2022 (11) TMI 1141 - HC - VAT and Sales Tax

Claim of reduced the levy of Central Sales Tax @ 1% for the financial year 2010-11 onwards) after the Capital Investment of Plant and Machinery, having exceeded R. 25 Crores in it s Unit-1, as on 18.03.2010 - Applicability of Notification No. 6222 on 25.07.2001 - HELD THAT - As per the scheme envisaged by the Government Order, the total capital investment in Plant and Machinery by assessee has to be determined by a Committee constituted by the State Government in that behalf. Admittedly, in this case there is no decision of the Committee and the Assessing Officer has himself assessed the capital investment. The learned counsel appearing of the revisionist has taken us to the order passed by the Assessing Officer and the Tribunals. A careful reading of all the orders reveal that the total capital investment has never been assessed by any Committee as envisaged under Condition No.1 of the Notification referred to above. Thus, it is clear that the law governing the field provided for the assessment of the capital investment by a Committee whereas the same has never been done in this case. It is trite that if the law provides that a particular procedure has to be followed while deciding an issue or a lis before the authorities then the procedure should be followed according to the law established and not otherwise - it is clear that in this case while imposing the Tax at the rate of 2% the Assessing Officer has not considered the assessment determined by any Committee, further he has relied on his own assessment. In that view of the matter, the order passed by the Assessing Authority, confirmed by the Appellate Authority and the Commercial Tax Appellate Tribunal is not sustainable. In that view of the matter, the Central Tax Revision is allowed.

Summary

Issues:
1. Challenge to the order of the Commissioner, Commercial Tax Tribunal by the revisionist-assessee.
2. Interpretation of the eligibility criteria for reduced Central Sales Tax (CST) rate.
3. Application of Notification No. 6222 dated 25.07.2001 and Notification No. 822 dated 03.07.2004.
4. Assessment of total capital investment in Plant and Machinery by the State Government Committee.
5. Compliance with the prescribed procedure for determining eligibility for concessional CST rate.

Analysis:
1. The revisionist-assessee challenged the order of the Commissioner, Commercial Tax Tribunal that upheld the decision of the First Appellate Court and Tax Assessing Order, seeking to set aside the dismissal of their appeal regarding the reduction of Central Sales Tax (CST) rate. The key issue was whether the revisionist was entitled to reduce the levy of CST to 1% after the capital investment in Plant and Machinery exceeded Rs. 25 crores in Unit-1, as per the relevant Notifications.

2. The dispute revolved around the interpretation of the eligibility criteria for the concessional CST rate as per the Industrial Policy Vision Note issued by the State of Uttarakhand in 2001. The Notifications issued in 2001 and 2004 specified conditions for availing the reduced CST rate based on the total capital investment in Plant and Machinery by manufacturing units in the state.

3. The Court examined the application of Notification No. 6222 dated 25.07.2001 and Notification No. 822 dated 03.07.2004 concerning the eligibility criteria for the concessional CST rate. The revisionist's compliance with the investment limits specified in these Notifications was crucial in determining their entitlement to the reduced CST rate.

4. The Court emphasized the importance of the State Government Committee's role in assessing the total capital investment in Plant and Machinery as per the Notifications. It was noted that in this case, no Committee had assessed the capital investment, and the Assessing Officer had made the assessment independently, deviating from the prescribed procedure.

5. The Court relied on legal precedents to highlight the significance of following prescribed procedures when deciding issues. Citing relevant judgments, the Court emphasized that if a statute specifies a particular procedure, it must be adhered to strictly. In this context, the Court found that the Assessing Officer's failure to consider the assessment by the Committee rendered the orders unsustainable.

In conclusion, the Court allowed the Central Tax Revision in part, setting aside the previous orders and remanding the matter for a fresh assessment by the Committee to determine the total capital investment by the revisionist for the relevant period. The judgment underscored the importance of procedural compliance and adherence to statutory requirements in tax assessments.