A division bench of Justice S.C. Gupte & Justice Abhay Ahuja of the Bombay High Court passed a judgment in the case of M.D. Overseas Pvt. Ltd. v. State of Maharashtra and others under Article 226 of the Constitution. It was alleged that the Deputy Commissioner of State Tax violated the principle of natural justice while passing an order under Maharashtra Value Added Tax, 2002.
Facts of the Case
The petitioner is a Private Limited company which deals with the trading of precious and non-ferrous metals like gold, silver, nickel, cobalt etc. The issue arose on the trading assessment of nickel and cobalt. The petitioner entered into an agreement for the provision of warehouse and storage facilities with Arshiya Free Trade Warehousing Zone (AFTWZ), which is deemed to be a Special Economic Zone under the Special Economic Zone Act, and an inland container depot under the Customs Act, 1962. The petitioner was served a demand notice for the assessment years of 2013-14, 2014-15 and 2015-16. It was served on the basis that there was a default on the payment of VAT under Maharashtra Value Added Tax Act, 2002 in the dealing of nickel and cobalt between the Petitioner and ASTWZ
The issue, in this case, is the decision given by Deputy Commissioner for the assessment year 2015-16, in which the assessing authority held that the petitioner is liable to pay the required tax. The concern of the petitioner is that the Appellate Authority of Joint Commissioner of Tax passed orders for the assessment year 2013-14, 2014-15 based on the same facts that stated that the petitioner is not required to pay tax under MVAT 2002. These orders were appealed against, but no decision was rendered.
The counsel for the petitioner submitted the following arguments:
- For the assessment year 2015-16, the nickel and cobalt were stored at AFTWZ Warehouse and was subsequently sold to either customer within AFTWZ Zone or to DTA units in AFTWZ zone. This sale comes under sales made in the course of import into India and hence exempted from the levy of State Tax in terms of Section 5(2) of the CST Act.
- The Assessing Officer should abide by the decision of the higher authority which passed the order on the same facts for the assessment years of 2013-14, 2014-15. This argument is supported by the Bombay High Court judgment in VIACOM 18 Media Pvt. Ltd. v. the State of Maharashtra.
The counsel for the respondent submitted the following arguments:
- The writ petition is not maintainable as the petitioner has the alterative remedy to approach the appellate authority. However, it didn’t choose the same because of the statutory requirement of a 10% deposit of the value in dispute.
- The orders passed for the assessment year of 2013-14, 2014-15 were appealed, and therefore the petitioner’s arguments based on these orders are not valid.
- There is no provision mentioned in the MVAT Act that AFTWZ can be treated as a place outside India. Also, no provision states that the SEZ area cannot come under the taxability of this act.
The court relied upon the decision in the VIACOM judgment of the court and observed that the assessing authorities before making a decision should have looked upon and considered the decision given by the higher appellate authority passed on the same facts of the assessment year of 2013-14, 2014-15.
The court did not comment on whether “this is a sale in the course of import”, but since the facts of the assessment years of 2013-14 and 2014-15 look identical to the assessment year of 2015-16, the assessing authority should have taken into consideration the decision of the appellate authority.
The order of the assessing officer was set aside, and the case was remanded back to the authority to look into the facts considering the previous orders on the 2013-14 and 2014-15 assessment years.
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