2016 (9) TMI 718 - HC - VAT and Sales Tax

Tax liability - section 60 of the Gujarat Sales Tax Act, 1969 - sale of electricity and steam generated from its captive plant to its sister concern - Condition 6 of Notification dated 1st April, 1992 and Entry 69 - Final Eligibility Certificate - Permanent Premier Registration - Held that - Every citizen has a right to seek protection of the courts in respect of his grievances. The respondents, therefore, as a condition precedent for processing the Final Eligibility Certificate, could not have called upon the petitioner to first withdraw the petition filed before this court. The petitioner gives up its challenge to the extent it had contended that it was open for it to transfer the power and steam to its associate company and the said transaction would be exigible to levy of sales tax. The condition which has been stipulated by the High Level Committee that the company should withdraw the case against the Government from the High Court, no longer survives. The respondents required to proceed further and consider the grant of Final Eligibility Certificate and Permanent Premier Registration - petition disposed off - decided in favor of petitioner.

Summary

Issues:
1. Challenge against show-cause notices for alleged breach of conditions.
2. Decision by State High Powered Committee making grant subject to withdrawal of another application.

Issue 1: Challenge against show-cause notices for alleged breach of conditions
The petitioner challenged show-cause notices alleging a breach of conditions due to selling electricity and steam to a sister concern, violating Notification dated 1st April, 1992. Assessments were challenged before appellate authority. Court directed deposit for interim relief. The High Powered Committee's decision to process Final Eligibility Certificate subject to withdrawal of the petition was challenged. The Committee's condition for withdrawal was deemed void under section 28 of the Contract Act. The petitioner agreed to give up the challenge in exchange for Final Eligibility Certificate and Premier Registration Certificate for specific products. The petitioner retained the right to dispute tax rates, interest, and penalties in pending appeals.

Issue 2: Decision by State High Powered Committee making grant subject to withdrawal of another application
The High Powered Committee's decision to link the Final Eligibility Certificate processing with the withdrawal of a separate petition was deemed inappropriate. The Committee's condition for withdrawal was considered contrary to law, as every citizen has the right to seek court protection. The petitioner agreed to withdraw the challenge in exchange for specific certificates. The court directed the respondents to promptly consider granting the Final Eligibility Certificate within six months from the date of the order.

This judgment addressed the challenges against show-cause notices for breach of conditions and the State High Powered Committee's decision to make the grant of a certificate subject to the withdrawal of another application. The court emphasized the right of citizens to seek court protection and declared the Committee's condition void. The petitioner agreed to withdraw the challenge in exchange for specific certificates, retaining the right to dispute tax-related matters in pending appeals. The court directed the respondents to promptly process the Final Eligibility Certificate within a specified timeframe.