2019 (9) TMI 516 - HC - VAT and Sales Tax

Nature of activity - service or not - levy of VAT or Service Tax - Defects in the completion of original proceedings - petitioner engaged in the activity of interior decoration - TNGST Act - case of the petitioner is that income was earned purely on the activity of interior decoration, for which service tax has been paid - detailed records not produced by the petitioner - HELD THAT - There is no merit in the Writ Petition insofar as the Assessing Authority, has in the course of the order, rendered categoric findings with regard to his repeated requests for evidences in support of the stand of the petitioner to the effect that the activity carried on by the petitioner was pure installation, that were not produced. The categorisation/classification of an activity can be undertaken by the Court only if all material, relevant and descriptive details of the work have placed before the authorities and findings contrary to such evidences have been rendered. In this case, despite more than adequate opportunities, having been extended, the petitioner has placed on record only very limited particulars, that are insufficient to support its stand - There was no detailed description given and importantly, no certificate produced from the clients in support of the petitioners' claim that all materials were supplied only by the clients and it was only the activity of installation that was rendered by it - thus there is nothing perverse in the order impugned, warranting interference. Petition dismissed.

Summary

Issues:
Challenging order-in-original dated 29.03.2010 for the period 2005-2006, nature of work for interior decoration services, assessment discrepancies, VAT levy proposal, objections to re-assessment jurisdiction and lack of evidence, classification of activity for VAT assessment.

Analysis:
1. The petitioner contested an order-in-original dated 29.03.2010 concerning the period 2005-2006. The petitioner, engaged in interior decoration services, was assessed under the Finance Act, 1994. The Assessing Authority raised concerns about the nature of work and discrepancies in the assessment process, requesting specific details like agreement copies and work orders.
2. The petitioner responded with some particulars but failed to provide a comprehensive clarification on the nature of work. The petitioner argued that the income solely pertained to installation activities, thus opposing the proposed VAT levy. However, requested evidence such as work orders and purchase details were not submitted.
3. Despite multiple opportunities, the petitioner's submissions lacked substantial evidence supporting their claim. The Assessing Authority emphasized the insufficiency of details and absence of client certificates validating the petitioner's assertions. The Authority concluded that the materials provided were inadequate to substantiate the petitioner's stance.
4. The court opined that it cannot categorize an activity without sufficient descriptive details and relevant evidence. The petitioner's limited submissions did not meet the required standard. The court dismissed the writ petition, stating that the Assessing Authority's decision was justified based on the insufficient evidence presented by the petitioner.
5. The court highlighted that relying on a Supreme Court judgment would only be applicable when the nature of the activity is undisputed, which was not the case here. The petitioner was granted the liberty to file a statutory appeal challenging the assessment order within three weeks. The connected Miscellaneous Petition was also dismissed without costs.