2020 (2) TMI 1250 - HC - VAT and Sales Tax

Maintainability of remand assessment order - applicability of time limitation in passing order - according to the petitioner s case, no hearing was given to the petitioner on that date and the order was passed beyond the period of two years, but has been ante-dated as 16.02.2015, in order to bring it within the period of limitation of two years - sale of excavators, cranes and its spare parts which are the earth moving machineries, which are claimed to be capital goods - rate of tax on the impugned goods was in dispute - Section 42(2) of the JVAT Act. HELD THAT - Section 42(2) of the JVAT Act clearly shows that when the matter was remanded to the Assessing Authority by order dated 19.02.2013, as contained in Annexure-7 to the writ application, the re-assessment order had to be passed on or before 19.02.2015 - In the present case, the re-assessment order has been shown to have been passed on 16.02.2015. There are force in the claim of the petitioner Company, inasmuch as, if by order dated 27.01.2015 the matter was fixed for 14.02.2015, there was no occasion for showing the next date of hearing as 14.02.2015/16.02.2015. This could have been done only in the event that 14.02.2015 was a non-working day for some reason, and thereafter the first working day was 16.02.2015, which is not the case here and neither stated in the order-sheet. If the matter was heard on 14.02.2015, there is nothing on record to show that it had been heard on that date, and if it was actually heard on 16.02.2015, there is nothing on record to show that the matter was ever fixed for hearing on 16.02.2015 - we cannot, but accept the plea of the learned counsel for the petitioner that this is an ante-dated order to cover up the period of limitation, which fact has not been specifically denied even in the counter-affidavit filed on behalf of the State, though specifically averred in paragraphs 37 to 55 of the writ application. The contention of the learned counsel for the State that the goods in question were not the capital goods prior to 06.03.2007, is not prima facie acceptable to us. After 06.03.2007, there is specific entry in Schedule-II, Part-B, Entry-25 to the Act, which gives the description of the capital goods liable to tax @ 4% and this includes Such as Excavator Hydraulic Excavators clampshell, Drojline, Rock Breakers, Mini Excavators, Crawler, Cranes, Wheeled Cranes, Wheel-loaders, Front end loaders, Shovels, Breakhoc Articulated Cranes and all other similar implements and machineries in this category - A plain reading of definition of Capital Goods shows that capital goods includes, machinery, equipment, apparatus, tools, appliances, also used for mining purposes, and prima facie it appears that the goods in question in the present case, i.e., excavators, cranes and its spare parts which are the earth moving machineries, would come within the expression machinery, equipment, apparatus, tools and appliances, used for the mining purposes. The impugned order dated 16.02.2015 passed by the Assessing Authority cannot be sustained in the eyes of law being void ab initio. Consequently, the revisional order dated 04.10.2018 passed by the Revisional Authority also, cannot be sustained in the eyes of law - Application allowed.

Issues Involved:
1. Validity of the remand assessment order dated 16.02.2015.
2. Validity of the revisional order dated 04.10.2018.
3. Classification of goods as 'capital goods' for VAT purposes.
4. Allegation of ante-dating and procedural irregularities.
5. Maintainability of the writ application despite alternative remedies.

Issue-wise Detailed Analysis:

1. Validity of the Remand Assessment Order Dated 16.02.2015:
The petitioner Company challenged the remand assessment order dated 16.02.2015, claiming it was ante-dated to fall within the two-year limitation period prescribed under Section 42(2) of the JVAT Act. The court found that the assessment order was indeed passed beyond the limitation period and was ante-dated to appear compliant. The court noted that the order-sheet showed no activity for 23 months and only commenced proceedings in January 2015, making it evident that the order was backdated. Consequently, the order was deemed void ab initio and quashed.

2. Validity of the Revisional Order Dated 04.10.2018:
The revisional order dated 04.10.2018, which affirmed the assessment order, was also challenged. The court observed that the Revisional Authority did not address the issue of ante-dating and procedural irregularities raised by the petitioner. Given that the foundational assessment order was void ab initio, the revisional order was also unsustainable and was quashed.

3. Classification of Goods as 'Capital Goods' for VAT Purposes:
The petitioner argued that the goods (excavators, cranes, and spare parts) were 'capital goods' liable for VAT at 4%, not 12.5%. The court noted that after 06.03.2007, these goods were explicitly listed as 'capital goods' in Schedule-II, Part-B, Entry-25 of the JVAT Act. The court found that even prior to this date, the goods could be classified as 'capital goods' under Section 2(x) of the JVAT Act, as they were machinery and equipment used for mining. However, the court refrained from a definitive ruling on this classification, leaving it for future adjudication.

4. Allegation of Ante-dating and Procedural Irregularities:
The petitioner provided detailed evidence of procedural irregularities, including the delayed commencement of reassessment proceedings and the late service of the demand notice. The court found these allegations credible, supported by the order-sheet and the lack of a specific denial from the State. The court concluded that the assessment order was ante-dated and procedurally flawed, making it void ab initio.

5. Maintainability of the Writ Application Despite Alternative Remedies:
The State contended that the writ application was not maintainable due to the availability of alternative remedies. However, the court held that since the assessment order was void ab initio, the petitioner was entitled to challenge it directly in the Writ Court without exhausting alternative remedies. The court emphasized that such orders could be challenged in the Writ Court when they are fundamentally flawed.

Conclusion:
The court quashed both the remand assessment order dated 16.02.2015 and the revisional order dated 04.10.2018. It directed the State to refund any excess VAT collected beyond 4% with statutory interest or adjust it against future tax liabilities. The court expressed dissatisfaction with the Assessing Authority's conduct and directed the State to consider appropriate action against the erring officials. The writ application was allowed, and all pending interlocutory applications were disposed of accordingly.

← Previous Next →