2022 (12) TMI 966 - HC - VAT and Sales Tax

Composition/compounding U/s 6 and 6A of VAT Act - when the matter is pending then assessment order U/s 28(2) of the VAT Act can be passed? - HELD THAT - Having heard learned counsel for the parties and having perused the record what clearly emerges is that an S.I.B. inquiry had been carried on 11.02.2016 on the premises of the revisionist. The revisionist got itself registered as a dealer in March 2016. On the basis of the S.I.B. inquiry the tax of Rs 2.94 lakhs had been imposed which after a series of appeals etc has been reduced to Rs 1.84 lakhs. Admittedly the Government Order dated 18.02.2016 had been issued with respect to such persons like the revisionist. Admittedly the revisionist applied in pursuance to the said Government Order on 07.04.2016 but no order was passed by the competent authority on the said application and the said application remained pending and in the meanwhile the impugned orders have been passed. The Government Order dated 18.02.2016 itself provides that even if application is filed beyond a period of 45 days the competent authority namely the Commissioner could still accept the said application on payment of interest. Admittedly no order has been passed by the competent authority / Commissioner on the application of the revisionist and at the same time the authorities have proceeded to impose tax on the revisionist. Considering that there has been inaction on the part of the authorities concerned in not acting in pursuance to the Government order dated 18.02.2016 and there being no denial that the revisionist did not apply in pursuance to the said Government Order, consequently the revision is allowed and the order impugned dated 18.06.2022 passed by the learned Commercial Tax Tribunal Bench III, Lucknow a copy of which is annexure 1 to the petition, is set aside - the matter is remanded to the respondent no. 1 to consider the appeal afresh keeping in view the observations, the Government Order dated 18.02.2016 and the application of the revisionist submitted in pursuance thereof.

Summary

Issues:
1. Interpretation of Section 6 and 6A of VAT Act in relation to assessment order under Section 28(2) of the VAT Act.

Analysis:
The High Court considered a revision filed against an order passed by the Commercial Tax Tribunal imposing a tax liability on the revisionist. The main question of law raised was whether an assessment order under Section 28(2) of the VAT Act could be passed if the matter is covered under the composition/compounding provisions of Sections 6 and 6A of the VAT Act. The revisionist had declared turnover, paid compounding fee, and later faced an SIB inquiry resulting in a show cause notice for tax imposition. The revisionist argued that the assessment under Section 28(2) was without jurisdiction due to Section 6A(3) exemption from furnishing returns. The Court noted the revisionist's application for benefit under a Government Order dated 18.02.2016, filed after the SIB inquiry, which remained pending without a decision while tax was imposed.

The Court examined the timelines of events, including the SIB inquiry, registration as a dealer, and the application under the Government Order. The revisionist's contention was that the competent authority should have informed about the option to pay the amount with interest if the application exceeded 45 days. The Court emphasized that the Government Order allowed acceptance of applications beyond 45 days on payment of interest, and since no decision was made on the revisionist's application, the tax imposition was deemed unjustified. The Court found inaction on the part of authorities in not acting on the application despite the revisionist's compliance with the Government Order.

In conclusion, the Court allowed the revision, set aside the Commercial Tax Tribunal's order, and remanded the matter for fresh consideration by the respondent no. 1. The Court directed a reevaluation of the appeal in light of the Government Order and the revisionist's application, with a mandate to pass an order within three months from the receipt of the judgment.

This detailed analysis of the judgment highlights the Court's interpretation of relevant provisions of the VAT Act, the application of Government Orders, and the procedural lapses leading to the decision in the case.