2017 (1) TMI 464 - HC - VAT and Sales Tax

Grant of appropriate adjustment, on account of payment of local tax in other States, upon the same goods, by virtue of Section 18-A(5) of the Act - nearly half of the amount of tax is liable to be adjusted, if due credit was accorded by the appellate authority to the payment of local tax in other States,in terms of Section 18-A(5) - Held that - it would be appropriate to modify the order dated 26.12.2016 by providing that in case the petitioner deposits 20% of the disputed tax amount, after adjusting the amount allegedly paid by it towards local tax in other States in respect of the same goods, which is to the extent of nearly 50% of disputed tax amount, within 2 weeks from today, the appellate authority shall entertain and decide the appeal on merits - petition disposed off - decided in favor of petitioner.

Summary

Issues:
Challenge to order of Commercial Tax Tribunal regarding Central Sales Tax for year 2013-2014. Petitioner's contention on stock transfer not constituting inter State sale. Lack of reasoning in the order under challenge. Interpretation of Section 18-A(5) of the Central Sales Tax Act. Dispute over deposit of disputed tax amount.

Analysis:

The petition challenges an order by the Commercial Tax Tribunal related to Central Sales Tax for the year 2013-2014. The petitioner, a company with a manufacturing unit in Ghaziabad, argued that stock transfers from Ghaziabad to other states did not amount to inter State sale for tax liability. The order under challenge directed the petitioner to deposit 20% of the disputed tax amount within 10 days, with the balance stayed upon security deposit. The petitioner claimed lack of reasoning in the order, emphasizing Section 18-A(5) of the Central Sales Tax Act, which allows for adjustment of tax amounts paid in other states. The petitioner contended that almost half of the disputed tax amount had been paid as local tax in other states, which was not considered by the Tribunal.

The petitioner's counsel argued that the order lacked reasoning and should be set aside. The petitioner sought adjustment of the tax amount paid in other states as per Section 18-A(5) of the Act. The standing counsel opposed, stating the deposit should not be interfered with due to the petitioner's financial standing and factual issues to be decided in appeal. The court disposed of the petition, noting the unresolved tax liability issue pending in appeal.

The court found that the petitioner had requested an adjustment based on the tax paid in other states, as allowed by Section 18-A(5) of the Act. The order under challenge did not address this adjustment claim or provide any reasoning on the matter. Considering the facts presented, the court modified the order to allow the petitioner to deposit 20% of the disputed tax amount after adjusting the tax paid in other states, which covered nearly 50% of the disputed tax. The appellate authority was directed to decide the appeal promptly without requiring further deposits, ensuring a swift resolution without unnecessary delays.

In conclusion, the court modified the order to consider the adjustment of tax paid in other states, allowing the appeal to proceed without additional deposits. The judgment emphasized the importance of addressing such claims and ensuring a fair resolution of the tax liability dispute.