2009 (11) TMI 859 - HC - VAT and Sales Tax

Whether the Corporation cannot be treated as manufacturer? Held that - The present case is referred to the committee to be constituted as directed by the apex court if not already functional and the said committee will look into the matter and redress the dispute raised in the present petition. It is further directed that until the decision by the aforesaid committee recovery proceeding shall be kept in abeyance and the same shall be subject to the order that may be passed by the said committee. In view of the observation made above the present revision is disposed of.

Summary

Issues:
1. Dispute regarding the classification of a corporation as a manufacturer by the Trade Tax Department.
2. Whether disputes between government departments should be contested in courts or referred to a high-powered committee for resolution.

Analysis:

Issue 1: Dispute regarding classification as a manufacturer
The revisionist, a corporation engaged in the sale of goods purchased from the Forest Department, contested the Trade Tax Department's classification of it as a manufacturer. The revisionist argued that since the goods were purchased and not manufactured, they should not be treated as a manufacturer. A settlement had already been reached between the Forest Corporation and the Trade Tax Department, with a substantial tax amount already deposited for a specific period. The Tribunal, however, disallowed the revisionist's claim, leading to the present revision before the High Court.

Issue 2: Disputes between government departments
The standing counsel for the Department justified the Tribunal's decision by referring to the Supreme Court's rulings in similar cases. Citing the decision in the case of Chief Conservator of Forests v. Collector and Oil and Natural Gas Corporation Ltd. v. City and Industrial Development Corporation, Maharashtra, it was argued that disputes between government entities should not be litigated in courts. Instead, such disputes should be referred to a high-powered committee for resolution. The High Court concurred with this view and directed that the present case be referred to the committee as directed by the apex court. Until the committee's decision, recovery proceedings were to be put on hold, subject to the committee's orders.

In conclusion, the High Court disposed of the present revision in line with the Supreme Court's directives regarding disputes between government departments. The case highlighted the importance of resolving such disputes through a high-powered committee to avoid unnecessary litigation and ensure fair and efficient resolution.