VATO directed to determine, if conditions u.s 6(2) CST Act were satified, HC

Facts in Brief:

1. Petitioner prayed for, issuance of a writ of certiorari or any other writ, order or direction quashing the notices of default payment of taxes and default assessment of penalties for the financial year 2007-08.

2. The said notices and default assessment of penalties have been annexed as Annexures B (Collectively) and C (Collectively) alongwith the writ petition.

3. The petitioner has also prayed for the issuance of a writ of certiorari or any other writ, order or direction quashing the Additional Commissioners order dated 09.10.2009 which confirmed the Value Added Tax Officers order with regard to default assessment of taxes.

HC held as under,

4. we do not find ourselves in agreement with the submissions made by Mr Taneja that where the first sale is exempted, subsequent sales would automatically have to be taxed irrespective of the fact that the second sale fully complies with the conditions stipulated under Section 6(2) of the said Act.

5. We are of the view that when the conditions specified in Section 6(2), whether in the main provision or in the provisos, are all satisfied, the dealer would be entitled to exemption. No provision has been brought to our notice which indicates or suggests that the exemption under Section 6(2) in respect of a subsequent sale cannot be granted where the first sale has had the benefit of an exemption.

6. Since the impugned orders have not examined the question of availability of exemption to the petitioner in terms of the conditions specified in Section 6(2) of the CST Act and had rejected the petitioners claim merely on the ground that since the first sale was exempted, the second and subsequent sale cannot be exempted from the CST Act, we find that the right course to follow would be to set aside the impugned assessment orders as well as the penalty orders and remand the matter to the Value Added Tax Officer to determine as to whether the conditions specified in Section 6(2) of the CST Act have been satisfied by the petitioner or not for the purposes of deciding as to whether the petitioner is or is not entitled to the grant of exemption.

7. It is ordered accordingly. The petitioner would be entitled to file any further documents it wishes to rely upon within a period of four weeks. Thereafter, the Value Added Tax Officer shall pass the appropriate orders within two months. The writ petition stands disposed of. The parties are left to bear their respective costs. 

Case Reference - M/S Mitsubishi Corporation India ... vs The Value Added Tax Officer & Anr.