4% Additional VAT on Drilling Rigs not allowable When Assessee already deposited Tax Amount: Supreme Court [Read Judgement]

The Supreme Court (SC) of India has held that 4% additional Value Added Tax (VAT) on drilling rigs is not allowable when the assessee already deposited the tax amount.

Paranthaman Hydraulics and Equipments, the assessee challenged the order passed by the 1st respondent rejecting the request of the appellants/writ petitioners for waiver of tax arrears and penalty.

The Madras High Court (HC) viewed that “one taken by the Commissioner in the Clarification dated 25.05.2007 holding it to be taxable at 4% and the other view taken by the assessing authority, who held it to be taxable at 12.5%, are not sustainable views.  The Drilling Rigs, prima facie appear to be Machinery and Equipments sold by the Assessee, which, upon being mounted on the Truck Chassis, can work as a Bore Hole Drilling Rigs by the purchasing dealers.”

Further, held that as an interim measure, the authorities are directed to pay 4% of the tax determined by the authorities, apart from 4% already remitted, i.e., a total of 8% (4% + 4%)  within a period of four weeks from the date of receipt of a copy of this order.”

Justice Krishna Murari and Mr Justice C T Ravikumar observed that tax at the rate of 4% has already been deposited by the petitioner(s) and the direction in the impugned order to pay another 4% is not valid.

The Court disposed of the petition by taking the above-said view.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates