2016 (12) TMI 312 - HC - VAT and Sales Tax

Set off of tax - the respondent assessee is a manufacturer and purchased raw material during the assessment year 1994-95 after paying full tax @ 4% and as per the Notification, claimed set off @ 2.5% on such purchases made within the State of Rajasthan. Originally the Assessing Officer allowed the said set off, however, the same was reopened and in the reassessment order, after taking into consideration the objections, allowed set off of 1% only - Held that - The Tax Board, in my view, has rightly considered the Notification dt 27.3.1995 and admittedly raw material purchased was used in the manufacture of iron and steel within the State of Rajasthan, and the rate in respect thereof could not exceed 1.5% as per the above Notification dt 6.3.1991. Admittedly the said Notification was in force and operative for the relevant assessment year and has been rescinded later- on, on 27.3.1995 by Circular No.726. The Tax Board has rightly applied the said Notification and in my view as well, once the Notification has correctly been applied, no question of law can be said to arise out of the impugned order as it is a finding of fact - petition dismissed - decided against petitioner.

Summary

Issues:
Interpretation of tax set off notifications for the assessment year 1994-95.

Analysis:
The case involved a dispute regarding the set off of taxes on raw material purchases for the assessment year 1994-95. Initially, the Assessing Officer allowed a set off of 2.5%, but upon reassessment, the set off was reduced to 1%. The matter was taken to the Dy. Commissioner (Appeals), who upheld the 1% set off decision. However, on further appeal, the Tax Board considered a Notification from 1991, which stated that the set off should be 2.5%, and granted relief accordingly.

The petitioner argued that the Tax Board erred by considering the 1991 Notification, as a later Notification from 1995 restricted the set off to 1%. The petitioner contended that the 1991 Notification was superseded and should not have been applied. On the contrary, the respondent argued that the 1991 Circular was still valid for the assessment year in question and was rescinded only in 1995. The respondent supported the Tax Board's decision to apply the 1991 Notification for granting the set off.

The judge examined the arguments presented by both parties and reviewed the relevant Circular from 1991. The Circular exempted the sale of iron and steel from tax to the extent that the tax rate exceeded 1.5% if used as raw material in the manufacture of iron and steel within the State of Rajasthan. The judge noted that the Tax Board correctly applied this Circular as the raw material purchased was used within the state, and the tax rate did not exceed 1.5% as per the 1991 Notification. The judge emphasized that the Notification was in force during the relevant assessment year and was rescinded later in 1995. Therefore, the judge concluded that since the correct Notification was applied, there was no legal question arising from the Tax Board's decision, which was deemed a factual finding.

Consequently, the judge dismissed the petition, stating that it lacked merit based on the correct application of the relevant tax set off Notification for the assessment year 1994-95.