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2022 (12) TMI 460 - HC - VAT and Sales TaxLevy of VAT - sale of textile - Orissa Value Added Tax Act, 2004 (OVAT Act) - basis for the impugned assessment order is that by virtue of an amendment to the schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act), Additional Excise Duty (AED) on textiles was exempted - HELD THAT - It was perhaps not brought to the notice of the assessing authority that by a separate clarification dated 3rd May 2006 issued by the Department of Revenue, Ministry of Finance, Government of India, it was clarified that the AED would continue to be leviable on goods described in column (3) of the First Schedule to the ADE Act although the rate had become 0% . Since the very basis of the impugned assessment order stands removed by virtue of the clarification issued by the Central Government on 3rd May, 2006, the impugned assessment order is unsustainable in law and is hereby set aside. Petition allowed.
Issues:
Challenge to assessment order under OVAT Act regarding taxable turnover on sale of textiles. Analysis: The petition challenges an assessment order dated 19th June 2012 by the Deputy Commissioner of Sales Tax, Balasore Circle, Balasore, concerning the taxable turnover of the Petitioner-Dealer on textile sales under the Orissa Value Added Tax Act, 2004 (OVAT Act). The impugned order was based on an amendment to the schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act), exempting Additional Excise Duty (AED) on textiles. This led to the conclusion that textile fabrics were subject to VAT at 4% after 1st March, 2006. It was noted that a clarification issued by the Department of Revenue, Ministry of Finance, Government of India on 3rd May 2006 stated that although the rate of AED on textile fabrics had become '0%', the duty would still be leviable, and the Central Government reserved the right to levy AED on these items in the future. Consequently, textile fabrics were not exempted from AED under the ADE Act during the relevant period of 1st October 2006 to 30th September 2007. This clarification invalidated the basis of the assessment order, as textile fabrics were not liable to VAT under the Explanation to Schedule-B (Part-II) of the OVAT Act. Due to the removal of the basis for the assessment order by the Central Government's clarification, the Court deemed the impugned assessment order legally unsustainable and set it aside. The writ petition was allowed without any costs. The Court directed the issuance of an urgent certified copy of the order in accordance with the rules.
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