In the High Court of Punjab and Haryana, Chandigarh
VATAP No. 26 of 2009
Date of Decision: November 11, 2009
New Model Industries Pvt. Ltd.
...Appellant
Versus
State of Punjab and another
...Respondents
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE JASWANT SINGH
Present: Mr. Kashmiri Lal Goyal, Senior Advocate, with
Mr. Sandeep Goyal, Advocate,
for the appellant.
Mr. Piyush Kant Jain, Addl. AG, Punjab,
for the respondents
1. To be referred to the Reporters or not? Yes
2. Whether the judgment should be reported in
the Digest?
M.M. KUMAR, J.
This appeal filed under Section 68 of the Punjab Value
Added Tax Act, 2005 (for brevity, ‘the VAT Act’) challenges order
dated 17.11.2008 passed by the Value Added Tax Tribunal, Punjab,
Chandigarh (for brevity, ‘the Tribunal’) in Appeal No. 511 of 2005-06,
in respect of Assessment Year 1993-94.
2. Brief facts necessary for disposal of the controversy raised
in the instant appeal are that the dealer-appellant is engaged in the
manufacturing of bus bodies on the chassis as per design, specifications
and seating capacity supplied by its customers. It has been claimed that
VATAP No. 26 of 2009 2
the dealer-appellant neither making bodies for sale nor keeps the same
in stock. It also undertook the repair work and resale of iron and steel.
3. On 16.9.1998, a surprise checking was conducted by the
officers of the revenue on the premises of the dealer-appellant. A
detailed show cause notice, dated 8.10.1998, was issued by the
Assessing Authority directing the dealer-appellant to produce requisite
documents such as cash book, ledger, purchase vouchers, balance sheet
with profit and loss account, bill books, trading account etc. and
purchase orders for the years 1993-94 to 1997-98. These proceedings
eventually culminated into passing of an assessment order dated
27.7.1999 (A-2) in respect of Assessment Year 1993-94. The Assessing
Authority raised an additional demand of Rs. 25,13,809/- under the
provisions of the Punjab General Sales Tax Act, 1948 (for brevity,
‘PGST Act’). Against the order dated 27.7.1999, the dealer-appellant
preferred an appeal under Section 20(5) of the PGST Act. The Deputy
Excise and Taxation Commissioner (Appeals), Jalandhar Division,
Jalandhar (DETC), vide order dated 21.9.1999 directed the dealer-
appellant to deposit Rs. 17,00,000/- by 14.10.1999 and to produce the
Treasury receipt on 15.10.1999 before him. Against the said order, the
dealer-appellant filed an appeal before the Tribunal, which directed him
to deposit Rs. 1,00,000/- by 15.5.2000 and to appear before the DETC.
The dealer-appellant could not deposit the requisite amount and filed an
application for extension of time for deposit of the amount. The
Tribunal extended the time upto 1.1.2001 and directed the dealer-
appellant to appear before the Appellate Authority on 8.10.2001. The
amount was deposited and the Appellate Authority remanded the matter
to the Assessing Authority to afford an opportunity to the dealer-
VATAP No. 26 of 2009 3
appellant to produce evidence and to pass fresh assessment order, vide
order dated 28.1.2002 (A-3).
4. On 18.9.2002, the Assessing Authority again passed an
assessment order. This time no demand under the PGST Act was raised
but a demand of Rs. 5,70,080/- under the Central Sales Tax Act, 1956
(for brevity, ‘CST Act’) was raised (A-4). A sum of Rs. 4,68,458/- as
penalty and interest under Section 10(6) and 11-D read with Section 9 of
the CST Act, was also imposed. The dealer-appellant filed two appeals
one under Section 20(10)(a) of the PGST and the other under Section 9
(2) of the CST Act read with Section 20(1)(a) of the PGST Act. On
11.1.2005 (A-4/A), the Appellate Authority again remanded the matter
back to the Assessing Authority for passing a speaking order after
verifying the facts as per the directions given in the earlier remand order
dated 28.1.2002.
