2020 (2) TMI 1052 - HC - VAT and Sales Tax

Valuation - inclusion of VAT in the assessable value - inter-State purchasers of High Speed Diesel at the concessional rate 2% of CST, on the basis of Form-C - Sections 47(1)(b) and 48(1) of the Jharkhand Value Added Tax (JVAT) Act, 2005 - HELD THAT - At this stage, only notices have been issued to the petitioners Companies and they have been asked to satisfy the Commercial Taxes Authorities, with the relevant documents, that they had not committed any breach of the provisions of Sections 47(1)(b) and 48(1) of the JVAT Act - Admittedly, this is not a final action against the petitioners Companies, by which, the petitioners companies are aggrieved. At this stage the petitioners Companies have only to satisfy the concerned authorities, with the help of the documents called for, that they had not committed any violation of Sections 47(1)(b) and 48(1) of the JVAT Act, and in case they are able to satisfy the concerned authorities on these facts, no action is warranted against them, for which, the final decision has to be taken by the Commercial Taxes Authorities, on the basis of the documents, to be produced by the petitioners Companies. It is directed that the petitioners Companies to appear before the Commercials Taxes authorities with the relevant documents, and their reply to the show cause notices, which shall be considered by the authorities concerned, who may take appropriate action, taking into consideration the fact, whether the petitioners companies had reduced the base price of the High Speed Diesel to the actual price, on which, the same was purchased by them at the relevant point of time, and whether they had escalated or decreased their bills to the actual price of the High Speed Diesel paid by them, as compared to the base price, quoted by them. Application disposed off.

Summary

Issues:
1. Interpretation of provisions under Sections 47(1)(b) and 48(1) of the Jharkhand Value Added Tax (JVAT) Act, 2005.
2. Validity of show cause notices issued by Commercial Taxes Authorities to petitioners.
3. Jurisdiction of the court in the present stage of proceedings.

Analysis:
1. The petitioners, engaged in overburden removal and coal transportation, were issued show cause notices by Commercial Taxes Authorities for allegedly including VAT in their bills despite purchasing High Speed Diesel at a concessional rate of CST. The notices were based on violations of Sections 47(1)(b) and 48(1) of the JVAT Act. The petitioners contended that they had only charged CGST, SGST, or Service Tax in their invoices to Coal Companies, not VAT. The court examined the e-tender notices and work orders, which indicated provisions for price variation based on diesel price changes. The court emphasized the need for the petitioners to demonstrate compliance with the JVAT Act to the authorities with relevant documents.

2. The State, opposing the petitioners' plea for quashing the show cause notices, argued that the petitions were premature as the notices were not final actions. The court agreed with the State's stance, stating that the petitioners must first satisfy the authorities that they did not breach JVAT Act provisions. The court highlighted that the notices were not conclusive actions against the petitioners and that they should present necessary documents to prove their compliance. The court directed the petitioners to appear before the Commercial Taxes authorities with relevant documents and responses to the notices for further evaluation.

3. Ultimately, the court disposed of all writ applications with the directive for petitioners to cooperate with Commercial Taxes authorities in proving their adherence to JVAT Act provisions. The court clarified that the authorities would assess whether the petitioners adjusted their diesel prices correctly in their invoices and whether they accurately reflected price variations as per the contractual terms. The judgment emphasized the importance of the petitioners' cooperation in the ongoing proceedings and highlighted that the final decision would rest with the Commercial Taxes Authorities based on the evidence presented by the petitioners.