2016 (4) TMI 967 - HC - VAT and Sales Tax

Re-assessment of returns - Chillers imported outside the country - Commitment of offence in regard to stipulation in contract that chillers had to be purchased from Malaysia - Held that - an officer of the rank of Commissioner is totally unaware of the provisions of the Sales Tax laws. The State Government has no legal competence to levy tax on goods which are imported from outside the State. It also has no competence to levy tax on goods imported from outside the country. The learned Commissioner has held that since the goods were imported from Malaysia for which the dealer was not authorized and, therefore, the dealer has committed an offence. we fail to understand this logic of the Commissioner of Taxes. The contract was entered into between the Airport Authority of India and Voltas. In the said contract there was a stipulation that these chillers had to be purchased from Malaysia. Even otherwise any dealer is not duty bound to buy goods from only within the State. He can buy goods from outside the State and bring them within the State or can import them into the country in accordance with law. If he has not smuggled in the goods, he has not committed any offence. Whether the assessee had charged 20% tax over and above the contract value - Works Contract - Held that - the state has failed to produce any evidence in regard to its conclusion that the dealer had charged 20% sales tax over and above the contract value. This leaves no manner of doubt that the contract value was inclusive of all taxes and duties and the stand of the Revenue in this regard is totally false. The entire exercise of reassessment was started only with a view to delay the re-payment of the sum of ₹ 14,65,591/-. It is indeed shocking that a State should behave in such a manner. The contract was available with the Revenue and yet it refused to read contract. The Commissioner of Taxes also came up with a fanciful argument that the assessee had committed an offence by importing chillers from Malaysia. Therefore, this is a fit case where exemplary costs should be imposed. - Petition disposed of

Summary

Issues:
Assessment of excess tax payments by the petitioner for the years 1998-1999 to 2004-2005. Refund demand of excess tax payments. Allegations of unauthorized import of goods from Malaysia. Discrepancy in the tax charged by the dealer. Delay in decision-making by the Commissioner of Taxes.

Assessment of Excess Tax Payments:
The petitioner company, registered under the Indian Companies Act, entered into an agreement with the Airport Authority of India for providing airconditioning services during the modernization of Agartala airport. The Assessing Officer found that the petitioner had deposited excess tax amounts for the years 1998-1999 to 2004-2005. The appellate authority remanded the matter for re-assessment, leading to a fresh assessment order determining excess tax payments totaling Rs. 14,65,601/-. The petitioner demanded a refund, initiating a series of reminders and notices. The Commissioner of Taxes issued an order almost four years later, questioning the assessment order and initiating a re-assessment process.

Refund Demand of Excess Tax Payments:
The petitioner challenged the order before the High Court, emphasizing the delay in decision-making by the Commissioner of Taxes. The Court directed the Revisional Authority to consider relevant legal precedents while deciding the matter and to pass a reasoned order within two months. Despite multiple reminders and submissions by the petitioner, the Commissioner delayed the decision for over a year, ultimately passing an order on 31.12.2013.

Allegations of Unauthorized Import of Goods:
The Commissioner alleged that the petitioner imported goods from Malaysia without authorization, constituting an offense. However, the Court clarified that the State lacks the legal competence to levy tax on goods imported from outside the country. The Court emphasized that the dealer, in this case, had not committed any offense by importing goods from Malaysia as per the contractual requirements.

Discrepancy in Tax Charged:
Another issue revolved around the discrepancy in the tax charged by the dealer. While the first appellate authority had made certain findings, the Assessing Officer disagreed, leading to a remand by the Commissioner for further assessment. The Court noted that the contract value already included all taxes and duties, refuting the Revenue's claim of excess tax charged by the dealer.

Delay in Decision-Making:
The Court criticized the Commissioner for the delay in deciding the matter, stating that the reassessment was initiated to delay the repayment of the excess tax amount. The Court quashed the Commissioner's order, directing the State to refund the excess amount of Rs. 14,65,601/- with statutory interest. Additionally, the State was burdened with costs of Rs. 50,000/- and instructed to pay the entire amount to the assessee within three months from the judgment date.