The Delhi High Court recently granted relief to Calcom Vision, affirming the maintainability of Sales Tax Appeals challenging the procedure of Assessment adopted by authorities of the Value Added Tax (VAT) department, under Section 81 of the Delhi Value Added Tax Act, 2004 (DVAT Act) instead of Section 45 of the Delhi Sales Tax Act, 1975 (DST Act).
The judgment was rendered by the Delhi High Court while adjudicating multiple sales tax appeals filed by divisions of the Calcom group against the VAT authorities, along with two appeals filed by Bharat Petroleum Corporation Limited against the state of NCT of Delhi and others.
Calcom Electronics Ltd. is engaged in the manufacture and distribution of electronic goods, and had its assessment finalized under the DST Act, at a time before the DVAT Act was promulgated.
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Following the institution of the cases, the Respondent Department initiated a preliminary objection challenging the maintainability of the matters, asserting that the appeals would have to follow the procedure as contemplated under Section 45 of the repealed Delhi Sales Tax Act, 1975 instead of the provisions of Section 106 of the Delhi Value Added Tax Act, 2004 – promulgated on 01.04.2005.
Additional Standing Counsel, Rajeev Aggarwal and Shubham Goel, appearing for the Respondent-Revenue contended that the Petitioners are required to produce a ‘statement of case’ under Section 45 of the DST Act for the consideration of the High Court and that the present appeals, pertaining to a period before April 1, 2005 cannot be directly instituted and maintained before the High Court.
The Petitioners, through Santanu Kanengo, Rajeev Bansal, Sayartani Kanugo and Pramod, argued that the appeal mechanism under Section 81 of the DVAT Act provides a streamlined process, permitting an aggrieved Petitioner to directly approach the High Court. Furthermore, the Petitioner contested the Respondent’s reliance on the retrospective nature of Section 106(4) of the DVAT Act.
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The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that the DVAT Act, in essence sought to replicate and re-enact the hierarchy of remedies created under the DST Act; however, the DVAT Act now entitled an aggrieved party “to approach the High Court directly as opposed to petitioning the Tribunal for drawing up a ‘statement of case’ and referring the same to the Court.”
Referring to the decision of the Supreme Court in Gammon India Ltd. vs. Spl. Chief Secy. (2006) the Bench held that the repeal and savings clause under Section 106(4) of the DVAT Act does not seek to regulate procedure of the institution of an appeal, instead the DVAT Act lays down that such an Appeal may be entertainable by the High Court only if it involves a ‘substantial question of law’.
In light of the observations made, the Delhi High Court held that the DVAT Act and its provisions do not mandate that any appeals filed after 01.04.2005 are to be subject to the rigors of procedure of Section 45 of the erstwhile DST Act. Pursuantly, the Division Bench held that the appeals filed by Calcom in accordance with Section 81 of the DVAT Act are maintainable.
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