2014 (3) TMI 781 - HC - VAT and Sales Tax

Accrual of Benefit or concession of tax u/s Clause 2(xiii) of the Industrial Incentive Policy of the State of Bihar, 2006 notification Whether assessee is eligible for concession when revenue already collected CST at the rate of 4 per cent before the notification reduced the same to 1 per cent Held that - There would be no occasion for any seller of goods to collect tax at any other rate contrary to the prevalent notified rate which is in place, because any under collection on behalf of seller would create a liability upon him, to make good the difference in the rate collected and what is required to be paid to the State exchequer - Since there is evidence that this was not done but is an effort now to show that it has been done, which cannot be established from the records, the concession and the benefit of the Industrial Policy cannot accrue to the assessee when he had already collected CST at the rate of 4 per cent till the notification reducing the same to 1 per cent was issued by the State Government on 12.10.2006. There is no occasion to interfere, with the assessment orders - The present dispute is only a camouflage under the garb of the Industrial policy with the object of negating the assessment order Petition dismissed - Decided against assessee.

Summary

Issues:
Dispute over benefit of Central Sales Tax concession under Industrial Incentive Policy of Bihar.

Analysis:
The High Court affirmed the statutory value of the Industrial Incentive Policy of Bihar, holding that promises made in such policies are binding on State authorities. The Court emphasized the importance of synchronizing notifications under various Acts with the date of Industrial Policy notification to ensure harmonized benefits. The judgment highlighted the need for good governance in aligning all benefits from the date of Industrial Policy notification.

In this case, the Industrial Policy of 2006 promised a concession on Central Sales Tax (CST) from 4% to 1%. However, the notification by the Sales Tax Department reducing CST to 1% was issued after the Industrial Policy notification. The Court observed that the benefit promised under the Industrial Policy remained elusive until the CST notification on 12.10.2006. The petitioner argued for assessment based on 1% CST collected, citing violation of the Industrial Policy and government promise.

The Court rejected the petitioner's claim, noting that evidence showed the petitioner collected CST at 4%. The judgment emphasized that sellers must collect tax at the notified rate to avoid liabilities. The Court ruled against the petitioner, stating that seeking assessment based on 1% CST would be unfair, as the petitioner had collected tax at 4% until the CST notification. The judgment dismissed the writ, highlighting that it was decided based on Industrial Policy interpretation, separate from challenging assessment or appellate orders on merit.

The judgment concluded that the writ lacked merit and was dismissed. It clarified that challenging assessment or appellate orders would involve a different cause of action governed by separate laws and rules. The Court's decision focused on upholding the notified rates and preventing attempts to evade tax liabilities under the guise of Industrial Policy benefits.