2014 (9) TMI 301 - HC - VAT and Sales Tax

Court dismisses writ petitions challenging jurisdiction under VAT Act, upholding validity of assessment orders

Prathista Industries Limited Versus Commercial Tax Officer, Bhongir Circle, Nalgonda District and Another

The court dismissed the writ petitions, ruling that Section 67 of the Andhra Pradesh Value Added Tax Act, 2005 does not apply to assessments under the ... Exemption from tax - Advance ruling - Whether the provisions relating to Clarification and Advance Rulings contained in section 67 of the Andhra Pradesh Value Added Tax Act, 2005 would automatically apply to assessments made under the Central Sales Tax Act, 1956, inasmuch as section 9 of the latter Act applies the machinery provisions of the former Act to assessments, levy and collection of tax under the latter Act - Held that:- Provision for 'advance ruling' is a mechanism introduced by the Legislature to ensure uniformity in orders of assessment, appellate and revisional orders (other than a revisional order passed by the Commissioner), with regard to the classification of goods under different entries of the various Schedules to the Act or the rate of tax applicable to such goods, etc., thereby avoiding conflicting orders being passed by different assessing/appellate/revisional authorities. Such a mechanism can only be introduced by way of a substantive provision in a statute and cannot be implied. Tax collected under the Central Sales Tax Act is ultimately assigned to the State in view of article 269 as explained in N.K. Nataraja Mudaliar's case [1968 (4) TMI 61 - SUPREME COURT OF INDIA] and the Central sales tax though levied for and collected in the name of the Central Government is a part of the sales tax levied and imposed for the benefit of the State. But from this it does not follow nor does it follow from section 9 of the Central Sales Tax Act that every provision of the VAT Act including provisions relating to 'advance ruling' would apply to proceedings for assessment, reassessment, collection and enforcement of payment of tax in relation to inter-State sale transactions under the Central Sales Tax Act. First respondent is entitled to initiate and complete the assessment under the Central Sales Tax Act in respect of the petitioner when its application for 'advance ruling' was pending before the authority for advance ruling and pendency of its appeal against the said ruling before the S.T.A.T would also not impede or operate to disentitle the first respondent in any way in initiating or completing the assessment under the Central Sales Tax Act, as the provisions of section 67 of the VAT Act would not apply to assessments made under the Central Sales Tax Act. - it cannot be said that the impugned orders dated March 30, 2011 and February 23, 2012, passed by the first respondent under the Central Sales Tax Act are without jurisdiction. - Decided against assessee. Issues Involved:1. Applicability of Section 67 of the Andhra Pradesh Value Added Tax Act, 2005 to assessments under the Central Sales Tax Act, 1956.2. Jurisdiction of the assessing authority to make assessments under the Central Sales Tax Act during the pendency of an application for advance ruling.3. Validity of assessment orders passed by the first respondent under the Central Sales Tax Act.Issue-wise Detailed Analysis:1. Applicability of Section 67 of the Andhra Pradesh Value Added Tax Act, 2005 to assessments under the Central Sales Tax Act, 1956:The core issue is whether the provisions for Clarification and Advance Rulings under Section 67 of the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act) apply to assessments under the Central Sales Tax Act, 1956 (CST Act) due to Section 9 of the CST Act applying the machinery provisions of the VAT Act to assessments, levy, and collection of tax under the CST Act.The court examined the argument that Section 9(2) of the CST Act incorporates the procedural provisions of the VAT Act for assessment, reassessment, collection, and enforcement of tax. However, it was contended that provisions relating to advance rulings are substantive and must be explicitly provided for in the CST Act. The court agreed that the provision for advance rulings is a substantive mechanism introduced to ensure uniformity and avoid conflicting orders, which cannot be implied into the CST Act by virtue of Section 9(2).2. Jurisdiction of the assessing authority to make assessments under the Central Sales Tax Act during the pendency of an application for advance ruling:The petitioner argued that the first respondent lacked jurisdiction to make assessments during the pendency of an application for advance ruling and its subsequent appeal. The court analyzed whether the assessing authorities are barred from deciding any issues pending before the Authority for Clarification and Advance Rulings (ARA) or the Sales Tax Appellate Tribunal (STAT).The court concluded that Section 67 of the VAT Act, which deals with advance rulings, does not apply to the CST Act. The CST Act does not contain a provision for advance rulings, and such a mechanism cannot be implied. Therefore, the assessing authorities under the CST Act are not barred from making assessments during the pendency of an application for advance ruling under the VAT Act.3. Validity of assessment orders passed by the first respondent under the Central Sales Tax Act:The petitioner challenged the validity of the assessment orders on the grounds that they were passed without jurisdiction. The court examined whether the impugned orders were void due to the first respondent's lack of jurisdiction.The court held that the first respondent had the jurisdiction to initiate and complete assessments under the CST Act, even during the pendency of an application for advance ruling under the VAT Act. The court rejected the petitioner's contention that the assessment orders were void, stating that the provisions of Section 67 of the VAT Act do not apply to assessments under the CST Act. Consequently, the principles laid down in various judgments regarding orders passed without jurisdiction being nullities did not apply to the facts of this case.Conclusion:The court dismissed the writ petitions, holding that the provisions of Section 67 of the VAT Act do not apply to assessments under the CST Act, and the first respondent had the jurisdiction to make the impugned assessment orders. The court found no merit in the petitions and upheld the validity of the assessment orders.