2021 (7) TMI 167 - HC - VAT and Sales Tax

Levy of Entry Tax - air conditioners and goods that were purchased were used in execution of works contract - fall within the definition of sale under Section 2(28) of VAT Act or not - contractee has deducted the tax at source and issued TDS certificates - HELD THAT - On perusal, the impugned assessment orders would show that the petitioner, by way of his objections to the show cause notices dated 08.10.2018 took the legal plea that the refrigeration goods purchased by him from out side the State were used in the works contract for which VAT has been paid during the relevant years and therefore, the value of those goods fall under the definition of sale within Section 2(28) of VAT Act, 2005 and consequentially the petitioner need not pay entry tax in respect of value of those goods in view of the exemption provided under Section 3(2) of Tax on Entry Act. The 1st respondent discarded the above objections of the petitioner and passed the impugned order. Also, the Assessing Authority has not discussed about the applicability or non-applicability of Section 3(2) of Tax on Entry Act to the petitioner s case. Therefore, we do not have the advantage of knowing the mind of the Assessing Authority/1st respondent - it is considered apposite to direct the 3rd respondent to dispose of the said appeal within a specified time. Petition disposed off.

Summary

Issues:
Challenge to entry tax assessment for two consecutive years under Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001.

Analysis:
The petitioner, a registered dealer under A.P. VAT Act, challenged entry tax levied by the 1st respondent for two consecutive assessment years. The petitioner contended that the goods purchased from outside the State were considered as sale involving transfer of property in execution of works contracts, and VAT was duly paid. The petitioner argued that the goods fell within the definition of "sale" under Section 2(28) of VAT Act, and hence, exempt under Section 3(2) of Tax on Entry Act. The 1st respondent, however, passed the impugned assessment orders without considering these objections. The petitioner had filed appeals against similar orders for previous years, and one appeal was pending for the assessment year 2016-17. The High Court directed the 3rd respondent to dispose of the pending appeal within a specified time. For the assessment year 2017-18, where no appeal was filed, the petitioner was directed to prefer an appeal within three weeks. Until the final orders on the appeals, no coercive steps were to be taken for tax realization.

The High Court noted that the Assessing Authority did not discuss the applicability of Section 3(2) of Tax on Entry Act in the petitioner's case. It observed that the Assessing Authority had not considered the legal aspects in the right perspective, leading to the filing of writ petitions. The petitioner's counsel argued that VAT was already paid on the goods used in works contracts, and hence, entry tax was not applicable. The Government Pleader representing respondents opposed the writ petitions. The High Court directed the 3rd respondent to consider the factual and legal points raised by the petitioner in the pending appeal for the assessment year 2016-17 and to pass an appropriate order expeditiously. For the assessment year 2017-18, the petitioner was given liberty to file an appeal within three weeks, and the 3rd respondent was directed to hear the appeal and pass an order expeditiously. No coercive steps were to be taken for tax realization until final orders on the appeals.