Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2015 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 539 - HC - VAT and Sales TaxLevy of tax on ‘deemed sale price’ – Constitutional validity – Explanation 2, Section 2(1)(zd) – Prior to amendment to Explanation to Section 2 (1) (zd) input tax liability was included in sale price and passed on to purchaser – However by explanation 2 VAT was to be levied on price charged for sale which was yet to take place – sale and purchase of petroleum products - It was assailed by petitioners that it was contrary to statutory provisions, concept of VAT and completely deprives dealers of claiming any input tax credit – Whether Explanation 2 added to Section 2 (i) (zd) was constitutionally sustainable inasmuch as it seeks to levy VAT on 'deemed' sale price. Held that:- subject of tax not goods or goods sold, but transaction of “sale of goods” – Addition of Explanation 2 was to permit levy of VAT on sale price of transaction which is yet to take place and to that extent such levy cannot be sustained in law – It was not on price of actual completed sale but price of sale which is yet to take place – Law prohibits taxing of transaction which is not completed sale – Expression 'sale' within meaning of Section 3 was confined to actual sale that has taken place and it was only price of that sale that can legitimately constitute measure for levy of tax. As explained in State of Rajasthan v. Rajasthan Chemists Association [2006 (7) TMI 17 - SUPREME COURT OF INDIA] this cannot be overridden by devising measure of tax which relates to event which has not come into existence – Devise adopted was beyond legislative competence of legislature with reference to Entry 48 in List II to Constitution – Therefore, Explanation 2 hereby struck down as being ultra vires to Constitution –Consequently, omission in Form DVAT-16 of relevant column to enable dealer to claim input credit was also declared to be unsustainable in law – Petition allowed – Decided in favour of Assesse.
|