2011 (12) TMI 465 - HC - VAT and Sales Tax

Court dismisses challenge to Assam VAT Act provisions & assessment order, upholds evidence requirements, advises statutory appeal.

The court dismissed the writ petition challenging the validity of certain provisions of the Assam Value Added Tax Act and Rules, as well as the assessment ... Sections 11 and 69 of the Assam Value Added Tax Act, 2003 and rule 10 of the Assam Value Added Tax Rules, 2005 seeked to be void - Held that:- No interference is called for under article 226 of the Constitution, at this stage.As regards the issue of validity of rule 39 referable to section 69(2) is concerned, we do not find any illegality therein. The provisions of section 69(2) and rule 39(1) only require production of documentary evidence of payment of tax with a declaration from the sub-contractor. There can be no difficulty in giving documentary evidence of tax or a declaration from the sub-contractor. No doubt the format of declaration has not been prescribed but in absence thereof, declaration from sub-contractor giving relevant particulars to connect the payment of tax to the turnover can certainly be furnished. The judgments relied upon do not help the petitioner. As regards the plea of arbitrariness of the order of assessment, it is of the view that the petitioner has the alternative remedy of raising all contentions against the said order before the concerned departmental authority in a statutory appeal. W.P. dismissed. Issues:Challenge to the validity of sections 11 and 69 of the Assam Value Added Tax Act, 2003 and rule 10 of the Assam Value Added Tax Rules, 2005. Quashing of assessment order dated September 6, 2010.Analysis:The petitioner sought a declaration that sections 11 and 69 of the Assam Value Added Tax Act, 2003, and rule 10 of the Assam Value Added Tax Rules, 2005 were void. They also aimed to quash the assessment order dated September 6, 2010. The petitioner, engaged in works contracts, claimed a refund but faced a reassessment leading to a substantial demand. The respondent argued that reassessment was permissible under section 40 of the Act in cases of tax escapement. The petitioner contended that the impugned order was arbitrary and violated Article 14 of the Constitution by adding to the declared turnover without proper justification.The petitioner raised two main contentions. Firstly, challenging the validity of section 69(2) of the Act and rule 39, which required the contractor to provide evidence of tax payment by the subcontractor. Secondly, alleging arbitrariness in the assessment order under section 11, claiming improper addition to the declared turnover. The State argued that these provisions were procedural and subject to departmental appeal for assessment validity review.The court found no grounds for interference under Article 226 of the Constitution at that stage. Regarding the validity of rule 39 under section 69(2), the court noted that it merely required documentary evidence of tax payment and a declaration from the subcontractor, which was reasonable. The judgments cited by the petitioner were deemed irrelevant to the case. The court emphasized that the petitioner had the option to challenge the assessment order through statutory appeal, thus dismissing the writ petition. The order did not prevent the petitioner from pursuing a statutory appeal as per the law.In conclusion, the court upheld the validity of the relevant provisions and dismissed the writ petition, stating that the petitioner could address all concerns through the statutory appeal process.