2010 (3) TMI 1040 - HC - VAT and Sales Tax

High Court remands case for comprehensive review of agreement, exempts assessee pending new orders.

The High Court remanded the case to the Tribunal for a comprehensive review of the agreement, exemption grounds, and other relevant issues. The Tribunal ... If the books were accepted by the authority, it was not open to the authority to charge tax on 7.5 per cent which had been segregated in the books of accounts? Held that:- The order of the Tribunal records that the agreement dated April 26, 1996 was not binding on the Department. The purpose of examining the agreement was to see whether the agreement was a genuine one and whether the contentions of the assessee that the tax had been collected by the assessee from his purchaser as a composite price in order to determine whether the tax was included in his turnover as composite price or whether it was liable to be taxed separately as having been charged separately. The authorities below have failed to do so. Thus the matter requires reconsideration after examining and investigating all the issues relating to the agreement dated April 26, 1996. As the question of ground of exemption under section 4AA is concerned, it was not open to the authority to travel beyond the grounds in the appeal or to interfere with that part of the order of assessment, against which no appeal had been preferred. He has therefore argued that the remand made by the first appellate authority with regard to this aspect, is wholly without jurisdiction and authority, thus consequently of the view that the order passed by the Tribunal for examination of this issue is also without any authority. Revision allowed. Case remanded. Issues:1. Inclusion of tax amount in taxable turnover2. Validity of the agreement dated April 6, 19963. Compliance with previous court judgments4. Jurisdiction of Deputy Commissioner to remand the matterAnalysis:Issue 1: Inclusion of tax amount in taxable turnoverThe assessee argued that the tax collected and deposited was already accounted for in the books of accounts, and therefore should not be subject to additional taxation. The first appellate authority, however, viewed the segregation of tax in the books as an indication of extra tax collected, leading to a false addition to the taxable turnover. The High Court noted that the acceptance of the books of accounts by the authority should preclude additional taxation on the segregated amount. The matter was remanded to the Tribunal for further examination.Issue 2: Validity of the agreement dated April 6, 1996The agreement in question was between the assessee and a purchaser, where the price was predetermined and inclusive of taxes. The Tribunal found the agreement not binding on the Department and called for a thorough examination to determine if the tax was included in the turnover as part of the composite price or if it should be taxed separately. The High Court emphasized the need for a detailed investigation into the agreement to resolve this issue effectively.Issue 3: Compliance with previous court judgmentsThe assessee cited various court judgments to support their arguments, highlighting the need for alignment with past decisions in similar cases. The High Court acknowledged the relevance of these judgments and emphasized the importance of considering them in the reconsideration of the matter by the Tribunal.Issue 4: Jurisdiction of Deputy Commissioner to remand the matterThe jurisdictional aspect of the Deputy Commissioner's decision to remand the matter for re-verification of the exemption granted under section 4AA of the Act was challenged. The High Court agreed with the assessee that the first appellate authority overstepped its bounds by raising new issues and remanding the matter beyond the scope of the appeal. The High Court deemed the remand without authority and called for a fresh examination by the Tribunal on this aspect.In conclusion, the High Court remanded the entire matter to the Tribunal for a comprehensive reconsideration of the agreement, exemption grounds, and other relevant aspects. The Tribunal was directed to pass appropriate orders within a specified timeframe, and no recovery was to be made against the assessee until fresh orders were issued. The impugned order of the Tribunal was set aside, and the revision was allowed without costs.