Excelsior Correspondent
JAMMU, May 9: Division Bench of State High Court comprising Justice Bansi Lal Bhat and Justice Janak Raj Kotwal today said that supply of milk to Northern Command units in Jammu and Kashmir is not liable to levy or collection of Value Added Tax (VAT).
The order was passed in a petition filed by National Cooperative Dairy Federation of India Ltd and others seeking direction to State against restraining the vehicles carrying UHT/Tetra Pack milk for supply to Army units under Northern Command and also seeking direction for prohibiting respondents from charging VAT from the petitioners.
After hearing Advocate Pranav Kohli for the petitioners whereas Advocate MA Bhat appearing for the Finance Department, the DB directed respondents not to levy and collect tax on sale or purchase when such sale or purchase has taken place in the course of inter-state trade or commerce. “The authorities of State Government have to show due caution and sensitivity while dealing with the matter and not to act arbitrarily. Stand taken by the respondents that the petitioners are making the supplies on FOR basis has no substance in relation to their liability to pay VAT”, the DB added.
“Supply on FOR (Free on Rail/Road) basis rather would show that the transportation of the sold goods is a covenant of and pursuant to the contracts of the sale between the Army and petitioners and the contracts shall not be said to have been executed until supply of goods at specified delivery points in the State of Jammu and Kashmir is made by the petitioners”, the DB further said.
“Stand taken by the respondents is without any basis and repugnant to constitutional scheme”, the DB said and even restrained the respondents from detaining trucks/vehicles carrying Tetra Pack Milk being transported by petitioners pursuant to supply orders for delivery at the specified delivery points of the Northern Command for enforcing payment of VAT under the Act.
“The respondents are also directed to undo all the steps taken by them in this behalf and release the Bank Guarantee(s) furnished by the petitioners”, the DB said.
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