2013 (5) TMI 1070 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Condonation of delay in filing the Tax Appeal.
2. Classification of machinery for Value Added Tax purposes.
3. Explanation for the delay by the State Government.
4. Opposition to the delay condonation by the opponent.
5. Legal precedents and considerations for condoning delay.

Summary:

1. Condonation of Delay in Filing the Tax Appeal:
The State of Gujarat filed an application seeking condonation of a 721-day delay in filing a Tax Appeal against the judgment of the Gujarat Value Added Tax Tribunal dated October 27, 2010. The delay was explained through an affidavit by the Deputy Commissioner of Commercial Tax, citing administrative procedures and workload in the Government Pleader's office.

2. Classification of Machinery for Value Added Tax Purposes:
The core issue in the Tax Appeal was whether machinery like Backho Loader, Track Excavators, Loader, Skip Steer Loader, Telesonic Handler, etc., dealt with by the opponent-assessee, should fall under Entry 35 of Schedule II ("Machinery including parts and accessories thereof used in the execution of the works contract") attracting 4% VAT, or under Entry 87 as motor vehicles attracting 12.5% VAT. The Tribunal's decision was rendered in the context of the opponent-assessee's application u/s 80 of the Gujarat Value Added Tax Act, 2003.

3. Explanation for the Delay by the State Government:
The delay was attributed to the time taken in receiving the certified copy of the judgment, internal administrative processes, obtaining approval from the Finance Department, and the workload in the Government Pleader's office. The applicant also cited the Supreme Court's decision in Commissioner of Income-tax v. West Bengal Infrastructure Development Finance Corporation Ltd., emphasizing that cases with significant tax implications should be decided on merits despite delays.

4. Opposition to the Delay Condonation by the Opponent:
The opponent opposed the application, arguing gross negligence and inaction by the applicant. They relied on the Supreme Court's decision in Post Master General v. Living Media India Limited, which criticized governmental delays, and a Division Bench decision of the Gujarat High Court that dismissed similar delay condonation applications.

5. Legal Precedents and Considerations for Condoning Delay:
The Court acknowledged the considerable delay but emphasized the need to consider the nature of the delay, the explanation provided, and the substantial tax effect involved. The Court referred to its previous order condoning delay in similar circumstances and the Supreme Court's observations in cases like State of Nagaland v. Lipok AO and State of Haryana v. Chandra Mani, which recognized the procedural delays inherent in government functioning.

Conclusion:
The Court condoned the delay, noting the reasonable explanation provided, the significant tax effect, and the recurring nature of the issue. The delay was condoned on the condition that the applicant pays costs of Rs. 20,000 to the opponent by May 31, 2013. The rule was made absolute to the extent specified, and the Civil Application was disposed of.