2017 (4) TMI 255 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the exemption from tax available u/s 16(4) of Maharashtra Act XXII of 1997 dated 24.4.1997? - interest charged u/s 36(3)(b) - Held that - the dealer was entitled to take the benefit of the exemption. Even the argument of the dealer s representative before the First Appellate Authority and the Tribunal has been noted and to be on the above lines. The Tribunal agrees with him that the appeal being a continuation of the proceedings commencing from the Assessment Order, even at the second appellate stage the ground could have been raised and highlighted. In such circumstances and when the argument on the benefit of this amended provision and available to the dealer was clearly ignored, then, a hypertechnical view of the matter was not justified at all - there was no warrant in denying the benefit of the amended provisions to the applicant/dealer before us - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of tax exemption under section 16(4) of Maharashtra Act XXII of 1997
2. Confirmation of interest charged under section 36(3)(b) as consequential

Issue 1 - Rejection of Tax Exemption:
The applicant, engaged in selling yarn, cloth, machinery, and leasing, purchased two trucks in 1992. The Sales Tax Officer assessed the applicant under Section 33(4) of the Bombay Sales Tax Act, 1959, imposing purchase tax, interest, and penalty. Appeals to the Assistant Commissioner of Sales Tax and the Tribunal were dismissed. An application for rectification was also denied. The Reference Application was made to seek clarification on the rejection of tax exemption under section 16(4) of Maharashtra Act XXII of 1997. The dealer argued that the amended provisions were not considered by the authorities, leading to a misinterpretation of the law. The High Court analyzed the provisions and concluded that the dealer was entitled to the benefit of the exemption as the grounds for appeal clearly challenged the entire demand, including interest and penalty. The Court held in favor of the applicant, stating that the benefit of the amended provisions should not have been denied.

Issue 2 - Confirmation of Interest as Consequential:
The Tribunal confirmed the interest charged under section 36(3)(b) as consequential. The dealer contended that the Tribunal overlooked the grounds of appeal challenging the entire demand, not just the interest and penalty components. The High Court noted that the dealer had objected to the levy of purchase tax, satisfying the requirements of section 16(4) of the Maharashtra Act XXII of 1997. The Court emphasized that the Tribunal's narrow interpretation disregarded the dealer's right to the benefit of the amended provisions. The Court found that the dealer should have been granted the exemption from the purchase tax, including interest and penalty. Consequently, the Court ruled in favor of the applicant, holding that the questions of law were to be answered in favor of the dealer and against the Revenue.

This comprehensive analysis of the judgment highlights the issues of tax exemption rejection and interest confirmation, providing a detailed overview of the legal proceedings, arguments presented by both parties, and the High Court's decision based on the interpretation of relevant legal provisions.