2009 (11) TMI 855 - HC - VAT and Sales Tax

VAT Tribunal dismisses appeal, upholds tax, sets aside penalty under section 10(7) Act

New Model Industries Pvt. Ltd. Versus State of Punjab and another

New Model Industries Pvt. Ltd. Versus State of Punjab and another - [2010] 28 VST 376 (P&H) Issues:Appeal challenging VAT Tribunal's order on assessment year 1993-94.Analysis:The appeal under section 68 of the Punjab Value Added Tax Act, 2005, contested the Tribunal's order on assessment year 1993-94. The dealer-appellant, engaged in manufacturing bus bodies on chassis as per customer specifications, faced a surprise check in 1998 leading to an assessment order in 1999 raising a substantial demand under the Punjab General Sales Tax Act, 1948. Subsequent appeals and remands resulted in fresh assessment orders under the Central Sales Tax Act, 1956, imposing penalties and interest. The dealer-appellant's appeals were remanded multiple times for fresh assessments, leading to a final order in 2005 determining tax liability and penalties. The Tribunal, in 2008, upheld the tax due but set aside a penalty under section 10(7) of the Act.The first question of law raised by the dealer-appellant, regarding whether the erection of body on the chassis constitutes a sale, was dismissed as per precedents set by the Supreme Court and other judgments. The second question pertained to tax liability in case of an inter-State sale. The dealer-appellant argued that if goods move outside Punjab, it should be considered an inter-State sale not assessable to sales tax. However, the Tribunal found that the transaction was within Punjab based on the agreement terms and the issuance of 'D' forms, indicating a sale liable to tax. Even if considered inter-State, the tax would still be four percent, as charged by the state, leading the Tribunal to conclude that no tax effect existed for the dealer-appellant.The Tribunal's findings on the agreement terms and the nature of the transaction within Punjab led to the dismissal of the appeal. The judgment highlighted that even if the transaction was deemed inter-State, the tax rate would remain the same, making a fresh assessment unnecessary. Therefore, the appeal was dismissed, with no other issues raised.In conclusion, the appeal challenging the VAT Tribunal's order on assessment year 1993-94 was dismissed based on the Tribunal's findings regarding the nature of the transaction and tax liability, ultimately resulting in no tax effect for the dealer-appellant.