In a recent decision the Rajasthan High Court observed that wrong payment of value added tax (VAT) under different statute would not absolve liability to pay VAT where it is actually due.
The present cross Sales Tax Revisions / References (“STRs”), under Section 84 of the Rajasthan Value Added Tax Act, 2003 (“RVAT Act”), are filed being aggrieved by the order dated 19.03.2020 passed by the Larger Bench of the Rajasthan Tax Board, Ajmer.
The cause and controversy in the matter arose on 19.01.2012, when a survey was conducted at the business premises of the assessee by the ACTO. The Surveying Authority, in furtherance of the survey, prepared a detailed inspection report to opine that breaking a composite and indivisible work contract into three contract is nothing but a colourable device to avoid the tax due under the RVAT Act.
The first contention of the assessee is that the State/revenue has no jurisdiction to tax the subject sales under the RVAT Act as the same are inter-state sales covered under Section 3 of the Central Sales Tax Act, 1956 (CST Act). The second contention of the assessee is that even in case of works contract, the State/revenue does not have the power to tax a sale in terms of Article 366(29-A)(b) of the Constitution of India, if such a sale is an inter-state sale.
It was also submitted that the assessee had duly rebutted and clarified the alleged discrepancies or irregularities pointed out by the assessing officer based on which the impugned assessment order was passed. The Senior Counsel for the assessee submitted that the sole ground of the assessing authority in rejecting the inter-state sales was that there were several discrepancies in the document transferring title of goods and that the invoices were raised late after the goods had already reached the Power Project site.
A Single Bench of Justice Sameer Jain observed that “Since the nature of transaction attracts applicability of RVAT Act, the assessee cannot be absolved of his liability to pay the same merely because the parties had agreed to pay different tax. There is no estoppel against law. Merely because the assessee might have wrongly paid tax under a different statute would not absolve the assessee from liability to pay tax where it is actually due. The issuance of C-Form under CST Act or Form VAT-47 under RVAT Rules have no bearing on nature of transaction.”
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