2016 (10) TMI 1345 - HC - VAT and Sales Tax

Levy of VAT - sale of repossessed cars by assessee/Bank - penalty - HELD THAT - In identical circumstances this court in its judgment reported as Citi Bank vs. Commissioner of Sales Tax 2015 (12) TMI 1040 - DELHI HIGH COURT had ruled against the assessee. In the present case, levy of penalty is above 150%. The main question of law is answered against the assessee. Appeal allowed in part.

Summary

Issues involved:
1. Delay in re-filing the appeal
2. Exemption application
3. VAT levy on the sale of repossessed cars
4. Proportionality of penalty imposed

Analysis:
1. Delay in re-filing the appeal:
The judgment begins by addressing the delay in re-filing the appeal, which is condoned for reasons mentioned in the application. The court disposes of the application, indicating that the delay issue has been resolved.

2. Exemption application:
An exemption application is allowed subject to just exceptions. The court disposes of this application as well, indicating that the exemption has been granted with certain conditions.

3. VAT levy on the sale of repossessed cars:
The main issue in the appeal is whether the assessee/bank's sale of repossessed cars is subject to VAT levy. The VAT Tribunal had ruled in favor of the levy, citing precedents such as the Citi Bank case and HDFC Bank case. The court notes that while the main question of law is answered against the assessee, it remits the matter to the adjudicating authority to determine the proportionality of the penalty imposed, considering the debatable nature of the issue. The appeal is partly allowed on this basis.

4. Proportionality of penalty imposed:
The court highlights that in the present case, the penalty imposed is above 150%, similar to the HDFC Bank case where a 200% penalty was deemed unjustified. The court emphasizes the need for the adjudicating authority to reassess the penalty in light of the debatable nature of the issue, indicating that the appeal is allowed to a certain extent based on this consideration.