2015 (6) TMI 80 - HC - VAT and Sales Tax

Court rules sales not taxable under Assam GST Act, citing misinterpretation & error in Board's decision.

The court ruled in favor of the petitioner, holding that the sales were not taxable under the Assam General Sales Tax Act. The court found errors in the ... Review order - Determination of sale price - 'First sale' - Assam Board of Revenue originally held that in view of the explanation 1 of section 8(1) of the Assam General Sales Tax Act 1993 the sale made by the petitioner cannot be construed as a first sale made by the petitioner to its dealers and is not taxable - Held that:- Quantity of goods sold to the petitioner by the IOC accounts for only 4.5 per cent of its total production, therefore the said quantity cannot be considered as a “a substantial part of the goods manufactured”. When that condition does not apply despite the fact that the sale price collected by the petitioner from its dealers being in excess of the 40 per cent of the purchase price the question of levy of tax does not arise, since one of the requisite conditions viz. “the sale of a substantial part of the goods manufactured” is not fulfilled. Unless both the conditions are fulfilled the question of levy does not arise. In that view of the matter the view taken by the Assam Board of Revenue in review is untenable. - Decided in favour of assessee. Issues:1) Interpretation of section 8(1)(explanation 1) of the Assam General Sales Tax Act 1993 regarding the taxability of sales made by a petitioner.2) Application of the Supreme Court's decision in civil appeal 6619/2001 to determine tax liability.3) Review jurisdiction of the Assam Board of Revenue in light of errors apparent on record.Analysis:1) The petitioner purchased petroleum products from Indian Oil Corporation (IOC) and resold them to dealers in Assam, with the sale price exceeding 40% of the price paid to IOC. Sales tax authorities levied tax on the entire sale price as a 'first sale,' leading to an appeal to the Assam Board of Revenue. The Board initially ruled the sales were not taxable under the Act's explanation 1 of section 8(1). However, a review was sought by the tax department citing a Supreme Court judgment, ultimately resulting in the Board reversing its decision and taxing the sales as first sales.2) The Supreme Court's decision in civil appeal 6619/2001, involving IOC's sale of petroleum products, clarified the inclusion of surcharge in sale price and tax liability on the price difference. The petitioner argued that this ruling was not relevant to their case, emphasizing the specific conditions under the Assam Sales Tax Act for determining taxability of sales. The court agreed, stating that the Supreme Court's decision did not align with the issues in the present case.3) The Assam Board of Revenue's review jurisdiction was challenged, focusing on errors apparent on record. The petitioner contended that the Board's decision to tax the sales was based on an incorrect interpretation of the Act's provisions. The court upheld the petitioner's argument, emphasizing that the Board's review decision was untenable as it misinterpreted the Act's requirements and erroneously linked it to the Supreme Court's unrelated judgment. Consequently, the court allowed the petition, quashing the Board's order and ruling in favor of the petitioner.