2015 (8) TMI 252 - HC - VAT and Sales Tax

Levy of VAT on return of processed goods - Job work - taxability of the returned goods in the form of catalysts to its owners, namely the customers of the Petitioners - AO treats these activities as inter State sale of goods and on the footing that the Petitioners have failed to obtain the requisite F Form, which is claimed to be mandatory - Maharashtra Value Added Tax Act, 2002. (MVAT) Held that - Petitioners are agreeable to go back to the Assessing Officer, but by keeping open all questions and contentions raised in the Writ Petition - orders passed by the Assessing Officers fail to take note of any objections nor does it make a proper and complete reference to the Circulars in the field. It is in these circumstances and parties like the Petitioner should not be deprived of a fair and reasonable opportunity of placing their version that the present order has been passed. - Matter remanded back. Needless to clarify that the issue of section 6A being ultra vires the constitutional mandate enshrined in Articles 14, 19(1)(g) and 265 etc. is kept open and for being raised in an appropriate case.

Issues:
1) Taxability of job work activities under Central Sales Tax Act, 1956.
2) Requirement of 'F' Form for inter State sale transactions.
3) Assessment orders by the Assessing Officer.
4) Principles of natural justice in assessment proceedings.

Analysis:

Issue 1: Taxability of job work activities under Central Sales Tax Act, 1956
The petitioners, manufacturers registered under the Central Excise Act, undertake job work of reprocessing spent catalysts into recharged catalysts. The dispute arises regarding the taxability of the returned goods in the form of catalysts to its owners, the customers of the petitioners. The Assessing Officer levied Central Sales Tax on these transactions treating them as inter State sale of goods due to the alleged failure to obtain the requisite 'F' Form. The petitioners argue that they have been regularly filing returns showing these activities and were not objected to until the financial year 2010-11, raising concerns about the sudden imposition of tax.

Issue 2: Requirement of 'F' Form for inter State sale transactions
The Assessing Officer based the tax levy on the absence of the 'F' Form, claimed to be mandatory under section 6A of Trade Circular No. 2T of 2010. The petitioners contest the legality of this basis, arguing that the Circular is unconstitutional and that the authorities failed to consider the nature of the transactions and the powers enabling them to levy the tax properly. The petitioners also argue that the evidence in the 'F' Form should be considered directory, not mandatory, supported by a letter from the Government of India and interpretations of section 6A by the courts.

Issue 3: Assessment orders by the Assessing Officer
The High Court found that the Assessing Officer did not adequately address the contentions raised by the petitioners in the earlier assessment orders. The court indicated that if the questions raised by the petitioners go to the root of the case, they should be addressed before the Assessing Officer through the appeal process. The court quashed the impugned assessment orders and directed the Assessing Officer to pass fresh assessment orders on merits and in accordance with law, allowing the petitioners to raise all contentions, including compliance with Circulars.

Issue 4: Principles of natural justice in assessment proceedings
The court emphasized the importance of natural justice in assessment proceedings and directed the Assessing Officer to give a fresh hearing to the petitioners if the earlier assessment orders were found to suffer from a breach of natural justice. The court's order aimed to ensure that the petitioners were not deprived of a fair opportunity to present their case and that the assessment was conducted in compliance with legal principles. The court kept open the possibility of challenging the constitutionality of section 6A in a future case.

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