2018 (4) TMI 586 - HC - VAT and Sales Tax

Validity of assessment order - short payment of tax, treating the galvanizing as works contract - availment of Input Tax Credit on ineligible rules - non-payment of TDS, as per Section 13 of the Act on construction of the building - Held that - Since the facts are complicated and already the respondent appears to have a closed mind to the issue, presumably, because of a report of the Enforcement Wing Officials, in the best interest of the petitioner, they should pursue the matter before the Deputy Commissioner of Commercial Taxes, Pollachi. This is more so, because, for the earlier assessment year 2010-11, identical issue has arisen and the petitioner has rightly preferred an Appeal before the Appellate Authority. Taking note of the fact that this is the second time, the petitioner is before the Court, raising very same contentions and that, similar issue is pending before the Appellate Authority, for the assessment year 2010-11, this Court would direct the petitioner to file Appeal before the Appellate Authority. Petition disposed off.

Summary

Issues:
Challenge to assessment order for the year 2011-12 under Tamil Nadu Value Added Tax Act, 2006.

Analysis:
1. Previous Challenges: The petitioner previously challenged assessment orders for 2009-10 and 2010-11. The Court set aside the orders for 2010-11 due to issues like short payment of tax, incorrect Input Tax Credit, and non-payment of TDS. The matter was remanded for fresh consideration after personal hearing.

2. Current Challenge - Assessment Order 2011-12: The petitioner contested the assessment order for 2011-12, claiming the Assessing Officer erred by not considering submitted judgments. The petitioner objected to a notice issued after a different stand was taken by the respondent, leading to a hasty assessment without proper opportunity for response.

3. Legal Arguments: The petitioner argued that the tax demand based on the entire value of goods post-galvanizing was incorrect, citing a Supreme Court judgment limiting liability to the cost of materials transferred. The respondent's focus on the definition of 'Manufacture' under Central Excise Law was deemed inappropriate for galvanizing work.

4. Taxation Issues: The petitioner protested VAT imposition on the full bill value, including service charges already under service tax. They claimed the tax rate should not exceed 4%/5% based on the nature of the components cleared post-galvanizing.

5. Industrial Input Certificate: The petitioner highlighted the discretionary nature of the Industrial Input Certificate requirement and efforts to obtain certificates from clients like Bharat Heavy Electricals Ltd.

6. Court's Decision: The Court declined to remand the matter to the Assessing Officer due to prior oversight of petitioner's submissions and a closed mindset. It directed the petitioner to appeal before the Appellate Authority, considering ongoing similar issues for other years. An interim protection order was granted subject to a financial condition.

7. Final Order: The petitioner was instructed to pay a specified sum within six weeks for filing an appeal. The payment would enable filing the appeal without limitation rejection and stay the remaining tax demand until appeal disposal. Failure to comply would nullify the order's benefits, leaving the petitioner to pursue remedies under the Act. No costs were awarded, and the connected Writ Miscellaneous Petition was closed.