2014 (8) TMI 188 - HC - VAT and Sales Tax

Tax liability - manufacture and sale of frames, glasses and spectacles - Assessee claimed exemption on tax - Held that - two things are clear that tax is leviable on sale of glasses and frames even if they are sold in the form of spects and second is whether the assessee has paid the tax on such sale is a question of fact and that factual enquiry can be conducted only by the Assessing Authority to find out whether the assessee has paid the tax on glasses and frames which used in the spects and sold by the assessee - The impugned orders of the Tax Board are set aside and the matter is remanded to the Assessing Authority who may hold an enquiry about the tax liability of the petitioner in relation to the commodities sold by the assessee by fixing the glasses in frames and treating the spects themselves as not a new commodity but treating the glasses and frames used in the preparation of the spects as taxable commodity - Following decision of ACTO v. Mehta Opticians 2007 (2) TMI 628 - RAJASTHAN HIGH COURT - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
1. Revision petitions against judgment of Rajasthan Tax Board
2. Tax liability on sale of frames, glasses, and spectacles
3. Interpretation of previous court judgments on tax exemption

Analysis:
The revision petitions were filed against the Rajasthan Tax Board's judgment, which upheld the Deputy Commissioner (Appeals)' decision to set aside assessment orders related to the tax liability on the sale of frames, glasses, and spectacles. The Assessing Authority had issued a notice to the dealers to justify the exemption claimed on sales, including imported frames and lenses. The Deputy Commissioner, relying on previous court judgments, concluded that the sales were exempt from tax. However, the petitioner argued that subsequent court decisions clarified the tax liability on such sales, leading to the remand of the matter to the Assessing Authority for factual inquiry.

The High Court analyzed the submissions and previous judgments, particularly the Mehta Opticians case, and concluded that tax is leviable on the sale of glasses and frames, even when sold as spectacles. The court emphasized that the Assessing Authority must determine whether the tax was paid on such sales. Therefore, the court allowed the revision petitions, set aside the Tax Board's orders, and remanded the matter to the Assessing Authority for further investigation into the tax liability concerning the commodities sold by the dealers.

In line with the judgment in the Mehta Opticians case, the High Court reiterated that the tax liability on the sale of spectacles involves treating the glasses and frames used in their preparation as taxable commodities. Consequently, the court set aside the Tax Board's orders and directed the Assessing Authority to conduct an inquiry into the tax liability of the dealers regarding the sale of spectacles. The parties were instructed to appear before the Assessing Authority for further proceedings. No costs were awarded in this matter.