2024 (12) TMI 1187 - HC - VAT / Sales Tax

Rate of tax - inter-state sales of safety equipment without the C form - requirement to pay tax at the rate of 4% as per the entry 34 schedule (4) - HELD THAT - On perusal of the record, it shows that the petitioner had paid tax in accordance with the schedule of the Act from the beginning and has never claimed any exemption through C forms. Therefore, the question of submitting the C forms for the goods in dispute does not arise. The authorities below and also the Appellate Tribunal, did not consider the petitioner s case in its the proper prospective. On perusal of the orders passed by the authorities and as well as the Tribunal, it is succinctly clear that without going into the aspect of rate of tax as against the goods dealt by the assessee of the authorities including the Tribunal must directed with the issue on hand and passed orders under challenge mulcting the assessee to pay tax at the rate of 14.5%, since he did not produce the C forms. The furnishing of C forms would arise only when the assessee is claiming exemption - But in the instant case he has paid tax as per the schedule appended to the Act for the goods viz., hand gloves. In that view of the matter, the orders of the Tribunal and also the order of the Appellate Deputy Commissioner and Assessing Authority are set aside, and the matter is remanded to the Assessing Authority to take-up the assessment afresh and pass appropriate orders, after giving opportunity of being heard to the petitioner and the same has to be completed within a period of four weeks from the receipt of copy of this order - the Tax Revision is allowed.

Summary

Issues:
1. Interpretation of tax liability on inter-state sales without 'C' form.
2. Consideration of exemption claims through 'C' forms.
3. Proper perspective in assessing tax liability under the VAT Act.

Analysis:

Issue 1: Interpretation of tax liability on inter-state sales without 'C' form
The petitioner, engaged in reselling machinery spares and safety equipment both within and outside Andhra Pradesh, faced a tax assessment for inter-state sales without 'C' forms. The assessing authority imposed a tax rate of 14.5% due to the absence of 'C' forms, which was upheld by the Appellate Deputy Commissioner and the VAT Appellate Tribunal. The petitioner contended that tax at 4% was collected as per the VAT Act, Schedule 4, Entry 34, for hand gloves made of cotton/Hosiery cloth, eliminating the need for 'C' forms as no exemption was sought. The High Court observed the petitioner's consistent tax payments per the Act's schedule and the absence of exemption claims through 'C' forms, leading to the conclusion that 'C' forms were unnecessary in this context.

Issue 2: Consideration of exemption claims through 'C' forms
The petitioner's argument emphasized that tax was paid at the prescribed rate of 4% under Schedule 4, negating the requirement for 'C' forms to claim exemption. The Court noted that 'C' forms are typically used for exemption claims, which were not applicable in this scenario as the petitioner had paid tax as per the statutory schedule. The authorities failed to consider this aspect, leading to an incorrect imposition of a higher tax rate based on the absence of 'C' forms. The Court highlighted that 'C' forms are relevant only when exemption claims are made, which was not the case here, as the petitioner had already paid tax at the appropriate rate.

Issue 3: Proper perspective in assessing tax liability under the VAT Act
Upon reviewing the orders of the lower authorities and the Tribunal, the High Court found a lack of consideration for the petitioner's consistent adherence to the tax schedule and absence of exemption claims. The Court concluded that the assessment should have focused on the applicable tax rate for the goods sold by the petitioner rather than penalizing for the non-submission of 'C' forms. Consequently, the High Court set aside the orders of the Tribunal, Appellate Deputy Commissioner, and Assessing Authority, remanding the matter for a fresh assessment. The Court directed the Assessing Authority to reevaluate the assessment, allowing the petitioner an opportunity to present their case, with a strict timeline of four weeks for completion.

In conclusion, the High Court allowed the Tax Revision, emphasizing the importance of assessing tax liability in line with the statutory provisions and the goods' applicable tax rates, rather than penalizing for procedural lapses like non-submission of 'C' forms.