2015 (11) TMI 879 - HC - VAT and Sales Tax

Court rules on tax treatment of sprinkler sales crossing state borders; review petition dismissed.

M/s Harvel Agua India Private Limited Versus State of H.P. & ors.

M/s Harvel Agua India Private Limited Versus State of H.P. & ors. - TMI Issues Involved:1. Whether the transaction of supplying sprinklers from Haryana to Himachal Pradesh constituted an inter-State or intra-State sale.2. Whether the irrigation sprinkler system supplied by the petitioner falls under the category of 'agricultural implement, manually operated or animal driven' and is exempted from tax under Schedule 'B' of the H.P. VAT Act, 2005.3. The scope and grounds for review under Section 114 and Order 47 Rule 1 of the Code of Civil Procedure (CPC).Issue-wise Detailed Analysis:1. Inter-State vs. Intra-State Sale:The petitioner claimed that the supply of sprinklers from Haryana to Himachal Pradesh constituted an inter-State sale, exempt from tax under Schedule 'B' of the H.P. VAT Act, 2005. However, the court found that the petitioner did not provide sufficient records to prove that the supply of sprinklers or Micro irrigation systems originated from Haryana. The court noted that documents revealed the goods were brought from Gurgaon to Mandi Branch in Himachal Pradesh and supplied to local farmers under a government scheme. The petitioner charged local taxes from farmers, indicating intra-State sales, thus liable to VAT. The court concluded that the transactions were intra-State sales.2. Classification of Sprinkler System:The petitioner contended that the irrigation sprinkler system was an 'agricultural implement, manually operated or animal driven,' and thus exempt from tax. The court, however, determined that the sprinkler system did not fall under this category. The system required materials like pipes, joints, sockets, and sprinklers, which were not manually operated or animal driven. Therefore, the system did not qualify for tax exemption under Schedule 'B' of the H.P. VAT Act, 2005.3. Scope and Grounds for Review:The petitioner sought a review of the judgment, arguing inherent contradictions in the court's findings and citing errors apparent on the face of the record. The court emphasized the limited scope of review under Section 114 and Order 47 Rule 1 of the CPC, which allows review only for errors apparent on the face of the record, new and important evidence, or other sufficient reasons. The court referenced several precedents, including the Supreme Court's rulings in Board of Control for Cricket in India vs. Netaji Cricket Club and Inderchand Jain vs. Motilal, which clarified that review is not an appeal in disguise and should not involve re-hearing or re-appreciation of evidence.The court found no error apparent on the face of the record in the original judgment. It noted that the petitioner's arguments had already been considered and addressed in the detailed judgment. The court reiterated that the findings of intra-State sales and the classification of the sprinkler system were based on factual and legal analysis, which could not be revisited under the guise of review. Consequently, the court dismissed the review petition, affirming the original judgment and leaving the parties to bear their own costs.