Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2014 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 1225 - HC - VAT and Sales TaxTrade tax - tractor batteries - Section 3-A of the Tax Act - Entry No.46 of the N/N. dated 15.1.2000 - Entry No.18 of N/N. dated 29.1.2001 - Entry No.18(i) as modified by N/N. dated 19.5.2003 - Based on Entry No.18 of the N/N. dated 9.5.2003, a circular dated 22.5.2007 was issued by the Commissioner of Trade Tax indicating that in view of the inclusion of “battery” in the N/N. dated 9.5.2003 and non-inclusion of battery in the N/N. dated 15.1.2000, the tractor battery should be subjected to tax as an unclassified item @ 10% - whether the batteries are to be considered as parts or accessories of tractor and at what rate should it be taxed? Held that: - a battery, which is fitted in a tractor, is an integral part of a tractor if not an accessory. Assuming that battery is supplementary or subordinate in nature and is not essential for actual functioning of the product, even then, battery would be included as a part, if not, accessory of a tractor under the notification dated 15.1.2000 in view of the words “of all kinds”. The said words are of wide import and would include battery tractor - We are of the opinion that a battery is an essential component for the functioning of the tractor and is an integral part of the tractor. Consequently, a battery would be covered under the notification dated 15.1.2000. Jurisdiction of AO - reasons to believe to impose tax - The words “has reasons to believe” must not be arbitrary or irrational but must be based on reasons which are relevant and germane to the issue. The formation of the required opinion and belief by the assessing officer is a condition precedent. Without such formation, the assessing officer will have no jurisdiction to initiate proceedings under Section 21 of the Act Held that: - the assessing officer as well as the Additional Commissioner, while granting permission, was of a belief that tractor battery is liable to be taxed as an unclassified item @ 10%. Such belief was based on comparison of the notification dated 9.5.2003 wherein batteries were included as a component, parts and accessories of a vehicle, which excluded tractor and consequently had a reasonable belief and formed an opinion that non-exclusion of battery in the notification dated 15.1.2000, which related to parts and accessories and attachments of tractor would mean that tractor battery cannot be included in the notification dated 15.1.2000 and, therefore, has to be treated as an unclassified item. Further, the belief was formed also on the basis of the circular dated 22.5.2007 issued by the Commissioner, which is binding upon the subordinate authorities. The Court is of the opinion, that such belief forming an opinion that whole or any part of the turnover of a dealer had escaped assessment of tax is not based on any rational basis nor the belief is germane to the issued involved nor such reasons have a nexus with the issue involved. Initiation of re-assessment proceedings under Section 21 of the Act was wholly illegal and without any authority of law. Consequently, the impugned order of the Additional Commissioner of Trade Tax, dated 20.5.2008, granting permission to the assessing authority for reopening the assessment proceedings under Section 21 of the Act as well as notice under Section 21 of the Act, dated 26.3.2008, issued by the Trade Tax Officer and the circular dated 22.5.2007 issued by the Commissioner of Trade Tax are wholly illegal and are quashed. Petition allowed - decided in favor of petitioner.
|