The Calcutta High Court set aside the demand for remission of tax under Gross Value of Fixed Capital Assets (GVFCA) as investments on fixed capital assets was made beyond duration of the West Bengal Incentive Scheme.
The writ petition is at the instance of a registered dealer under the West Bengal Sales Tax Act, 1994 under the West Bengal Value Added Tax, (WB VAT) 2003 Act praying for a writ of mandamus, commanding the respondents to allow remission of tax after setting aside the order passed by the West Bengal Taxation Tribunal.
The petitioners, Electrosteel Castings Limited & Anr, claim to have made a further investment of Rs. 23 crores during the period from 01.04.2005 to 31.12.2005 taking the total investment till 31.12.2005 at Rs. 274 crores. The petitioners claim that the GVFCA was determined at Rs. 194 crores. Petitioners prayed for enhancement of GVFCA by Rs. 80 crores to include the investment made by the petitioner till 31.12.2005.
The writ petitioner contended that the State Government has the power to relax certain provisions of the West Bengal Sales Tax Act, 1994 relating to deferment of payment of taxes or remission of taxes and allow remission of sales tax to the petitioner in respect of the GVFCA to the tune of Rs. 23 crores.
Before the Tribunal, the writ petitioners prayed for an order directing the respondents to allow remission of tax to the petitioner covering the GVFCA of 23 crores. The Tribunal, by a judgment dismissed the said application.
The Counsel further submitted that after the coming into force of the WB VAT Act, a registered dealer holding eligibility certificate under the 1994 Act and who was enjoying benefit of remission of tax under Section 41 of the 1994 Act for a specified period or a specified amount determined shall be allowed remission under the WB VAT Act in terms of the provisions laid down under Section 118(c) of the WB VAT Act.
The Bench comprising Justices T.S. Sivagnanam and Hiranmay Bhattacharyya noted that the contention of the petitioner cannot be accepted for the following reasons. Admittedly investments on fixed capital assets of Rs. 23 crores were made during the period 01.04.2005 to 31.12.2005 i.e., well beyond the duration of the scheme. Therefore, the said investment could not qualify for remission of sales tax dues as the right to claim remission for such investment did not accrue within 31.03.2004
The Court also observed that “The Court has already observed that the petitioners have failed to demonstrate that the investment of Rs. 23 crores made by the unit was pursuant to any promise made by the government to allow remission of sales tax on such investment. Therefore, the question of reversing the promise by the State does not arise in the case on hand.”
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