TMI Blog2017 (8) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... denying the benefit of exemption except saying that the case of the Appellant cannot be accepted. It is only a conclusion without any reasons. The Department has expressed an apprehension that the Appellant may be dressing up regular sales transactions as sale of capital goods for avalining the benefit under Section 6 (3) of the DVAT Act. The denial of benefit of that provision cannot be based on mere apprehensions and suspicions. The fact remains that the Department has been unable to produce any credible material to show that in selling any of the demo cars in either 2009-10 or 2010-11, the Appellant was seeking to camouflage regular sale transactions as sale of capital goods in order to claim the benefit under Section 6 (3) of the DVAT Act. Appeal allowed - decided in favor of appellant. - VAT APPEAL 1/2016 - - - Dated:- 2-5-2017 - MR. S. MURALIDHAR AND MR. CHANDER SHEKHAR, JJ. For The Appellant : Mr. Ashok Babbar with Mr. V.K. Sabharwal and Mr. Bharat Tripathi, Advocates For The Respondent : Mr. Gautam Narayan, Additional Standing counsel with Mr. R.A. Iyer, Advocate along with Mr. Kaushal Kishore, Assistant Commissioner (Ward 204), Mr. Akshay Allagh, LA, VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id payment of VAT on the sale of car being a fixed asset was rejected. It was taxed @ 12.5%. The resultant tax deficiency of ₹ 1,31,375 together with interest @ 15% per annum was attracted. The Appellant was directed to pay the aggregate sum of ₹ 1,77,266. Simultaneously, an order of default assessment of penalty under Section 33 of the DVAT Act was also passed. 5. Similar notices of default assessments of tax, interest and penalty were issued on 22nd March 2012 for the periods February 2010-11 and March 2010-11 and on 2nd April 2012 for the period December 2010-11. 6. Aggrieved by the above notices of default assessments of tax, interest and penalty, objections were filed by the Appellant before the Objection Hearing Authority ( OHA ). By the order dated 15th October 2012 the OHA dismissed the objections. 7. The Appellant next filed Appeal Nos. 1424-1431/ATVAT/12-13 before the AT. By the order dated 28th August 2014, the AT affirmed the order of the OHA by holding that the capital assets used in the definition of business is a greater concept than capital goods which include goods as well . Here, in the present case, the Appellant has sold the car fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trade and Taxes and Ors . ( 2013 ) 59 VST 524 ( Del ) was distinguished. After analysing the various provisions of the Act, the Division Bench of this Court in Anand Decors v . Commissioner of Trade and Taxes, New Delhi ( supra ) held as under: (a) the motor vehicle would be a capital good as defined in Section 2(f) and purchase thereof would form part of the business, but ITC of VAT paid would not be available. (b) If the capital goods are used for purposes of taxed and non-taxed sale of goods, the requirement of claiming exemption under Section 6 (3) of the DVAT would stand satisfied. (c) the four conditions stipulated in Section 6 (3) of the DVAT Act, in order to claim exemption, were: (i) there should be sale of capital goods; (ii) the said capital goods have been used by the dealer from the time of purchase till sale; (iii) the purpose for which the capital goods were used should be for making sale of taxable goods or taxable goods and non-taxable goods. The capital goods should not be exclusively used for making sale of non-taxable goods. (iv) The dealer should not have taken tax credit in respect of such capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as its registered owner . The affidavit be filed at least one week prior to the next date of hearing . The Respondent can also file a note of submissions on this aspect . 14. Pursuant to the above order the Appellant filed an additional affidavit on 29th March 2016 inter alia setting out the details of the demo cars purchased in its own name in 2009-10 and 2010-11 and those sold and also enclosing copies of the Registration Certificates (RC) of such demo cars. On 12th July 2016 the Additional Commissioner, Department of Trade and Taxes filed a short affidavit inter alia enclosing copies of the returns filed by the Appellant for the years 2009-10 and 2010-11. Thereafter on 9th January 2017 this Court admitted the appeal and framed the question of law as has been set out in para 2 hereinabove. 15. Mr. Ashok Babbar, learned counsel appearing for the Appellant pointed out that the decision of this Court in Anand Decors ( supra ) covers the case in favour of the Appellant on all fours. The cars in question were capital assets. They had been purchased by the Appellant/Assessee in its own name after paying VAT. They were used as demo cars i.e. for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004. Section 2 (d) of the DVAT Act which defines business read with Explanation (1) thereof which clarifies that any transaction of sale or purchase of capital assets pertaining to such service, trade, commerce, manufacture, adventure or concern shall be deemed to be business. Section 2 (f) defines 'capital goods' to mean plant, machinery and equipment used, directly or indirectly, in the process of trade or manufacturing or for execution of works contract in Delhi. 19. Section 6 (3) of the DVAT Act sates that there will be an exemption from payment of VAT on the following transaction: Where a dealer sells capital goods which he has used since the time of purchase exclusively for purposes other than making non - taxed sale of goods, and has not claimed a tax credit in respect of such capital goods under section 9, the sale of such capital goods shall be exempt from tax . 20. Section 9 (9) of the DVAT Act lists out the instances where tax credit is allowable in respect of capital goods. Section 9 which talks of input tax credit , has already been summarized by this Court earlier. 21. It makes no distinction whether the main business of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference whatsoever to the Appellant‟s taxable turnover under the DVAT Act. 25. It must be noticed at this stage that VATO gave no reasons whatsoever for denying the benefit of exemption except saying that the case of the Appellant cannot be accepted. It is only a conclusion without any reasons. The Department has expressed an apprehension that the Appellant may be dressing up regular sales transactions as sale of capital goods for avalining the benefit under Section 6 (3) of the DVAT Act. The denial of benefit of that provision cannot be based on mere apprehensions and suspicions. The fact remains that the Department has been unable to produce any credible material to show that in selling any of the demo cars in either 2009-10 or 2010-11, the Appellant was seeking to camouflage regular sale transactions as sale of capital goods in order to claim the benefit under Section 6 (3) of the DVAT Act. 26. For all the aforementioned reasons, the Court finds that the order of the OHA as well as the order dated 21st August 2014 of the AT and its subsequent order dated 29th July 2015 are unsustainable in law and therefore, they are hereby set aside. Accordingly, the question fra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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