2007 (8) TMI 660 - HC - VAT and Sales Tax

Benefit of exemption from tax - Held that - It is clear from annexure 2 that the District Level Screening Committee has very specifically mentioned in the exemption certificate that the petitioner was entitled to exemption from the tax liability up to the extent of 75 per cent therefore the notices issued by respondent No. 5 are just against the exemption certificate. Accordingly this writ petition is allowed and the notice dated May 31 2005 (annexure 8) as well as notice dated June 7 2005 (annexure 9) issued by the Commercial Taxes Officer Special Circle Sriganganagar are set aside. There shall however be no order as to costs.

Summary

Issues:
Challenge to show cause notices for assessment years 2000-01 and 2001-02 under Rajasthan Sales Tax Act, 1994 based on exemption percentage discrepancy.

Analysis:
The petitioner challenged show cause notices for assessment years 2000-01 and 2001-02, claiming exemption of 75% based on an exemption certificate, while the taxing authority alleged eligibility for only 60% exemption. The petitioner contended that once an exemption certificate is issued by the competent authority, the taxing authority cannot deviate from the relief granted. Reference was made to a judgment stating that certificates issued by the District Level Screening Committee cannot be questioned without following the correct procedure. The single judge allowed the petition based on this premise.

The District Level Screening Committee issued an exemption certificate allowing 75% exemption on total fixed capital investment for the petitioner. The petitioner's eligibility was confirmed after a detailed assessment and meeting the conditions of the Central Sales Tax Incentive Scheme, 1989. Despite explanations and submissions by the petitioner, show cause notices were issued for reassessment by the Commercial Taxes Officer, alleging the petitioner was only entitled to 60% exemption. Respondents opposed the petition, citing the jurisdiction of the assessing authority to reopen assessments under Section 30 of the Rajasthan Sales Tax Act, 1994.

After considering the arguments and the precedent set by a previous judgment, the court found that the notices issued by the Commercial Taxes Officer were without jurisdiction. It was emphasized that the certificate granting 75% exemption could not be disregarded without following the correct procedure to amend it. As the exemption certificate clearly stated the entitlement to 75% exemption, the court set aside the show cause notices issued by the Commercial Taxes Officer for assessment years 2000-01 and 2001-02. The petition was allowed, and no costs were awarded.