2019 (5) TMI 444 - HC - VAT and Sales Tax

Assessment order - effect of order, prospective or retrospective? - whether the impugned order denying prospective effect to the assessment from the date of MSTT order dated 20/01/2015 is unjustified? HELD THAT - If the impugned assessment order is perused, it is apparent that the assessing officer went by the effect given to the tribunal s order by this court by terming it as applicable to all live proceedings. If the assessment in hand pertaining to financial year 2013-14 is considered live, then, the assessment order overlooks the fact that it is not the financial year, but the transactions covered and dealings up to 20th January, 2015, which is the relevant factor. It is nowhere indicated in the impugned assessment order that the transactions covered are post 20th January, 2015. The case of the petitioner that up to January, 2015 they have collected and paid tax at the rate of 15% of the turnover actually used by them after claiming goods return and therefore, the claim of goods return will have to be allowed and the payment of tax on the remaining value as per the return filed by the petitioners up to 20th January, 2015 should be held as valid, appears to be correct. It is an accurate understanding of this court s order. This is not a case of any undue or uncalled for or illegal benefit being conferred on the dealer. This is a case of misreading and misinterpretation of the judgment of this court. Merely because the order of 11th September, 2006 is set aside by the Maharashtra Sales Tax Tribunal by its judgment and order dated 20th January, 2015, the transactions covered and dealt with by that judgment, which gave rise to a tax liability, cannot now be reopened. This Court has clearly dealt with the issue of prospectivity to the order of the MSTT in the light of section 52(2) of the BST Act. Once this Court has come to the conclusion that this was a fit case where the MSTT ought to have exercised its discretion and granted prospective effect to its judgment and order , then, the contention of Shri Sonpal that the order of the MSTT having merged with the order of the Commissioner and therefore the effect of prospectivity has to be from the year 2006 , can only be stated to be rejected. Petition allowed.

Issues Involved:
1. Prospective effect of the MSTT order under section 52(2) of the BST Act.
2. Legality of the assessment orders for the periods 2011-12 and 2013-14.
3. Granting of relief and protection to the petitioners for transactions up to 20th January 2015.
4. Misinterpretation of the High Court's judgment by the assessing authority.

Detailed Analysis:

1. Prospective Effect of the MSTT Order under Section 52(2) of the BST Act:
The petitioners sought a Writ of Certiorari to declare that the prospective effect of the MSTT order should apply to all periods/transactions up to the date of the Tribunal’s order (20/01/2015). The MSTT had overruled the Commissioner’s order, which initially held that the return of kerosene by RIL to BPCL was not a sale but a return of goods. The MSTT’s decision was challenged, and the High Court held that the MSTT should have granted prospective effect to its order. The Supreme Court dismissed the State’s SLP against this decision, thus affirming the High Court’s stance on prospective effect.

2. Legality of the Assessment Orders for the Periods 2011-12 and 2013-14:
The petitioners challenged the assessment orders for 2011-12 and 2013-14, arguing that they were contrary to the High Court’s directions in Writ Petition No. 2217 of 2015. The High Court had ruled that the MSTT’s order should be given prospective effect, meaning it should not affect transactions before 20/01/2015. The assessment orders disallowed the goods return claim and treated the transactions as taxable, which contradicted the High Court’s ruling.

3. Granting of Relief and Protection to the Petitioners for Transactions up to 20th January 2015:
The petitioners argued that the High Court had directed that the MSTT’s order should have prospective effect, protecting them from any tax liabilities for transactions up to 20/01/2015. The High Court noted that reopening past assessments would be unfair and prejudicial to the petitioners, given the long history of the case and previous favorable assessments. The Court reiterated that the MSTT should have exercised its discretion to grant prospective effect to its judgment.

4. Misinterpretation of the High Court's Judgment by the Assessing Authority:
The assessing authority misinterpreted the High Court’s judgment by applying the MSTT’s order retrospectively, leading to exorbitant tax demands. The High Court clarified that the prospective effect meant that the MSTT’s order would apply to transactions after 20/01/2015, and not to those before. The Court emphasized that the assessing authority must adhere to the binding judgment and not reopen issues settled by the Court.

Conclusion:
The High Court allowed the petitions, ruling that the MSTT’s order must have prospective effect from 20/01/2015, thus protecting the petitioners from tax liabilities for transactions before this date. The assessment orders for 2011-12 and 2013-14 were set aside as they were contrary to the High Court’s directions. The Court underscored the importance of adhering to binding judgments and not reopening settled issues. The rule was made absolute with no order as to costs.

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