI followed - We have to look at the dominant/principal purpose for which the machine was designed and manufactured - Depending upon the said factual finding, it has to be determined and decided whether or not the said machine would fall under Entry No.41A or should be treated as falling in other or general category - These writ petitions should not be entertained - The petitioners relegated and asked to exhaust statutory remedies where both questions of law and facts can be elucidated and examined - Normally when alternate remedy is available, writ petitions, in taxation matters are not entertained. (See Bafna Healthcare Pvt. Ltd. and ors. versus Commissioner of Central Excise, Delhi- IV 2011 (8) TMI 327 - DELHI HIGH COURT - Writ petitions dismissed with a direction that the petitioners should take recourse to the statutory remedies - The interim orders shall remain in force for a period of 60 days to enable the petitioners to approach the departmental/appellate authorities for stay of the impugned demand - Appeals/objections will not be dismissed in case the same are filed within a period of four weeks from today - No order as to costs Decided in favour of assessee.

Summary

Issues:
1. Challenge to notice of default assessment of tax and interest under the Delhi Value Added Tax Act, 2004.
2. Determination of whether multi functional machines qualify as input or output units under Entry No.41A of the notification issued under the Act.
3. Application of the doctrine of dominant purpose in determining the classification of multi functional machines.
4. Relevance of factual aspects in deciding the classification of multi functional machines.
5. Decision on whether writ petitions should be entertained in taxation matters when alternate statutory remedies are available.

Analysis:
1. The writ petitions were filed challenging the notice of default assessment of tax and interest under the Delhi Value Added Tax Act, 2004. An interim order was issued for stay of the demand in one case. Reference was made to a decision regarding the classification of multi functional printers as input or output units under Entry No.41A. The court held that the principal and predominant purpose of the machine determines its classification, emphasizing the doctrine of principal and dominant purpose. For the period after November 30, 2005, the court clarified that the dominant purpose of the multi functional machine will decide whether it qualifies as an input or output unit. The onus was on the appellant to establish the principal purpose of the machine, and factual details were deemed essential for a firm opinion.

2. The judgment also addressed the classification of multi functional machines under Entry No.41A for the assessment year 2007-08. The court reiterated the importance of determining the principal purpose of the machine to decide its classification. The decision in a previous case was deemed applicable to the present case, emphasizing the need for factual examination to ascertain whether the machine functions as an input or output unit of an automatic data processing machine.

3. The court dismissed the writ petitions, directing the petitioners to exhaust statutory remedies for a comprehensive examination of both legal and factual aspects. It highlighted that writ petitions, especially in taxation matters, should not be entertained when alternate remedies are available. The interim orders were maintained for a limited period to allow the petitioners to approach the departmental or appellate authorities for relief without facing dismissal due to the pendency of the writ petitions. No costs were awarded in the case.

This detailed analysis covers the legal judgment comprehensively, addressing the issues involved and the court's decision on each matter.