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2009 (9) TMI 418 - HC - VAT and Sales TaxREP Licence- Sales Tax- The petitioner is a manufacturer and exporter of leather. The petitioner s assessment for the assessment years 1989-90 to 1994-95 were finalised by the third respondent resulting in the balance of arrears of Rs. 70,40,425/- due from it. Out of the above said arrears, the petitioner paid a sum of Rs. 1,22,663/- towards tax involved of sales of other goods purchased from unregistered dealers and also sales of assets. The balance arrears amounting to Rs. 69,17,861/- represented the premium received on the sale of REP licence as the petitioner failed to pay the arrears. The third respondent issued recovery notice, which is challenged in this writ petition. Held that- the petitioner has not availed the statutory remedy within the statutory period of limitation and has thus allowed the assessment to become final. Thus the petition fails.
Issues:
1. Challenge to recovery notice issued by the third respondent. 2. Interpretation of the judgment of the Supreme Court in Vikas Sales Corporation v. Commissioner of Commercial Taxes, (1996) 102 STC 106. 3. Taxability of the transfer value of REP license under the Tamil Nadu General Sales Tax Act. 4. Applicability of retrospective nature of Supreme Court judgments. 5. Failure to avail statutory remedies within the statutory period of limitation. Issue 1 - Challenge to Recovery Notice: The petitioner, a manufacturer and exporter of leather, challenged a recovery notice issued by the third respondent for arrears of Rs. 70,40,425. The arrears included a premium received on the sale of a REP license. The petitioner contended that the taxability of the transfer value of the REP license should be considered effective from 1-5-1996 based on the Supreme Court's judgment in Vikas Sales Corporation v. Commissioner of Commercial Taxes, (1996) 102 STC 106. Issue 2 - Interpretation of Supreme Court Judgment: The petitioner argued that the Supreme Court's judgment in Vikas Sales Corporation case should be applied retrospectively from 1-5-1996. However, the court held that a Supreme Court decision merely explains the true position of the law and does not create new rights or obligations. The court emphasized that a Supreme Court decision is presumed to be retrospective unless expressly restricted to prospective operation. Issue 3 - Taxability of REP License Transfer Value: The Division Bench had previously upheld the levy of tax on the premium received on the sale of REP licenses. The petitioner failed to avail statutory remedies within the statutory period of limitation, allowing the assessment to become final. The court noted that the petitioner had approached the Government of Tamil Nadu to pay the arrears in installments but failed to make any payments. Issue 4 - Retrospective Nature of Supreme Court Judgments: The court clarified that a Supreme Court decision does not create new rights or obligations but identifies and declares the pre-existing legal position. The court cited the Sourabh Chaudri v. Union of India case to emphasize that every Supreme Court decision is presumed to be retrospective unless expressly restricted to prospective operation. Issue 5 - Failure to Avail Statutory Remedies: The court highlighted that the petitioner did not pursue statutory remedies within the prescribed period, allowing the assessment to become final. As the petitioner failed to avail the statutory remedy within the limitation period, the court dismissed the writ petition as lacking in merits, without imposing any costs.
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