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2016 (4) TMI 94 - HC - VAT and Sales TaxInclusion of processing and transportation charges received by ONGC as part of the sale price of LPG sold by ONGC to GAIL - ONGC had not raised the said charges against GAIL or the ONGC had not paid any charges to the ONGC - Before the delivery of goods, the ONGC had charged and the ONGC is in receipt of the said charges - Held that - merely because the ONGC had not received the transportation and processing charges from GAIL but had received from Joint Ventures, such transportation and processing charges cannot be excluded in the sale price . Considering the definition of sale price contained in section 2(29) such transportation and processing charges received by the ONGC before the actual delivery thereof it has to be included in the sale price as per section 2(29). In support of the decision of Division Bench in the case of ONGC vs. Commissioner of Sales Tax, the learned Tribunal has committed a grave error in holding that processing and transportation charges not received by the respondent from Gas Authority of India Limited (GAIL) cannot be included as part of the sale price of the gas sold by the respondent to GAIL. Levy of tax - Entitlement for exemption notifications issued under Section 49(2) of the Act, 1969 as well as under section 5(2) of the VAT Act, 2003 - Sale of kerosene and LPG by the ONGC to various OMCs and inter-State sale of LPG in bulk sold outside the State - The relevant entries in respect of the exemption claimed under the VAT Act, 2003 are entry Nos. 53 and 69 divided into two parts 1) for the period between 11.06.2008 to 02.10.2008 and 2) for the period between 03.10.2008 onwards and with respect to the Central Sales Tax is entry No. 55. As per the exemption notification issued under section 49(2) of the Act, 1969 and so long as the Act, 1969 was in force, on sale of kerosene for domestic use sold for Public Distribution System the whole of the sales tax was exempted and on sale of LPG (domestic) no tax exceeding the rate of 14% can be levied - Held that - the entries in question of the Schedule to the respective exemption notifications issued under the Act, 1969 and VAT Act, 2003 are required to be interpreted. Considering the relevant entries and the wordings used in the relevant entries more particularly Entry Nos.33, 70 and 173 of the Act, 1969 and VAT Act, 2003, as the case may be, and considering the law laid down by the Hon ble Supreme Court in catena of decisions, as the wordings used in the respective exemption entries are very clear and therefore, required to be interpreted literally and as they are and there is no scope for either liberal and/or purposive interpretation. Now the relevant entry in respect of sales of kerosene under the exemption notification issued under section 49(2) of the Act, 1969 as Entry No.33. It provides that in respect of sales of kerosene for domestic use sold for public distribution system there shall be exemption from payment of whole of the sales tax. Therefore, in respect of sale of kerosene by the ONGC to various OMCs for domestic use for public distribution system, the ONGC shall be entitled to exemption from payment of sales tax under the Act, 1969 as per Entry No.33 and not liable to pay tax. Now for the exemption claimed by the ONGC in respect of the sale of kerosene by ONGC to various OMCs from payment of VAT under the VAT Act, 2003 claimed as per entry No.53, there is a vast difference in the wordings in the said Entry No.53 under the VAT Act, 2003 and the relevant entry No.33 under the Act, 1969. Entry No.53 provides that in respect of kerosene sold through the public distribution system there shall be exemption from payment of whole of the tax under the VAT Act, 2003. As the kerosene which is sold by ONGC to various OMCs for public distribution and not through public distribution system which is the condition for the grant of exemption and therefore, the ONGC shall not be entitled to the exemption from payment of VAT Act, 2003 and liable to pay tax. Now, for exemption claimed in respect of sales of LPG by ONGC to various OMCs, from payment of sales under the Act, 1969 as per Entry No.70 or in the alternative Entry No.173, the ONGC shall be entitled to the exemption from payment of sales tax as per Entry No.70 read with Entry No.173 to the extent to which the amount of sale tax exceeds 14 ps in a rupee. For exemption claimed by ONGC in respect of the sales of LPG, by ONGC to various OMCs from payment of value added tax under the VAT Act, 2003 as per Entry No.69 of the exemption notification issued under section 5(2) of the VAT Act, 2003, the ONGC shall be entitled to the exemption from payment of the whole of the tax under the VAT Act, 2003, pre 02.10.2008 which was prevailing at the relevant time. So far as post 03.10.2008 the entry amended and as per amended entry, the exemption is provided for the sales of LPG for domestic use by the consumers of the State which is not the present case, therefore, the ONGC shall not be entitled to the exemption from payment of tax under the VAT Act, 2003. Even the ONGC is not entitled to exemption from tax on the inter-State sales of LPG, effected by the ONGC from the Stat of Gujarat to other States as the exemption is available on inter-State sales of LPG for domestic use by the consumers of the State only and liable to pay VAT and is not exempt from more of the tax as per Entry No.16 of the Schedule to the Exemption Notification dated 31.03.2006, as amended and issued under section 5(2) of the GVAT Act. Levy of penalty - Section 45(2)(c) of the Act, 1969 - Held that - As per