2019 (7) TMI 146 - HC - VAT and Sales Tax

Levy of purchase tax u/s 28(2) of the Value Added Tax Act - purchases and sales made from unregistered dealers - exparte assessment order - HELD THAT - The assessee is not an dealer under Section 2(h) of the Act as it is an educational institution and it is another thing to say that certain transactions are not liable to tax because they are ancillary to the main activity of education. Insofar as the Tribunal has only reasoned that the activity of construction of the medical college was ancillary, the same appears to have been reached pre-maturely, without allowing adequate opportunity to consider that claim in the proceedings for assessment. In this regard, it is noted that in view of the fact that the assessment order was wholly ex-parte, the said plea could not considered by the assessing authority. In that view of the matter without making any observation as to the merits of the case, it appears that the Tribunal has erred in allowing the claim made by the assessee on merits. Matter remitted to the Assessing Authority such that the Assessing Authority may complete the assessment within the timelines indicated under the Act - revision disposed off by way of remand.

Summary

Issues:
1. Delay condonation application for filing revision.
2. Validity of the order of the Commercial Tax Tribunal annulling the assessment order.
3. Whether the assessee is liable to tax on purchases from unregistered dealers.
4. Legal justification for deleting the tax levied under section 28(2) of the Value Added Tax Act.
5. Interpretation of the term "dealer" under the Act in relation to the assessee being a charitable trust.

Analysis:

Issue 1: Delay Condonation Application
The delay of 103 days in filing the revision was attributed to administrative duties related to the implementation of the Goods and Services Tax. The court accepted this explanation and condoned the delay, allowing the delay condonation application.

Issue 2: Validity of Commercial Tax Tribunal's Order
The Tribunal had annulled the assessment order against the revenue, which was challenged in the revision. The Tribunal held that the assessee, a Trust establishing a medical college, was not liable for tax on the construction of the hospital. The Tribunal relied on precedents to support the non-taxable status of the assessee. However, the court set aside the Tribunal's order, remitting the matter to the Assessing Authority for a fresh assessment.

Issue 3: Tax Liability on Purchases from Unregistered Dealers
The revenue questioned the Tribunal's decision to delete the tax levied on purchases from unregistered dealers. The revenue argued that the Tribunal erred in adjudicating the issue on merits without allowing proper examination by the Assessing Authority. The court found discrepancies in the Tribunal's reasoning and remanded the matter for proper assessment without prejudicing any party.

Issue 4: Interpretation of "Dealer" under the Act
The court analyzed whether the assessee, as an educational institution, qualified as a "dealer" under the Act. The Tribunal's reasoning based on ancillary activities was deemed premature, as the assessing authority did not consider the claim due to an ex-parte assessment. The court concluded that the Tribunal erred in allowing the claim without proper assessment and remitted the matter for further consideration.

In conclusion, the court set aside the Tribunal's order and directed the Assessing Authority to conduct a fresh assessment without prejudice, allowing all relevant pleas to be adjudicated independently.