5. On 28.3.2005, the Assessing Authority again passed fresh
assessment orders under the PGST Act and determined the gross sales of
the dealer-appellant at Rs. 2,16,66,610/-. After placing reliance on ‘D’
Forms, the Assessing Authority came to the conclusion that there was
sale of motor vehicle bodies and the transactions were not of work
contract as claimed by the dealer-appellant. It was further held that the
sales were completed within the State and, thus, liable to sales tax under
PGST Act. Accordingly, demand of Rs. 6,92,988/- towards tax was
raised and penalty of Rs. 5,00,000/- under Section 10(7) of the Act was
imposed (A-5). The appeal preferred by the dealer-appellant against
order dated 28.3.2005, was dismissed by the Appellate Authority vide
order dated 27.12.2005 (A-6)
VATAP No. 26 of 2009 4
6. Against the order dated 27.12.2005 (A-6), the dealer-
appellant preferred further appeal before the Tribunal along with an
application for entertaining the appeal without prior payment of
demand. The Tribunal vide order dated 17.11.2008 disposed of the
appeal holding the dealer-appellant liable to pay the tax due as shown in
the order dated 28.3.2005 passed by the Assessing Authority. However,
it has set aside the penalty of Rs. 5,00,000/- under Section 10(7) of the
Act (A-9).
7. At the hearing, Mr. K.L. Goyal, learned senior counsel for
the dealer-appellant has raised the following two questions of law for
determination of this Court:-
1. Whether on the facts and in the circumstances of the
case, the Tribunal was justified in holding that the
erection of body on the chassis would amount to sale,
contrary to the judgment of Hon’ble the Supreme
Court in 38 STC 177?
2. Whether on the facts and in the circumstances of the
case, the Tribunal was justified in holding that there
would be no effect with regard to tax liability of the
dealer even if the transaction is held to be inter state
sale?
8. The first question of law does not survive as it has already
been answered against the dealer-appellant by Hon’ble the Supreme
Court in the case of Commissioner of Commercial Taxes, Mysore v.
M.G. Brothers, [1975] 35 STC 24. Confronted with the aforesaid
situation, Mr. K.L. Goyal, learned senior counsel could not point out
VATAP No. 26 of 2009 5
any distinguishing feature in the case in hand. Accordingly, the first
question is answered against the dealer-appellant.
9. In respect of the second question, Mr. Goyal has argued
that once it is certain that the goods were to move outside the State of
Punjab then the transaction is required to be considered as inter state
sale, which would not be assessable to sales tax. In support of his
submission he has placed reliance on a Division Bench judgment of this
Court in the case of State of Punjab v. Himachal Government
Timber Depot, [1985] 58 STC 265 and argued that according to clause
3 of the agreement dated 1.12.1994 (A-1), the Haryana Roadways has
undertaken to pay CST in addition to fabrication charges. The
submission appears to be that once it is clear between the parties that the
transaction is inter state, no tax under the PGST would be leviable. On
a query by the Court, learned counsel has not disputed that as far as the
dealer-appellant is concerned, it has to pay 4% tax either under the
PGST or under the CST.
10. We have thoughtfully considered the submissions of the
learned counsel. There are categorical findings recorded by the
Tribunal that the agreement dated 1.12.1994 (A-1) stipulated fabrication
of bus bodies on the chassis which were supplied by the Haryana
Roadways to the dealer-appellant. A fixed amount of price was to be
realised for each of the bus body to be fabricated on the chassis and no
material for fabrication of bus body was to be supplied by the Haryana
Roadways. Accordingly, the Tribunal on facts has concluded that there
is no other possible construction except to infer that there was sale
within the State of Punjab, which was liable to tax especially when the
dealer-appellant had obtained ‘D’ Forms from Haryana Roadways as is
VATAP No. 26 of 2009 6
mandatory in case of sale made to Government department which is
chargeable to tax at lower rate.
11. On the issue of inter state sale, the Tribunal has opined that
even if the contention raised by the dealer-appellant is accepted and it
was treated as an inter state sale on account of movement of goods from
Punjab to Haryana, still the fact remains that the tax was assessable @
4%, which has been charged by the respondent State. Accordingly, the
Tribunal has concluded that no useful purpose would be served by
remanding the matter for fresh assessment, especially when the dealer-
appellant did not show the transaction to be inter state sale. Therefore,
we are of the view that there would be no tax effect on the dealer-
appellant in the facts and circumstances of the present case.
Accordingly, while leaving the question of law open, we dismiss the
appeal.
12. No other issue has been raised.
13. As a sequel to the aforesaid discussion, the appeal fails and
the same is dismissed.
(M.M. KUMAR)
JUDGE
(JASWANT SINGH)
November 11, 2009 JUDGE
Pkapoor