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2015 (8) TMI 104 - HC - VAT and Sales TaxReduced rate of VAT on Liquor - Application to enforce the Notification/Government Order dated 23.06.2014, w.e.f. 01.04.2014 - Held that - Petitioner has supplied the different brands of Indian Made Foreign Liquor at the M.R.P. so fixed by the Government inclusive of 15% Commercial Tax (VAT). It is also not in dispute that neither any other dealer nor petitioner could have recovered any amount from the customer over and above the M.R.P. fixed by the Government. - all the three Government orders dated 28.02.2014, 31.03.2014 and 01.04.2014 were issued by the Competent Officers who were subordinate to the Governor of the State, therefore, every dealer including the petitioner was duty bound to obey the same. The net conclusion of these Government Orders would be that Government has decided to reduce the rate of Commercial Tax (VAT) from 20% to 15% w.e.f. 01.04.2014 and M.R.P was fixed inclusive of Commercial Tax (VAT) @ 15%. In view of Article 154 and 166 of the Constitution of India, all the three above Notifications/Government Orders shall be deemed to be valid. Petitioner and all the dealers were having every reasonable expectation and assurance from the Government that entire Commercial Tax (VAT) on different brands of Indian Made Foreign Liquor has been included in the M.R.P., therefore, petitioner /dealers have to pay the same and if Government would modify Commercial Tax(VAT) in that event M.R.P. shall also be modified accordingly. - Applying the principle of promissory estoppel and doctrine of reasonable expectation, the harmonious interpretation of both the Government Orders, would be that reduced rate of 15% would be applicable w.e.f. 01.04.2014. If Government is allowed to charge Commercial Tax @ 20% w.e.f. 01.04.2014 to 23.06.2014, it would amount to arbitrary exercise and unjustified action on the part of the Government which would be hit by Article 14 of the Constitution of India. - Decided in favour of assessee.
Issues Involved:
1. Legality of the Provisional Assessment Order dated 30.09.2014. 2. Validity of the recovery citation dated 12.06.2015. 3. Determination of the applicable VAT rate for Indian Made Foreign Liquor for the Assessment Year 2014-15. 4. Enforcement of Government Orders regarding VAT rates. Detailed Analysis: 1. Legality of the Provisional Assessment Order dated 30.09.2014: The petitioner challenged the Provisional Assessment Order dated 30.09.2014, which mandated a VAT rate of 20% for the period from 01.04.2014 to 22.06.2014. The court noted that the Assessing Officer and the Statutory Appellate Authorities must assess tax as per the rates fixed by the State Government, but they do not have the jurisdiction to question the legality or the effective date of the tax rates. The court found that the Government Orders issued on 28.02.2014, 31.03.2014, and 01.04.2014, which set the VAT rate at 15%, were still valid and had not been repealed or superseded. Therefore, the Provisional Assessment Order was quashed as it was inconsistent with these Government Orders. 2. Validity of the Recovery Citation dated 12.06.2015: The recovery citation dated 12.06.2015 was issued based on the Provisional Assessment Order. Since the court quashed the Provisional Assessment Order, the recovery citation was also invalidated. The court held that the petitioner had a legitimate expectation based on the Government Orders that the VAT rate was 15%, and thus, the recovery at 20% was unjustified. 3. Determination of the Applicable VAT Rate for Indian Made Foreign Liquor for the Assessment Year 2014-15: The court examined the conflicting Government Orders regarding the VAT rate. The Government Orders dated 28.02.2014, 31.03.2014, and 01.04.2014 set the VAT rate at 15% effective from 01.04.2014. However, a later Government Order dated 23.06.2014 stated that the VAT rate was reduced to 15% effective from 23.06.2014. The court applied the doctrine of promissory estoppel and reasonable expectation, ruling that the VAT rate should be 15% from 01.04.2014, as the petitioner had relied on the earlier Government Orders to set their prices. 4. Enforcement of Government Orders Regarding VAT Rates: The court emphasized that all executive actions of the State must be expressed in the name of the Governor as per Articles 154 and 166 of the Constitution of India. The Government Orders issued on 28.02.2014, 31.03.2014, and 01.04.2014 were valid and enforceable since they were issued in the name of the Governor and published in the official gazette. The court ruled that the Finance Department's later order could not retroactively alter the VAT rate for the period from 01.04.2014 to 22.06.2014. The court concluded that the VAT rate of 15% should be applied for the entire assessment year 2014-15. Conclusion: The court allowed the writ petition, quashing the Provisional Assessment Order dated 30.09.2014 and the recovery citation dated 12.06.2015. It held that the VAT rate on Indian Made Foreign Liquor for the period from 01.04.2014 to 31.03.2015 should be 15%, as per the Government Orders issued on 28.02.2014, 31.03.2014, and 01.04.2014. The court applied the doctrines of promissory estoppel and reasonable expectation, ensuring that the Government's actions did not result in arbitrary and unjustified demands on the petitioner.
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