sub-section (2) of section 45 of the Act, 1969, the penalty is leviable if it appears to the Commissioner, a dealer has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. In the present case, it cannot be said that the ONGC has concealed the particulars of any transaction or deliberately furnished inaccurate particulars of any transaction liable to tax. Under the circumstances, there is no justification in levying the penalty under sub-section (2)(c) of section 45 of the Act, 1969. Levy of penalty - Section 45(6) of the Act, 1969 - Held that - the penalty leviable under the said provision is as such a statutory penalty and as such there is no discretion vested in the Commissioner whether to levy the penalty leviable under sub-section (6) of section 45 of the Act, 1969 or not. Sub-section (5) of section 45 provides that in the case of a dealer the amount of tax assessed for any period under sections 41 to 50 or reassessed for any period under section 45 exceeds the amount of tax already paid by the dealer in respect of such period by more than 25% of the amount of tax so paid, dealer shall be deemed to have paid the tax to the extent of difference between amount so assessed or reassessed as aforesaid and the amount paid. Once considering sub-section (5) of section 45 of the Act, 1969, a dealer is deemed to have failed to pay the tax to the extent mentioned in sub-section (5), that shall be levied on such a dealer not exceeding a penalty times the difference referred to in sub-section (5). Under the circumstances, to the aforesaid extent and on the difference of tax, as per sub-section (5) of section 45, the respondent ONGC - dealer is liable to pay the penalty as mentioned under sub-section (6) of section 45. Levy of penalty - Section 34(12) of the VAT Act read with section 9(2a) of the Central Sales Tax Act, 1956 - Held that - the ONGC - dealer is liable to pay the penalty on the difference of the amount of tax liability in eventuality of mentioned sub-section (12) of section 34 of the VAT Act. - Appeal disposed of
Issues Involved:
1. Inclusion of processing and transportation charges in the sale price. 2. Exemption from tax on sale of kerosene for domestic use sold for public distribution system. 3. Exemption from tax on sale of LPG for domestic use. 4. Exemption from tax on inter-State sales of LPG. 5. Liability to pay penalties under the Gujarat Sales Tax Act, 1969 and Gujarat Value Added Tax Act, 2003. 6. Levy of interest on provisional refund. Issue-wise Detailed Analysis: 1. Inclusion of Processing and Transportation Charges in the Sale Price: The Tribunal erred in holding that processing and transportation charges not received from GAIL cannot be included in the sale price. The Court held that as per Section 2(29) of the Gujarat Sales Tax Act, these charges must be included in the sale price because they were received before the delivery of goods. This decision aligns with the precedent set in ONGC vs. Commissioner of Sales Tax. 2. Exemption from Tax on Sale of Kerosene for Domestic Use Sold for Public Distribution System: The Tribunal correctly held that the sale of kerosene by ONGC to OMCs for domestic use intended for public distribution system qualifies for exemption under Entry No.33 of the Gujarat Sales Tax Act, 1969. The Court relied on the interpretation that "for use" means "intended for use," as established in Dalmia Dadri Cement Ltd. and Prakash Metal Crafts Industries. 3. Exemption from Tax on Sale of LPG for Domestic Use: - Under the Gujarat Sales Tax Act, 1969 (Entry Nos.70 and 173): The sale of LPG in bulk by ONGC to OMCs for domestic use is entitled to exemption to the extent that the amount of sales tax exceeds 14 paise in the rupee. - Under the Gujarat Value Added Tax Act, 2003 (Entry No.69): - Pre 02.10.2008: The sale of LPG for domestic use qualifies for exemption from the whole of the tax. - Post 03.10.2008: The exemption is only for sales of LPG for domestic use by the consumers of the State. The sale of LPG in bulk by ONGC to OMCs does not qualify as it cannot be considered as sold "by the consumers of the State." 4. Exemption from Tax on Inter-State Sales of LPG: The ONGC is not entitled to exemption from tax on inter-State sales of LPG, as the exemption is applicable only to sales for domestic use by the consumers of the State. Therefore, ONGC must pay value-added tax on inter-State sales of LPG. 5. Liability to Pay Penalties: - Under Section 45(2)(c) of the Gujarat Sales Tax Act, 1969: The Tribunal correctly held that ONGC is not liable for penalties as there was no concealment or deliberate furnishing of inaccurate particulars. - Under Section 45(6) of the Gujarat Sales Tax Act, 1969: The Tribunal erred in holding that ONGC is not liable for penalties. The penalty is statutory and must be imposed if the tax assessed exceeds the tax paid by more than 25%. - Under Section 34(12) of the Gujarat Value Added Tax Act, 2003: The ONGC is liable to pay penalties on the difference in tax liability as specified. 6. Levy of Interest on Provisional Refund: The Tribunal erred in deleting the levy of interest on provisional refunds. The Court held that the State is entitled to interest on provisional refunds ultimately found not due, as per the relevant provisions of the Gujarat Sales Tax Act and the Gujarat Value Added Tax Act. Conclusion: The appeals and the Special Civil Application are partly allowed. The Tribunal's decision is upheld in part and reversed in part, as detailed above. The ONGC is liable for certain taxes and penalties but is entitled to specific exemptions as per the interpreted entries.
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