2019 (5) TMI 250 - HC - VAT and Sales Tax

Levy of tax - deemed sales of dyes, chemicals, consumable, machinery parts and packing materials involved in the job works of the third parties - HELD THAT - The issue involved in the present appeal stands concluded against the revenue by a recent judgment of this Court in Excise and Taxation Commissioner, Haryana through Excise and Taxation Officer-cum-Assessing Authority, Panipat Vs. M/s Mittal Processors Private Limited, G.T. Road, Siwah, Panipat and other, 2018 (12) TMI 483 - PUNJAB AND HARYANA HIGH COURT , wherein after considering the relevant statutory provisions and the entire case law on the point, it has been concluded that the chemicals used in the job work are taxable but the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred. Matter remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the applicant - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of statutory provisions under the Haryana Value Added Tax Act, 2003 and Central Sales Tax Act, 1956 by the Haryana Tax Tribunal.
2. Justifiability of the decisions made by the Haryana Tax Tribunal regarding the levy of taxes on job works.
3. Scope of Revisional Authority under Section 34 of the HVAT Act based on the orders of the Haryana Tax Tribunal.

Analysis:

Issue 1:
The appellant-revenue challenged the order of the Haryana Tax Tribunal, questioning the Tribunal's authority to apply a prospective operation of law without specific provision in the HVAT Act. The Tribunal held that all materials used in job work are taxable as the property, including chemicals, dyes, and colors, gets transferred to the fabrics. The High Court noted a similar judgment where it was concluded that the taxable amount of dyes/colors transferred to the fabric needs factual assessment by the Assessing Officer based on evidence presented by the parties. The High Court upheld the previous judgment, dismissing the present appeal.

Issue 2:
The dispute arose from the additional tax demand created on a dealer under the HVAT Act and CST Act for job work activities. The Tribunal's decision to tax all materials used in job work was challenged by the revenue. The High Court referred to a previous judgment where it was established that the quantity of taxable dyes/colors transferred to the fabric requires factual assessment by the Assessing Officer. The High Court upheld the previous judgment and dismissed the appeal, emphasizing the need for factual determination in such cases.

Issue 3:
The appellant-revenue contested the Tribunal's restriction on the power of Revisional Authority under Section 34 of the HVAT Act, which provides for revision based on the Tribunal's order in a similar case. The High Court referenced a recent judgment where the Tribunal's decision was set aside, and the matter was remanded to the Assessing Officer for detailed assessment. The High Court aligned with the previous judgment, dismissing the present appeal and leaving the application for condonation of delay open.

In conclusion, the High Court's judgment reaffirmed the importance of factual assessment in determining the taxable amount of chemicals, dyes, and colors transferred in job work activities, as established in previous cases. The Tribunal's decisions were upheld, and the appeal by the revenue was dismissed in line with the precedents set by the Court.