2014 (7) TMI 490 - AT - VAT and Sales Tax

Exemption from payment of sales/purchase tax - Held that - Admittedly, on the date of consideration of the petitioner s application, his business activity fell within the negative list as provided by entry 43 of Schedule III, appended to the rules. The writ petition was admitted as the entry was notified later. It is, however, not denied that during pendency of the writ petition, the State of Punjab, has in its wisdom and in the exercise of powers conferred by section 27 read with sections 10A and 30A of the Punjab General Sales Tax Act, 1948 amended the Rules by deleting entry 43 with retrospective effect from April 1, 1989 - The necessary affect of this notification is that entry No. 43 shall be deemed to have been deleted from April 1, 1989, in essence, removing any obstacle in the petitioner s entitlement to exemption. The application has to, therefore, be reconsidered, subject however to the petitioner satisfying the respondents that it has not charged sales tax from its customers - matter remitted back - Decided in favour of assessee.

Summary

Issues:
1. Petitioner's application for exemption from payment of sales/purchase tax rejected.
2. Interpretation of relevant rules and amendments.
3. Effect of retrospective amendment on petitioner's entitlement to exemption.
4. Reconsideration of application by the Assistant Excise and Taxation Commissioner.

Analysis:
1. The petitioner sought a writ of certiorari to quash the order rejecting their application for exemption from sales/purchase tax. The petitioner argued that at the time of application, there was no prohibition on claiming exemption under the Industrial Policy. The State contended that the application was rightly dismissed as entry 43 of the Punjab General Sales Tax (Deferment and Exemption) Rules disentitled the petitioner from exemption. The court noted the subsequent deletion of entry 43 with retrospective effect, removing the obstacle to the petitioner's entitlement to exemption.

2. The court acknowledged that at the time of application consideration, the petitioner's business activity was within the negative list as per entry 43 of the Rules. However, the retrospective deletion of entry 43 from April 1, 1989, by the State allowed for the petitioner's entitlement to exemption. The court emphasized that the application must be reconsidered, with the petitioner required to demonstrate that they did not charge sales tax to customers during the disputed period.

3. The court allowed the writ petition, setting aside the impugned order, and remitted the matter to the Assistant Excise and Taxation Commissioner for a fresh decision in line with the law. The Commissioner was instructed to consider the amendment deleting entry 43 and ensure the petitioner proves non-collection of relevant tax from customers. If tax was collected, the petitioner must remit it to the State. The judgment did not award costs to any party involved in the case.