Excise And Taxation Commissioner, Haryana vs. M/S Aei Engineering Industries

Held

The Court held that the case was covered by its previous decision in M/s Sonex Auto Industries Private Limited’s case. In that judgment, it was concluded that when a unit opts for payment of half of the deferred tax upfront along with returns, the deferred tax should be calculated without deducting the input tax paid on goods used in manufacture. The amount of input tax paid by the assessee is to be counted towards the payment of 50% of the deferred tax upfront. The Court reasoned that Section 61(2)(d)(iii) of the HVAT Act, read with Rule 69(2) of the HVAT Rules, allows for the continuation of tax deferment benefits. The provision requires payment of half of the deferred tax upfront, and on such payment, the tax due according to the returns is deemed to have been paid in full. The deferred tax is to be computed on the basis of tax on sales of manufactured goods, and input tax credit is to be allowed as tax paid in advance. The Court found that the Tribunal had correctly applied this principle. Consequently, the substantial questions of law were answered in favour of the assessee, and the appeal was dismissed.

Facts

The Excise and Taxation Commissioner, Haryana (appellant-revenue) filed an appeal against an order of the Haryana Tax Tribunal. The respondent assessee, M/s AEI Engineering Industries, was engaged in manufacturing and selling auto parts and was granted a tax deferment certificate. The Assessing Authority created an additional demand under the CST Act for the assessment year 2009-10. The assessee challenged this, arguing that the benefit of tax deferment under Section 61(2)(d)(iii) of the Haryana Value Added Tax Act, 2003 (HVAT Act) was wrongly reduced. The Joint Excise and Taxation Commissioner (Appeals) dismissed the assessee's appeal. The Tribunal, however, allowed the assessee's appeals, relying on a previous High Court judgment.

Key Issues

1. What is the amount of deferred tax within the meaning of Section 61(2)(d)(iii) of the Haryana Value Added Tax Act, 2003, read with Rule 69 of the Haryana Value Added Tax Rules, 2003? 2. Whether the learned Tribunal erred in appreciating that the amount of input tax paid by the assessee cannot be counted towards the payment of 50% of deferred tax upfront under Section 61(2)(d)(iii) of the Haryana Value Added Tax Act, 2003? The appellant-revenue argued that the Tribunal failed to appreciate that input tax paid by the assessee should not be counted towards the 50% upfront payment of deferred tax. The respondent assessee argued that the benefit of deferment under Section 61(2)(d)(iii) of the HVAT Act was wrongly reduced by the Assessing Authority and that the Tribunal's decision was correct. The appellant-revenue relied on the judgment of this Court in M/s Sonex Auto Industries Private Limited’s case.