2016 (7) TMI 480 - HC - VAT and Sales Tax

Seeking relief from payment of fixed tax amount - Prayer on the ground that for certain reasons, beyond his control, he could not run Brick Kiln and, therefore, tax liable should be waived. - Held that - once such an agreement has been entered into between parties, it is binding on both and no estopple or any other principle of administrative law or otherwise can help assessee to wriggle out from said liability under composition scheme - the prayer made by petitioner that respondents be restrained from realizing tax from petitioner for Assessment Year 2014-15 and waive tax amount, cannot be accepted. The writ petition is thoroughly misconceived.

Summary

Issues:
Petitioner's liability to pay trade tax under a settlement scheme for Brick Kiln Season 2014-15 and the possibility of waiving the tax amount due to inability to operate the kiln.

Analysis:

1. The petitioner initially agreed to pay a fixed amount of trade tax under a government order implementing a settlement scheme for the Brick Kiln Season 2014-15. However, the petitioner later sought to avoid payment, claiming that circumstances beyond their control prevented them from operating the kiln and thus the tax liability should be waived.

2. The High Court referred to a Full Bench judgment in M/s Bhadauria Gram Sewa Sansthan, Fatehpur Vs. Assistant Commissioner, Sales Tax, Allahabad, where it was established that once an agreement for payment of tax under a composition scheme has been entered into and become binding, the liability cannot be denied subsequently for any reason. The court emphasized that the agreement between the parties is crucial, and the agreed-upon amount must be paid regardless of actual turnover or manufacturing activities during the specified period.

3. The court highlighted that the composition scheme's terms, once opted for by the dealer, cannot be disregarded based on the absence of turnover or manufacturing activity. The court rejected the petitioner's argument that the tax demand should be waived due to non-operation of the kiln, emphasizing that the liability to pay the composition money is not contingent on actual sales.

4. The petitioner's counsel could not contest the legal principles outlined by the court, leading to the dismissal of the petitioner's plea to restrain the tax realization and waive the tax amount for the Assessment Year 2014-15. The court concluded that the writ petition was misconceived and, therefore, dismissed it.

In summary, the judgment reaffirmed the binding nature of agreements made under composition schemes and emphasized that once such agreements are in place, the parties are obligated to fulfill the agreed-upon terms, irrespective of subsequent developments or operational challenges faced by the dealer.