2014 (9) TMI 619 - HC - VAT and Sales Tax

Court dismisses writ petition challenging tax assessment on imported goods for works contract, emphasizes need for factual verification.

M/s. Ircon International Ltd. Versus State of UP. Through its Secretary Inst. Finance And Others

The court dismissed the writ petition challenging a tax assessment on goods imported for a works contract, emphasizing the need for factual verification ... Jurisdiction to levy tax - exemption under Section 3 of the Central Sales Tax Act - Alternative remedy - Held that:- petitioner is required to establish that the goods purchased by him outside the State of U.P. is actually being utilized towards the works contract - Petitioner relies upon the decisions given in his own case wherein it has been held that the goods brought into the State of U.P. was in pursuance of a works contract and, therefore, was exempted under Section 3 of the Central Sales Tax Act. The said decision passed in a previous assessment years cannot be considered in the present assessment year, inasmuch as the goods purchased in the assessment year in question and brought into the State of U.P. is required to be established by evidence and proved that it was used and utilized towards the works contract. Consequently, reliance on a decision in its own case for the previous assessment year cannot form the basis for claiming exemption in the present assessment year. writ petition is dismissed on the ground of alternative remedy. - Decided against assessee. Issues:Jurisdiction to levy tax under works contract, exemption under Section 3 of Central Sales Tax Act, factual controversy regarding utilization of goods in works contract, alternative remedy of appeal.Jurisdiction to levy tax under works contract:The petitioner, a Government of India undertaking, challenged an assessment order imposing tax on goods imported in Uttar Pradesh for a works contract with Rail Vikas Nigam Limited. The petitioner argued that the Assessing Authority had no jurisdiction to levy tax as the works contract was exempted under Section 3 of the Central Sales Tax Act, citing relevant legal precedents.Exemption under Section 3 of Central Sales Tax Act:The petitioner contended that the goods imported from outside Uttar Pradesh for the works contract were covered under Section 3 of the Central Sales Tax Act, and thus no tax was payable. However, the court emphasized the need for the petitioner to establish the actual utilization of the goods in the works contract, which required factual verification by the appropriate authority.Factual controversy regarding utilization of goods in works contract:The court held that the determination of whether the goods imported were actually used in the works contract was a factual issue requiring examination by the appellate authorities. Past exemptions in previous assessment years did not automatically apply to the current assessment year, necessitating evidence of utilization for the present case.Alternative remedy of appeal:While acknowledging the discretionary nature of the writ jurisdiction under Article 226 of the Constitution, the court emphasized the rule of self-imposed limitation on entertaining writ petitions when an alternative remedy is available. The court dismissed the writ petition on the ground of the availability of an alternative remedy through an appeal, directing the petitioner to file an appeal within six weeks for consideration by the appellate authority.In conclusion, the court emphasized the importance of factual verification in determining the utilization of goods in a works contract, highlighting the need for evidence and the availability of an alternative remedy through an appeal process. The judgment underscored the discretionary nature of writ jurisdiction and the policy of self-imposed limitation when alternative remedies are accessible.