2015 (2) TMI 750 - HC - VAT and Sales Tax

Deferment of assessment proceedings - Power of authorities to defer proceedings - Assessee contends that levy of VAT on the turnover on which service tax was levied as hire charges, and levy of VAT on supply of food and drinks on which also service tax was levied, was the subject matter of other writ petition which was admitted, and was pending on the file of the High Court - Held that - Where an assessment has been deferred by the Commissioner under sub-section (5) of Section 32 or as the case may be, by the Appellate Tribunal under the proviso to sub- section (4) of Section 33 on account of any stay granted by the Appellate Tribunal, or as the case may be the Andhra Pradesh High Court or Supreme Court respectively, or whereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or the Supreme Court involving a question of law having a direct bearing on the assessment in question, the period during which the stay order was in force or such appeal or proceedings was pending shall be excluded in computing the period of four years or six years as the case may be for the purpose of making the assessment. Section 31(4A) - Where any proceeding under this section has been deferred on account of any stay orders granted by the High Court or Supreme Court in any case or by reason of the fact that an appeal or other proceedings is pending before the High Court or the Supreme Court involving a question of law having a direct bearing on the order or proceeding in question, the period during which the stay order is in force or the period during which such appeal or proceeding is pending, shall be excluded, while computing the period of two years specified in sub-section (4) for the purpose of passing appeal orders under this section. The Legislature, having retained a provision similar to Section 14(5) of the APGST Act in Section 21(7) of the VAT Act, has consciously chosen not to make a provision similar to Section 14(6) of the APGST Act which conferred on the Commissioner the power, in certain circumstances, to direct the assessing authority to defer assessment proceedings. The Commissioner has not been conferred the power to defer assessment proceedings under the VAT Act, and his power is now limited only to defer revision proceedings under Section 32 thereof, that too only in the circumstances referred to, and subject to the limitations prescribed, in sub-section (5) thereof. The Legislature has consciously chosen not to confer on the Commissioner the power to defer assessment proceedings under the VAT Act evidently because, unlike the APGST Act, Sections 20(2) & (4) of the VAT Act provide for self-assessment and, except in the circumstances referred to in sub-sections (3) to (5) of Section 21, no assessment order need be passed under the VAT Act. The Legislative intent is to remedy the mischief which, under Section 14(6) of the APGST Act, enabled the Commissioner to defer assessment proceedings, and thereby ensure that assessment proceedings, under the VAT Act, are not interdicted before its completion, and are completed without hindrance. In the absence of a provision in the VAT Act, similar to Section 14(6) of the APGST Act, none of the authorities under the VAT Act can be said to have been empowered to defer assessment proceedings. It matters little that the Commissioner had rejected the petitioners request for deferment, as he lacks jurisdiction, in the first place, to entertain such an application for deferment of assessment proceedings under Section 21 of the VAT Act. The Writ Petition is devoid of merits.It is made clear that the assessing authority may proceed, pursuant to the show-cause notice issued by him earlier, and pass an assessment order in accordance with law - Decided against assessee.

Summary

Issues Involved:
1. Deferment of assessment proceedings.
2. Levy of VAT on outdoor catering, tent house equipment, and inter-state sales.
3. Disallowance of input tax credit on LPG.
4. Jurisdiction and power of the Commissioner under the VAT Act.

Issue-wise Detailed Analysis:

1. Deferment of Assessment Proceedings:
The petitioner requested the Commissioner to defer assessment proceedings initiated by the assessing authority, citing that the levy of VAT on certain turnovers was already under judicial scrutiny in W.P. No.6692 of 2011. The Commissioner rejected this request, stating that not all issues in the show cause notice were covered by the pending writ petition. The High Court examined whether Section 21(7) of the VAT Act conferred the power to defer assessment proceedings on the Commissioner. The Court concluded that Section 21(7) only provides for the consequences of deferment and does not confer the power to defer assessment proceedings. The power to defer is limited to revision proceedings under Section 32(5) and appeals under Section 33(4) of the VAT Act.

2. Levy of VAT on Outdoor Catering, Tent House Equipment, and Inter-State Sales:
The assessing authority issued a show cause notice proposing to levy VAT on outdoor catering, tent house equipment, and inter-state sales. The petitioner contended that these issues were under judicial review in various courts, including the Supreme Court and High Courts. However, the Commissioner held that the issues in the show cause notice were not entirely covered by the pending cases and rejected the request for deferment. The Court upheld the Commissioner's decision, emphasizing that the petitioner had not provided sufficient evidence to show that their case was similar to those pending in higher courts.

3. Disallowance of Input Tax Credit on LPG:
The assessing authority disallowed the petitioner's claim for input tax credit on LPG used for cooking, citing Rule 20(2)(q) of the VAT Rules. The petitioner referenced an interim stay granted by the High Court in a similar case (M/s. RAK Ceramics (India) Pvt. Ltd.) but the Commissioner noted that the stay was only regarding the recovery of disputed tax and not on the substantive issue of disallowance of ITC on LPG. The Court found no reason to defer the assessment on this ground and upheld the Commissioner's decision.

4. Jurisdiction and Power of the Commissioner under the VAT Act:
The Court examined whether the VAT Act conferred the power to defer assessment proceedings on the Commissioner. It was argued that the Commissioner's power under Section 32(5) to defer proceedings should extend to assessment proceedings. However, the Court held that Section 32(5) only allows the Commissioner to defer revision proceedings and not assessment proceedings under Section 21. The Court emphasized that the legislative intent was clear in limiting the deferment power to revision proceedings to ensure that assessments are completed without hindrance.

Conclusion:
The High Court dismissed the writ petition, stating that the Commissioner did not have the jurisdiction to defer assessment proceedings under Section 21 of the VAT Act. The assessing authority was directed to proceed with the assessment order in accordance with the law. The Court's decision underscores the importance of adhering to the statutory provisions and the legislative intent behind the VAT Act.