2006 (12) TMI 465 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to rejection of application to opt out of lumpsum tax scheme due to revision in tax rate.

Analysis:
The petitioner challenged the rejection of their application to opt out of the lumpsum tax scheme following a revision in the tax rate from 12% to 12.5%. The petitioner relied on Section 9 of the Haryana Value Added Tax Act, 2003, which allows for lumpsum payment in lieu of tax, and Rule 46 of the Haryana Value Added Tax Rules, 2003, which specifies conditions for opting out of the lumpsum scheme. The petitioner argued that once the tax rate is revised, they have the statutory right to opt out of the scheme, regardless of whether they are prejudiced by the revision. The State contended that the lumpsum scheme had been upheld by the Supreme Court in a different context, but the relevance of that judgment was not applicable in the present case. The court noted that Rule 46(3) allows for a dealer to change their option when the lumpsum rate or the tax rate on the commodity is revised, without requiring that the revision prejudice the dealer.

The court found in favor of the petitioner, quashing the order rejecting their application and directing that the petitioner should be allowed to opt out of the lumpsum payment scheme upon a change in the tax rate on the commodity. To ensure smooth implementation, the petitioner was granted the benefit of changing their option from the next quarter starting from January 1, 2007. The court's decision was based on the plain meaning of the rules, emphasizing the dealer's right to change their option upon a revision in tax rates, without the condition of being prejudiced by the revision.