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2015 (8) TMI 1061 - HC - VAT and Sales TaxCalculation of Cumulative Quantum of Benefits Assessing Officer worked out Cumulative Quantum of Benefits as per Rule 31AA of Bombay Sales Tax Rules,1959 Assessment order resulted in refund Applicant being not satisfied with working of cumulative quantum of benefits preferred appeal which was dismissed Held that - Appellate Authority found that there is no documentary evidence to support argument that calculation is erroneous and incorrect Bare perusal of Rule 31AA would denote as to how calculation of CQB has to be made Rule 31AA(2)(e) refers to sum equal to amount of tax which would have been payable to Government on any sales of products manufactured by said dealer in eligible unit and specified in Eligibility Certificate granted to him by implementing agency. Tribunal concluded that this assessment and covered by clause (e) cannot be made in case of applicant simply because applicant is not required to pay any tax to Government Assessment could not have been made as all invoices would indicate that sale price was not to include component of sales tax Tax element could not have been, therefore, forming part of price and as depicted in invoices Tribunal has correctly come to conclusion that sale effected by dealer is not liable for payment of sales tax Therefore, calculation of CQB as made in applicant s case is not required to be altered or changed, such reason could not have been termed as perverse or vitiated Decided in favour of Revenue.
Issues Involved:
1. Calculation of Cumulative Quantum of Benefits (CQB) under Rule 31AA of the Bombay Sales Tax Rules, 1959. 2. Applicability of Rule 46A of the Bombay Sales Tax Rules, 1959 in calculating CQB. 3. Interpretation of tax exemption and its effect on sale price and tax liability. Issue-wise Detailed Analysis: 1. Calculation of Cumulative Quantum of Benefits (CQB) under Rule 31AA of the Bombay Sales Tax Rules, 1959: The primary issue revolves around the calculation of CQB as per Rule 31AA. The applicant, a manufacturer of PVC pipes, holds a Certificate of Entitlement under the Package Scheme of Incentives and opted for exemption mode of incentives. The Assistant Commissioner of Sales Tax assessed the applicant for the period from 1.4.2000 to 31.3.2001, resulting in a refund of Rs. 9,64,855/-. The applicant contested the calculation of CQB, arguing that the Assessing Officer did not correctly calculate it by failing to allow the deduction of the tax element as provided by Rule 46A. The Tribunal, however, upheld the decision of the Assessing Officer, leading to the present reference for the High Court's opinion. 2. Applicability of Rule 46A of the Bombay Sales Tax Rules, 1959 in calculating CQB: The applicant contended that Rule 46A should be applied in calculating CQB, which allows for the deduction of the tax element from the sale price. The Tribunal, however, concluded that Rule 46A was not applicable in this case. The Tribunal's decision was based on the interpretation that the sale price during the exemption period did not include the tax element, as the applicant enjoyed tax exemption under the Certificate of Entitlement. The High Court agreed with the Tribunal's interpretation, stating that the calculation of CQB under Rule 31AA(2)(e) should be based on the assumption that the dealer does not hold a Certificate of Entitlement and that the sale price does not include the tax component. 3. Interpretation of tax exemption and its effect on sale price and tax liability: The High Court examined the language of Rule 31AA and Rule 46A. Rule 31AA(2)(e) specifies that the CQB should be calculated as a sum equal to the amount of tax that would have been payable if the dealer was not holding the Certificate of Entitlement. The Tribunal concluded that since the applicant was exempt from tax, the sale price did not include the tax element. The High Court agreed with this conclusion, stating that the sale price during the exemption period did not include the tax component, and therefore, the calculation of CQB should not consider the tax element. The High Court also referred to previous judgments, including "Prasad Power Control Pvt. Ltd. Vs. Commissioner of Sales Tax" and "Shakti Arora Exports Pvt. Ltd. Vs. State of Maharashtra," but found them distinguishable based on the specific facts and context of those cases. Conclusion: The High Court concluded that the Tribunal correctly interpreted the relevant rules and upheld the calculation of CQB without considering the tax element as per Rule 46A. The reference was disposed of by answering the question in favor of the Revenue and against the applicant.
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