2005 (3) TMI 730 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioner is liable to pay sales tax on the sale of country-made liquor for the period of May 21, 1997, to November 16, 1997?
2. Whether the petitioner's application for quashing the assessment order is maintainable considering the availability of alternative remedies?
3. Whether the petitioner is entitled to relief based on the stay order granted and subsequently vacated regarding the sales tax notification?

Analysis:
1. The petitioner challenged the assessment order imposing sales tax on the turnover of country-made liquor for the period from May 21, 1997, to November 16, 1997. The petitioner contended that since the sales tax notification was stayed and later vacated, they did not collect the tax and should not be penalized. The State argued that once a stay order is vacated, the liability to pay tax commences from the date of the notification. The court examined the petitioner's claim in light of previous judgments and held that the petitioner cannot benefit from their own wrong act of obtaining and then withdrawing the stay order. The court dismissed the petitioner's application, stating that there was no merit in their argument.

2. The State contended that the petitioner had an alternative remedy of reference under the Bihar Finance Act, which the petitioner did not pursue before filing the writ application. The petitioner argued that since they challenged the jurisdiction of the authority to impose tax, the writ application was maintainable despite not pursuing the reference. The court acknowledged the availability of alternative remedies but chose to decide the matter on merit due to arguments presented by both parties. The court emphasized the need to address the issue of maintainability in an appropriate case.

3. The petitioner sought relief based on the stay order granted and subsequently vacated regarding the sales tax notification. The petitioner relied on judgments where courts refrained from collecting sales tax due to undue hardship caused by invalid notifications. However, the court distinguished those cases from the present situation. The court referenced a settled law that a stay granted by the court does not confer a right upon a party and is subject to the final outcome of the matter. The court concluded that the petitioner's case had no merit, and allowing their claim would reward their own wrong act. The court dismissed the application, highlighting that the petitioner cannot benefit from obtaining and then withdrawing the stay order.

In conclusion, the court dismissed the petitioner's application for quashing the assessment order, emphasizing that the petitioner cannot benefit from their actions regarding the stay order and subsequent withdrawal of the case. The court addressed the issues of liability for sales tax on country-made liquor and the maintainability of the application based on alternative remedies, providing a detailed analysis of each aspect before reaching its decision.