2003 (2) TMI 440 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of writ petitions due to alternative remedies.
2. Entitlement of the petitioner to sales tax exemption under the relevant Acts and the Scheme.
3. Sustainability of the impugned assessment and demand under section 17(4) of the 1993 Act and section 9(2) of the 1956 Act.
4. Validity of the impugned assessment order given its omnibus nature.

Issue-Wise Detailed Analysis:

1. Maintainability of Writ Petitions:
The court acknowledged the long pendency of the petitions since 1998 and decided not to dismiss them on the grounds of alternative remedies. This issue was answered in the negative, allowing the petitions to be heard on merits.

2. Entitlement to Sales Tax Exemption:
The court referred to the decision in *Manjushree Extrusions Ltd. v. State of Assam* [2001] 123 STC 366 (Gauhati), which upheld the validity of the Scheme and confirmed that existing industrial units undertaking expansion were entitled to full sales tax exemption as per the 1991 Industrial Policy. The petitioner, having an eligibility certificate under the 1991 Policy, was entitled to the exemption benefits under the Scheme, which included exemption from both State and Central sales tax.

3. Sustainability of the Impugned Assessment and Demand:
The court found that the assessment orders were based on the assumption that the petitioner was not entitled to tax exemption and had collected and not deposited Central sales tax. The court held that any collection of tax despite exemption should be addressed under section 65A of the 1993 Act, which provides for forfeiture of such amounts. The court emphasized that a detailed examination of each transaction was necessary to determine unauthorized tax collection. The impugned orders, which generalized the collection of tax across all transactions, were deemed illegal and without jurisdiction.

4. Validity of the Impugned Assessment Order:
The court noted that the assessment orders lacked specific instances and were based on hypothetical and sweeping conclusions. The orders did not afford the petitioner an opportunity to present its case for each transaction. The petitioner claimed to have "C" forms for the transactions and asserted a refund claim for local taxes paid on raw materials. The court found that these claims were not adequately considered by the assessing authority. Consequently, the impugned orders and the resultant demand notices were set aside and quashed.

Conclusion:
The court allowed the petitions, setting aside the impugned orders and demand notices. However, it left the door open for the State respondents to take appropriate actions under the relevant enactments if deemed necessary. No costs were awarded.