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2016 (5) TMI 1208 - HC - VAT and Sales TaxActivity liable to VAT or service tax - sale of media space for displaying advertisements of its clients - Demand of VAT and imposition of penalty - Section 33 of the DVAT Act - Default assessment under Section 32 - Agreement entered to transfer of the right to use various display sites - Petitioner paying service tax under Finance Act by considering it as services rendered - Held that - there is a considerable merit in the Petitioner‟s contention that levy of Service Tax and Value Added Tax are mutually exclusive. The question whether the transaction entered into between the Petitioner and its clients can be constituted as a sale within the meaning of Section 2(1)(zc)(vi) ibid is required to be answered keeping in view the principles as reiterated by this Court in the case of Tim Delhi Airport Advertising Pvt. Ltd. v. Special Commissioner II, Department of Trade & Taxes & Ors. 2016 (5) TMI 297 - DELHI HIGH COURT . Accordingly, the impugned default assessment orders and notices of penalty are set aside and the matter is remanded to the VATO to consider it afresh in the light of the principles as reiterated in Tim Delhi Airport Advertising Pvt. Ltd. (supra). The penalty orders under Section 86 (14) of the DVAT Act are also set aside. - Petition disposed of
Issues involved:
Petition under Article 226/227 of the Constitution of India challenging DVAT Act notices and penalty orders - Assessment of turnover under DVAT Act - Levy of VAT on service transactions - Refund of service tax - Mutually exclusive nature of Service Tax and VAT - Interpretation of 'sale' under DVAT Act. Analysis: Issue 1: Challenging DVAT Act Notices and Penalty Orders The petitioner challenged various notices issued under Section 59 of the Delhi Value Added Tax Act and penalty orders under Section 86(14) of the DVAT Act. The notices called for details to assess the petitioner's turnover chargeable to tax under the DVAT Act. The petitioner responded to these notices asserting that it is not assessable to tax under the DVAT Act. Issue 2: Assessment of Turnover under DVAT Act The petitioner procures outdoor media space for displaying advertisements and claims to be rendering services chargeable to Service Tax under the Finance Act, 1994. The DVAT authorities assessed the petitioner's turnover as exigible to VAT based on agreements with clients, considering them as 'sale' under the DVAT Act. Issue 3: Levy of VAT on Service Transactions The petitioner argued that it cannot be assessed under the DVAT Act as it is already paying Service Tax. The court acknowledged the mutually exclusive nature of Service Tax and VAT and directed the matter to be reconsidered in light of previous judgments. Issue 4: Interpretation of 'Sale' under DVAT Act The court emphasized the need to determine whether the transactions between the petitioner and its clients constitute a 'sale' under the DVAT Act. The judgment referred to previous rulings to guide the assessment process. Judgment Outcome The court set aside the impugned default assessment orders and penalty notices, remanding the matter for fresh consideration. The petitioner was directed to provide necessary details, and the VATO was instructed to pass a reasoned order after hearing the petitioner. The petitioner's rights to challenge the order and seek refund of service tax, if applicable, were preserved. The petition was disposed of with each party bearing its own costs.
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