2015 (12) TMI 176 - HC - VAT and Sales Tax

Dealer liable for purchase tax on paddy, export sales excluded from tax liability calculation

The court held that the dealer is liable to pay purchase tax on paddy included in the levy price to the DFSC, citing unjust enrichment principles. ... Exemption of tax under rule 28A of the Rules - benefit of consignment sales during the currency period of exemption of tax - Whether the dealer is liable to pay purchase tax on paddy which is included in the levy price to the DFSC - Whether for the purpose of notional sales tax liability, the export sales are includible therein or not - Held that:- Decision in the case of Jay Vee Rice and General Mills v. State of Haryana [2010 (9) TMI 881 - SUPREME COURT OF INDIA] and State of Haryana v. Liberty Enterprises [2009 (3) TMI 545 - SUPREME COURT OF INDIA] followed - Matter remanded back - Decided in favour of assessee. Issues:1. Whether the dealer is liable to pay purchase tax on paddy included in the levy price to the DFSCRs.2. Whether export sales are includible in the notional sales tax liability calculationRs.Issue 1:The petitioner sought to declare certain rules as ultra vires and quash specific orders related to tax exemptions. The petitioner, engaged in husking paddy and selling rice, filed returns for the assessment year 1997-98. The Assessing Officer completed the assessment and granted tax exemption under rule 28A of the Rules. However, consignment sales were disallowed due to exemption granted. The revisional authority revised the assessment order, creating additional tax liability. The key contention was whether the dealer is liable to pay purchase tax on paddy included in the levy price to the DFSC. The court referred to a previous judgment against the assessee, establishing that retaining purchase tax collected amounts to unjust enrichment.Issue 2:Regarding the second issue, the court cited a Supreme Court judgment related to notional sales tax liability calculation. The Supreme Court emphasized the definition of 'notional sales tax liability' and how it should be strictly interpreted. The court discussed the provisions of rule 28B, which provided conditions for availing exemption from sales tax. The court clarified that for calculating the quantum of exemption availed by the unit, the notional sales tax liability should be considered. It was highlighted that export sales were not includible in the calculation of notional tax liability during the period in question. Based on these considerations, the court disposed of the writ petition and remanded the matter to the Assessing Officer for a fresh order after providing an opportunity for the assessee-dealer to be heard in accordance with the law.