9911796707
TMI Blog2015 (2) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... oner also prays that orders dated 31.03.2009, 06.05.2010 and 28.04.2011, passed by the Excise & Taxation Officer-cum-Assessing Authority, SAS Nagar, Mohali, the Deputy Excise & Taxation Commissioner (Appeals) and the Value Added Tax Tribunal, Punjab, Chandigarh, respectively, may be quashed. Before referring to the diametrically opposing stands of the parties, it would be appropriate to delimit the facts. Admittedly, in accordance with the Package of Incentives, 1992, the Government of Punjab, through the Industries Department and M/s Godrej-GE Appliances Limited (the original name of the petitioner), entered into a memorandum of understanding, dated 08.03.1994, agreeing to defer sales tax liability for nine years, subject to a fixed capital investment of 150%. Admittedly, the petitioner set up a manufacturing unit at Mohali and commenced production on 22.03.1996. The State of Punjab notified an amendment, dated 11.12.1997, to Clause 7 of the Package of Incentives, 1992 and Rule 8 of the Punjab Industrial Incentive Code, 1992, granting sales tax deferment to the petitioner. Accordingly, an eligibility certificate dated 20.02.1998 was issued to the petitioner granting deferment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Deputy Excise and Taxation Commissioner (Appeals) which was dismissed on 06.05.2010. The petitioner filed another appeal before the Value Added Tax Tribunal, Punjab, Chandigarh, which was dismissed by holding that as vires of Rule 2(xxi)(ii) of the Rules have been impugned, the Tribunal does not have jurisdiction to record an opinion thereon. VATAP-64-2011 has been filed to challenge order dated 28.04.2011, passed by the Value Added Tax Tribunal, Punjab, Chandigarh whereas the writ petition has been filed to challenge the vires of the Rules. Counsel for the petitioner/appellant submits that liability to pay sales tax was deferred by fixing the quantum of deferment and providing for an outer period of deferment whichever is achieved earlier. The latter period was nine years and the former amount was Rs. 137 crores. The period of deferment, including the extended period expired on 21.03.2007. The petitioner has deposited the entire deferred sales tax liability to the satisfaction of authorities but the respondents have demanded sales tax on branch transfers made outside the State of Punjab by asserting that the explanation to Rule 2(xxi) of the Rules and the proviso appended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine expiry of the quantum of deferment. Rule 2(XXI) of the Rules, reads as follows:- "(xxi) "Notional sales tax liability" shall mean:- (i) the amount of tax payable under the Act on estimated sales of finished products and estimated purchase of raw material otherwise liable to purchase, of the eligible unit during the year for the purpose of deferment of, or, exemption from, tax computed at the rates specified under the Act; and, EXPLANATION- The sales made on consignment basis within the State of Punjab, or branch transfer within the State of Punjab, shall be deemed to be sales made with the State and liable to tax. (ii) the amount of tax payable under the Central Sales Tax Act, 1956 on the sale of finished products of the eligible units made in the course of inter-State trade of commerce computed at the rate of tax applicable under the aforesaid Act; PROVIDED THAT on branch transfer or consignment sales outside the state of Punjab, notional sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are eligible to tax under the aforesaid Act" clarify the word "notional". This notional calculation of sales tax liability cannot possibly be read to confer a fresh liability to pay tax. Even otherwise, Section 10-A of the 1948 Act places an obligation upon the party granted a deferment certificate to pay "tax due" i.e. tax as determined by the statue and, therefore, the stand taken by the State that Rule 2(xxi) of the Rules, the proviso and the explanation thereto requires the petitioner to pay tax on branch transfers, can neither be countenanced nor do the words and expressions used in the explanation and the proviso lend themselves to such an interpretation. The explanation to sub Rule (i) which clarifies that branch transfers within the State of Punjab shall be deemed to be sales made within the State of Punjab and liable to tax does appear to suggest that branch transfers shall be deemed to be sales under the Act and liable to tax. The proviso to sub rule (ii), which sets out the rate of "notional tax liability" on branch transfers or consignment sales outside the State of Punjab clarifies that sale tax liability on branch transfers shall be sales under the Act, by raising a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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