2020 (9) TMI 1258 - HC - VAT and Sales Tax

Validity of assessment order - levy of sales tax - local sale or inter-state sale - movement of goods from the State of Maharashtra to Mumbai High - HELD THAT - On reading of the judgment in THE COMMISSIONER OF SALES TAX VERSUS M/S. PURE HELIUM (INDIA) LTD. 2012 (2) TMI 5 - BOMBAY HIGH COURT , it is evident that this Court has held that movement of goods from the State of Maharashtra to Mumbai High does not constitute a movement from one state to another state; Mumbai High does not form part of any state in the Union of India. Thus the very basis on which revenue sought to assess the sale as an inter-state sale was found absent. This being the position, foundational view taken by Respondent No.2 that movement of goods from the State of Maharashtra to Mumbai High is a sale within the territory of the State of Maharashtra is factually and legally unsound. Article 286 of the Constitution of India, particularly clause 1(a) thereof clearly says that no law of a state shall impose or authorize the imposition of a tax on the supply of goods or of services or both, where such supply takes place outside the state. Prima facie, impugned order of assessment is without jurisdiction. Therefore, as an interim measure, we direct that no coercive steps shall be taken by the Respondents against the Petitioner on the basis of the order of assessment impugned. Stand over to 1st October, 2020.

Summary

Issues:
Assessment Order under Maharashtra Value Added Tax Act, 2002 validity challenged under Articles 226/227 of the Constitution of India.

Analysis:

1. Assessment Order Validity:
- The petitioner challenged the Assessment Order dated 29th June, 2019, passed by Respondent No.2 under Section 23 of the Maharashtra Value Added Tax Act, 2002 for the period 01-04-2005 to 31-03-2006.
- The petitioner contended that the Assessment Order was based on a misinterpretation of a previous court decision regarding the movement of goods from the State of Maharashtra to Mumbai High.
- The petitioner argued that Mumbai High does not constitute a movement from one state to another and does not form part of any state in the Union of India, as per the court's previous ruling.
- The petitioner further highlighted that the Assessment Order was contrary to the provisions of Section 6 of the Central Sales Tax Act, 1956, and Article 286 of the Constitution of India, which prohibits the imposition of a tax where the supply takes place outside the state.

2. Jurisdiction and Remedies:
- The petitioner opted for a writ remedy under Articles 226/227 of the Constitution of India, contending that the Assessment Order was ex-facie without jurisdiction.
- The petitioner argued that the writ remedy was appropriate due to the lack of efficacy of the alternative remedy of appeal, given the jurisdictional issues involved.
- The court acknowledged the jurisdictional concerns raised by the petitioner and directed that no coercive steps be taken against the petitioner based on the impugned Assessment Order as an interim measure.
- The court also noted that the impugned order of assessment was prima facie without jurisdiction, emphasizing the importance of adhering to the constitutional provisions regarding taxation on supplies outside the state.

3. Court Proceedings and Directions:
- During the court proceedings, both parties were represented by learned advocates, and the court carefully considered the previous judgment regarding the movement of goods to Mumbai High.
- The court directed the respondents to file an affidavit and waived notice for both respondents, while also allowing time for the respondents to submit the affidavit by the next date.
- An interim measure was put in place to prevent coercive steps by the respondents against the petitioner, pending further proceedings.
- The court set a future date for the case to stand over, ensuring that all concerned parties were informed about the order through digital means for compliance.

This detailed analysis outlines the key issues raised in the legal judgment, including the validity of the Assessment Order, jurisdictional concerns, the choice of remedies, court proceedings, and the directions issued by the court to address the legal dispute effectively.