TaxTMI 
TaxTMI 
THE ASSESSING OFFICER SHOULD NOT BE A PROSECUTOR, JUDGE AND EXECUTOR AT THE SAME TIME
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....HE ASSESSING OFFICER SHOULD NOT BE A PROSECUTOR, JUDGE AND EXECUTOR AT THE SAME TIME<br>By: - DR.MARIAPPAN GOVINDARAJAN<br>Value Added Tax - VAT and CST<br>Dated:- 4-6-2025<br>In M/S JAYPEE UNIVERSITY OF INFORMATION TECHNOLOGY VERSUS STATE OF H.P. & ORS. - 2025 (5) TMI 1817 - HIMACHAL PRADESH HIGH COURT, the petitioner University was established by Himachal Pradesh Government. It was established by a Public Trust, not for profit. The University falls under the category of 'Private College' under the University Grants Commissions Act. The object of the petitioner is to impart technical education to the students. Since it runs on not for profit, it reinvests the surplus arised in each year. The petitioner got exemptio....
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....n from paying income tax under Section 10(23C) (vi) of the Income Tax Act, 1961. The University is situated at Waknaghat, a hilly station where infrastructure is very less. To attract the students in their area, the University has established a mess called as 'Annapoorna' which has 3 wings. The first wing supplied food to the students. The second wing is a cafetoria and the third wing is a truck shop. All these three wings work for fixed hours. These facilities are available only for students and not for outsiders. On 06.03.2013 a team of VAT officers visited the premises of the petitioner and searched the premises every nook and corner. The petitioner submitted the information/documents what....
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....ever required by the Department. The Department, without giving a reasonable opportunity to the petitioner, imposed VAT under Section 21(7) of Himachal Pradesh Value Added Tax, 2005 to the tune of Rs.38.17 lakhs. The Officers demanded the petitioner to pay the said amount immediately, failing which they would seal the premises. Further they sought plain papers duly signed by the Officers of the University. Considering the reputation of the University, the petitioner obeyed the directions of the Officers and gave a cheque for the said amount and also handed over blank papers duly signed by them. The Department issued a receipt for the said amount but no assessment order has been passed in this matter. On ....
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....11.03.2013 the officials of the petitioners visited the Department to supply the copy of the assessment order and also the blank papers duly signed by them. The Department informed that the same will be supplied to them after 60 days so as the petitioner could not file appeal against them. The petitioner was also threatened that they ought not to take any legal course against the department to avoid harsh actions in future. The petitioner filed appeal before the CESTAT against the impugned demand of the Department. The CESTAT, after hearing the parties held that- * The petitioner is liable for payment of tax on the supply of foodstuff and other items to the students within its premises even though it has been held that ....
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....petitioner is predominately existing for education. * The petitioner is not a dealer. * The petitioner would be liable to pay the tax on supply of goods to the students in the course of academic activities even though the same is not in the course of business. Against this order the petitioner filed these revision petitions before the High Court. The High Court considered the submissions of the parties to this case and also considered the documents on record. The High Court observed, on going through the order for payment of tax, that the same has been passed by the Assessing Authority without even caring or bothering to issue mandatory notice in the prescribed format VAT 29 as required under Rules 67 and 78. The Hig....
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....h Court observed that the Adjudicating Authority acted not only in a unprofessional but in a total illegal manner by fixing the liability to pay the tax on the day of the visit. The Adjudicating Authority took the law into his own hand and played as a Prosecutor, Judge and Executor at the same time. There was no material to establish that the ancillary activities of providing canteen facilities to the children is being conducted by the petitioner with an independent intention to conduct business with such activities. The ancillary activities of providing canteen facilities to the inmates of the University would not amount to business as defined by the Act. Therefore, the petitioner was not liable to pay any tax on the said acti....
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....vities. The authorities, at the first place, are required to see whether the Act is applicable or not and in such like cases there cannot be a deemed sale so as to attract the levy of tax. The burden to prove such intention rests upon the Department. in the absence of profit making, the activity is not trade, commerce or business within the meaning of Section 2(15) of the Income Tax Act, 1961. The High Court relied on the judgment of Supreme Court in COMMISSIONER OF SALES TAX VERSUS SAI PUBLICATION FUND - 2002 (3) TMI 45 - SUPREME COURT in which the Supreme Court held that where the main activity is not business, then any incidental or ancillary transactions would normally amount business out if an independent intention t....
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....o carry on the business in the incidental or ancillary transaction is established. The High Court further observed that the petitioner University has reported in the Income and Expenditure Account, Schedule and Sub-Schedule have been listed and the instant demand has been made without establishing that how these incomes would be liable to VAT. Even the goods for which VAT is being demanded have not been spelt out in the impugned demand. The High Court held that once the canteen is not main activity of the university, then any incidental or ancillary transaction held, would normally amount to business only if an independent intention to carry on the business in the incidental and ancillary transaction is established....
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..... The High Court allowed the revision petitions filed by the petitioner.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....