9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1611 - HC - VAT and Sales TaxLevy of VAT - sale of repossessed cars owned by Bank - quantum of penalty - HELD THAT - It could not be said that the point was not debatable; undoubtedly it was. The levy of 200% penalty therefore is not sustainable; this court at the same time opines that it would not be appropriate to act as an adjudicating authority as to the proportionateness of the penalty to be imposed having regard to the fact that the issue was debatable. The matter is accordingly remitted to the Tribunal on the limited question of extent of penalty to be properly levied under these circumstances. The appeals are accordingly partly allowed on the question of penalty.
Issues:
1. Whether the sale of repossessed cars by a bank is subject to VAT levy? 2. Whether the imposition of a 200% penalty for VAT non-compliance is justified? Analysis: 1. The primary issue in this case was whether the sale of "repossessed" cars by a bank is subject to VAT levy. The appellant, a bank, argued that as per Section 8 of the Banking Regulation Act, banks are prohibited from engaging in trading activities. However, the Tribunal held that VAT is applicable to transactions where the bank sells repossessed cars that were previously financed to borrowers. The Tribunal's decision aligned with a previous ruling in Citi Bank vs. Commissioner of Sales Tax. The court considered judgments from other High Courts and concluded that VAT was indeed leviable on such transactions. Therefore, the main question raised by the appellant was deemed irrelevant by the court. 2. The appellant further contended that the imposition of a 200% penalty for VAT non-compliance was unjustified and disproportionate, given the debatable nature of the leviability issue. The court agreed that the penalty was facially disproportionate, considering the legal ambiguity surrounding the VAT levy on repossessed cars. The court acknowledged that the issue was debatable, making the imposition of a 200% penalty unsustainable. The matter was remitted to the Tribunal solely to determine the appropriate extent of penalty under the circumstances. Consequently, the appeals were partly allowed on the question of penalty, emphasizing the need for a fair and proportionate penalty in debatable situations.
|
