2025-VIL-1072-GUJ
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VAT High Court Cases

Gujarat Sales Tax Act, 1969 - Sales Tax Exemption, Collection of tax on exempted goods, Levy of Penalty - Respondent-assessee had obtained sales tax exemption certificate under section 49(2) of the Gujarat Sales Tax Act, 1969. Dept issued a show-cause notice alleging that the assessee had collected sales tax on the exempted goods, in violation of section 56(1) of the Gujarat Sales Tax Act -The Tribunal allowed the assessee’s appeals by setting aside the orders passed by the Assessing Officer as well as the First Appellate Authority - Whether the assessee had collected sales tax on the exempted goods, in violation of section 56(1) of the Gujarat Sales Tax Act – HELD - The Revenue has issued the show-cause notice by making assumption that the sale price fixed by the respondent-assessee to for its product was inclusive of the sales tax amount though the sale of the goods was exempted from payment of sales tax - The Tribunal, after considering the evidence on record, held that there was no direct or implied evidence to show that the assessee had collected any amount by way of tax from the distributors, retailers, or customers. The Tribunal relied on the fact that the sales invoices showed 'Nil' tax, the assessee had continued the same practice even after the expiry of the exemption period, and the accounts maintained under IGAAP did not show any collection of tax - The Assessing Officer and the Appellate Authority had committed an error in appreciation of the evidence on record resulting into wrong finding that the assessee had collected some amount by way of tax from the distributors and retailers – The Supreme Court's in Hindustan Lever Limited case has held that when an assessee is not liable to pay tax and has not passed on the tax liability, the sale consideration received should not be bifurcated and divided on the basis of any assumption that the sale price included the tax - Since the assessee had not collected any amount by way of tax, the provisions of section 56 of the Gujarat Sales Tax Act could not be attracted - The appeals filed by the Revenue are dismissed
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