2014 (7) TMI 845 - HC - VAT and Sales Tax

Levy of tax on import of goods - levy of tax on owner or lessee - it is lessee who had brought the goods into local area - Bar of limitation - Held that - Tax is payable by the importer and it is the duty of the court to discover who is the importer for the purpose of section 3 of the Act. Section 3(3) of the Act elucidates that a person who causes the entry of the vehicle into the local area for use or sale especially deemed to be the importer who is liable to pay the tax. In other words merely because an owner of the vehicle satisfied the definition as importer in the context of section 3 of the Act the word importer need not necessarily be the owner and in the context the importer has to be considered to be the person who is responsible or who causes the entry of the motor vehicle into any local area for use or sale. It was the lessee of the petitioner, viz., M/s. VPR Mining Infrastructure Private Limited who had brought the dumpers in question into the local area situated within the State for use and utilization. Applying section 3(3) of the Act to the facts of the case though the petitioner being the owner of the dumpers may satisfy the definition of importer yet for the purpose of section 3(3) of the Act, the liability to pay tax arises on the entry of the dumpers into the State and the liability gets fastened on the person who brings the same for use or sale into the State. In this case, the customer of the petitioner, M/s. VPR Mining Infrastructure Private Limited, was also satisfied the definition of importer inasmuch as the customer is the one which having taken the delivery of the dumpers in Chennai has caused the vehicles to movie to the local area of the State for the purpose of use in its works and thus became liable to pay the tax. Decided in favour of assessee.

Summary

Issues:
1. Liability of the petitioner to pay tax under the Andhra Pradesh Tax on Entry of Motor Vehicles Into Local Areas Act, 1996.
2. Applicability of limitation under section 8(5) of the Act.
3. Interpretation of the term "importer" under the Act.
4. Obligation to file returns under the Act.
5. Assessment of tax liability based on ownership of vehicles.

Analysis:

1. Liability to Pay Tax:
The petitioner, a company engaged in financing and leasing equipment, challenged the assessment order demanding tax under the Act for the year 2008-09. The petitioner contended that despite owning the vehicles, they were not liable for the tax as their customer brought the vehicles into the state. However, the court held that as the petitioner satisfied the definition of "importer" under the Act, they were indeed liable to pay the tax.

2. Applicability of Limitation:
The petitioner argued that the assessment and demand were barred by limitation under section 8(5) of the Act. The court rejected this argument, stating that the limitation provisions applied only to compliant importers/dealers, and since the petitioner had not filed returns under the Act, the limitation did not apply to them.

3. Interpretation of "Importer":
The court analyzed the term "importer" under the Act, emphasizing that the liability to pay tax arises upon the entry of vehicles into the state for use or sale. The court clarified that the person causing the entry of the vehicle is deemed the importer, irrespective of ownership. In this case, the customer of the petitioner, who brought the vehicles into the state, was considered the importer liable to pay the tax.

4. Obligation to File Returns:
Section 7 of the Act mandates importers who are dealers liable to pay tax to file returns. Since the petitioner was found liable to pay tax as an importer, the obligation to file returns applied to them. Failure to comply with this obligation could result in assessment and penalty as per the Act.

5. Assessment Based on Ownership:
The court rejected the argument that ownership alone determines liability for tax under the Act. Ownership, while relevant, does not solely determine liability. The court emphasized that the interpretation of statutory terms should align with the purpose of the statute and the context of the section in question.

In conclusion, the court allowed the writ petition, setting aside the assessment order against the petitioner. The court held that the petitioner, despite being the owner of the vehicles, was not liable to pay tax under the Act, as the responsibility fell on the customer who brought the vehicles into the state. The judgment highlighted the importance of interpreting statutory terms in line with the legislative intent and context to determine tax liability accurately.