2014 (4) TMI 546 - HC - VAT and Sales Tax

Consideration of Sales tax revision petition u/s 86 of the Rajasthan Sales Tax Act, 1994 - petition pending for want of prosecution for 11 years whether the assessee would be liable to pay the interest u/s 11B(1)(f) when the liability of the assessee to pay tax arises by virtue of the notification having retrospective effect - Held that - The ground of 11 years pendency alone in prosecuting this revision petition renders it non- deserving for consideration - Revenue to prosecute further - the Board has allowed the appeal of the respondent-assessee partly on the ground that the interest could not be made chargeable in case of the retrospective levy of tax, as per the earlier judicial pronouncements of the Board referred to, and relied upon in the impugned order - the Revenue has failed to point out any judgment laying down the legal position contrary to the decision of the Board dealing whether the assessee would be liable to pay the interest under Section 11B(1)(f) of the said Act, when the liability of the assessee to pay tax arises by virtue of the notification having retrospective effect Decided against Revenue.

Summary

Issues:
Sales tax revision petition under Section 86 of the Rajasthan Sales Tax Act, 1994 against the order passed by the Member, Rajasthan Tax Board, Ajmer in appeal No.1055/1998/Kota regarding the assessment year 1987-1988.

Analysis:

1. Facts and Background:
The respondent, a registered contractor, was assessed to tax for materials supplied in various works contracts during the assessment years 1987-1988 & 1988-1989. The respondent challenged the ex parte assessment for the year 1987-1988, leading to a fresh assessment order imposing tax, surcharge, and interest. Subsequent appeals were made to different authorities, culminating in the Tax Board's decision partly allowing the appeal and setting aside the interest amount, leading to the petitioner-department's revision petition.

2. Legal Interpretation - Interest on Tax:
The petitioner-department argued that the respondent was liable to pay interest on the tax accrued based on Section 11B(1)(f) and a retrospective notification by the State Government. However, the Board interpreted the law differently, citing previous judicial pronouncements and finding no legal basis for charging interest on retrospective tax liabilities. The petitioner failed to provide any contrary legal precedent from the Court or the Apex Court to challenge the Board's decision.

3. Court's Decision:
The Court noted the prolonged pendency of the revision petition due to the petitioner-department's inaction for eleven years. Despite the petitioner's arguments, the Court upheld the Board's decision, finding no legal flaw in their interpretation. The Court emphasized that the cited case law by the petitioner did not directly address the specific issue of interest liability on retrospective tax assessments. Consequently, the revision petition was dismissed for lacking merit.

In conclusion, the High Court of Rajasthan dismissed the sales tax revision petition, upholding the Rajasthan Tax Board's decision to set aside the interest amount on the tax liability for the assessment year 1987-1988. The Court's analysis focused on the legal interpretation of interest liability on retrospective tax assessments, highlighting the absence of contrary legal precedents to challenge the Board's decision.