2015 (9) TMI 470 - HC - VAT and Sales Tax

Exemption from Advance tax As per notification exemption application was to be filed if goods were to be disposed of in manner otherwise than by way of sale or by making zero rate sales as provided under section 17 of such goods or of goods manufactured therefrom Petitioner submitted that application followed by various reminders was moved by petitioner for exemption of advance tax but no decision has so far been taken thereon Held that - after considering material on record and without expressing any opinion on merits of case respondent No. 4 directed to take decision on application by passing speaking order and after affording opportunity of hearing to petitioner in accordance with law Decided in favour of petitioner.

Summary

Issues:
Challenge to the constitutionality of sections 6(7) and 13(1A) of the Punjab Value Added Tax Act, 2005 and a notification dated October 4, 2013. Seeking a writ of mandamus to prevent charging advance tax on goods for manufacturing tax-free goods.

Analysis:
The petitioner, engaged in rice manufacturing, imported paddy and rice from outside Punjab for processing and sale. Transactions involving zero-rated sales did not attract tax liability. However, purchasing goods from outside the state incurred a 5% advance tax, even if eventually sold tax-free. Amendments to the Act introduced sections 6(7), 6(8), and 13(1A) in 2011, with the State collecting taxes under the Punjab Tax on Entry of Goods into Local Areas Act, 2000. A 2013 notification levied tax on imported goods, treated as an advance VAT payment, with an exemption process for goods not sold but used otherwise. The petitioner sought exemption from advance tax, filing an application in 2014, followed by reminders, yet no decision was made.

The petitioner's counsel argued for exemption from advance tax, emphasizing the pending application and lack of a decision. The Court, without delving into the case's merits, directed respondent No. 4 to decide on the petitioner's application from February 24, 2014, within one month from receiving the order's copy, following due process and granting a hearing to the petitioner.