2016 (7) TMI 1017 - HC - VAT and Sales Tax

Rate of VAT - The assessing authority merely holds that bio toilets do not come under the category of rail coaches. No reasons are assigned as to how the assessing authority has come to the conclusion that these bio toilets do not fall under the said category. The assessing authority exercises quasi-judicial powers, and is obligated to assign reasons for arriving at any decision. No order of assessment can be passed on the ipse dixit of the assessing authority. - Matter remanded back.

Summary

Issues:
Assessment order challenging the levy of tax on sale of bio toilets to Indian Railways without proper declaration.

Analysis:
The petitioner contended that the requirement of submitting a declaration in form C is not applicable when goods are sold to the Government under section 8(2) of the CST Act. The bio toilets supplied exclusively to Indian Railways are considered part of rail coaches falling under entry 51 of the Fourth Schedule to the VAT Act, subject to a tax rate of five percent. The assessing authority levied tax at 14.5 percent due to the absence of form C or other certificates. The petitioner argued that bio toilets are not general goods and should be taxed at a lower rate based on their classification.

In response to the show-cause notice, the petitioner explained the applicable CST rates based on inter-State sales with or without form C. The assessing authority's decision lacked reasoning on why bio toilets were not categorized under rail coaches. It was emphasized that the assessing authority must provide detailed justifications for its decisions as it exercises quasi-judicial powers. Consequently, the order was set aside due to the absence of proper reasoning, and the assessing authority was directed to issue a reasoned order after granting the petitioner a personal hearing.

The judgment concluded by disposing of the writ petition and any related miscellaneous petitions without costs. The assessing authority was instructed to reevaluate the matter, ensuring a fair opportunity for the petitioner to present their case before making a new assessment order in compliance with the law.