2007 (3) TMI 777 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of sub-clause (c) of clause 4 of the Rajasthan Sales Tax Incentive Scheme 1987 regarding entitlement to claim set off, benefit under Section 5C of the Rajasthan Sales Tax Act 1954, and consequential liability of interest.

Summary:
The High Court of Rajasthan heard a revision petition filed by the revenue against the Tax Board's order allowing the assessee's appeal. The issue revolved around the denial of set off and imposition of interest by the Assessing Authority. The Scheme of 1987 provided tax exemption, but the interpretation of sub-clause (c) of clause 4 was in question. The revenue argued that the assessee cannot claim set off as per the scheme, while the assessee contended that they were entitled to both tax exemption under the scheme and benefits under Section 5C of the Act of 1954.

The Court examined the Scheme of 1987, which granted tax exemption to industrial units. Sub-clause (c) of clause 4 prohibited deductions, set off, or exemptions for purchases made by units benefiting from the scheme. However, the Explanation allowed for benefits under Section 5C and 5CC of the Act of 1954 to continue for eligible industrial units.

The Court concluded that the assessee could claim set off if they paid tax beyond the taxable limit under Section 5C, despite availing tax exemption under the Scheme of 1987. The Tax Board's decision to allow the set off was upheld, but it was noted that the matter should be remanded to the Assessing Authority for further examination of the actual liability of the assessee.

In summary, the revision petition was partly allowed, affirming the entitlement of the assessee to claim set off. The case was remanded to the Assessing Authority for a detailed assessment of the assessee's liability in light of the Court's observations.