2000 (8) TMI 1077 - HC - VAT and Sales Tax

Summary

Issues:
Challenging orders passed by Deputy Excise and Taxation Commissioner, Joint Excise and Taxation Commissioner, and Sales Tax Tribunal III. Grounds for invalidation of impugned orders. Consistency of levy of purchase tax with Act and Rules.

Analysis:

The petitioner filed a petition seeking to quash orders passed by the Deputy Excise and Taxation Commissioner, the Joint Excise and Taxation Commissioner, and the Sales Tax Tribunal III. The petitioner challenged the rejection of their application for exemption from payment of tax, interest, and penalty. The Tribunal had directed the petitioner to deposit 25% of the tax demand and furnish a surety bond, which the petitioner complied with. However, the Tribunal later declined the petitioner's request for exemption without considering the previous order. The petitioner argued that the Tribunal's decision was arbitrary and discriminatory.

The respondents defended the impugned orders, stating that the levy of purchase tax was in line with the Act and Rules. They argued that the petitioner failed to provide evidence of financial incapacity to pay the tax, interest, and penalty as per the assessment order. The Court noted that the Tribunal's order suffered from a patent error of law. The Tribunal had rejected the petitioner's request for exemption without valid reasons, failing to consider the petitioner's financial status or the previous order directing the appeal to be entertained with certain conditions.

The Court found the Tribunal's decision to be arbitrary and lacking legal basis. The respondents failed to prove any change in the petitioner's status between the previous order and the decision to decline exemption. The Court concluded that the Tribunal's refusal to entertain the petitioner's prayer for exemption was unjust and based on an error of law. Consequently, the Court allowed the writ petition, declaring the impugned order as illegal and quashing it. The Tribunal was directed to hear and decide the appeal filed by the petitioner on its merits, with a deadline set for the decision within three months.

In summary, the Court found the Tribunal's decision to decline the petitioner's request for exemption to be arbitrary and lacking legal justification. The Court quashed the impugned order and directed the Tribunal to hear and decide the appeal on its merits within a specified timeframe.