2016 (6) TMI 63 - HC - VAT and Sales Tax

Seeking quashing of Assistant Commissioner s order under Section 31 of the Bihar Value Added Tax Act, 2005 - Imposition of penalty - Petitioner is not making any direct sale in the State of Bihar, rather imported certain spares and supplied the same free of cost under warranty scheme - entire Entry Tax already paid. Held that - that levy of penalty is a serious matter, that too in a case where the petitioner has paid entry tax on the entire value of the goods which have been brought in by the petitioner and, in any case, if the said import of goods was ultimately treated as a sale then the set off would have had to be granted, but the same was not claimed by the petitioner simply because it was not sale and the petitioner as per its case merely supplied the goods free of cost under the warranty scheme and therefore had not made claim for the set off of the Entry Tax. Therefore, the order passed by Assistant Commissioner is quashed and the matter is remanded to the respondent no.2, Assistant Commissioner, Commercial Taxes, South Circle to pass an order in accordance with law after giving proper opportunity to the petitioner to be heard in the matter. - Writ Application disposed of

Summary

Issues: Quashing of order under Bihar Value Added Tax Act, 2005 for the year 2014-15, imposition of penalty for incomplete disclosure in returns, failure to respond to notices, discrepancy in figures, payment of entry tax, non-claim of set off.

In this judgment by the High Court of Patna, the petitioner sought the quashing of an order passed by the Assistant Commissioner, Commercial Taxes, under the Bihar Value Added Tax Act, 2005. The petitioner argued that it did not engage in direct sales in Bihar but instead fulfilled warranties by importing spares for free replacements. The petitioner contended that it had paid Entry Tax on imports amounting to over ?6 crores and had filed the necessary returns. However, the returns did not have specific columns for 'inter-State transfer' and 'free replacement,' leading to a discrepancy in the figures.

The petitioner received a notice under Section 31 of the Bihar VAT Act for incomplete disclosure in the returns. Despite requesting time to gather necessary documents, the petitioner was not granted sufficient time for compliance. The Department claimed to have sent a notice via email, but the petitioner argued that the correct address was not provided, resulting in non-receipt of the notice. Subsequently, a penalty was imposed without considering the petitioner's explanation regarding the nature of transactions and the availability of supporting documents.

The Court observed that the imposition of a penalty is a significant matter, especially when the petitioner had already paid Entry Tax on the imported goods. The Court noted that if the imports were treated as sales, the petitioner would have been entitled to a set off, which was not claimed due to the nature of the transactions. Consequently, the Court quashed the order and remanded the matter to the Assistant Commissioner for a fresh decision, emphasizing the importance of providing the petitioner with a proper opportunity to present its case.

The Court directed the petitioner to appear before the Assessing Officer with all relevant documents and authorized personnel for further proceedings. It was clarified that no additional notice was required, and the matter was to be resolved in accordance with the law. Ultimately, the writ application was disposed of with the aforementioned directions and observations, ensuring a fair opportunity for the petitioner to address the issues raised.