Allahabad High Court: Under VAT, Revision Jurisdiction Limited To Issues Of Law, Jurisdictional Errors Or Procedural Irregularities

Allahabad High Court: Under VAT, Revision Jurisdiction Limited To Issues Of Law, Jurisdictional Errors Or Procedural Irregularities

States the high courts must refrain from going into facts already decided by the tribunal

The Allahabad High Court has held that the revision jurisdiction under Section 58 of the Uttar Pradesh Value Added Tax (VAT) Act, 2008 is limited to questions of law, jurisdictional errors, or procedural irregularities.

The bench comprising Justice Shekhar B. Saraf stated that the high court must refrain from going into questions of facts, which the tribunal had already decided.

Section 58 of the Uttar Pradesh VAT provides that any person aggrieved by the order passed under Section 57(7) or Section 57(8) could file a revision petition before the court if the case involved questions of law. The limitation for filing is 90 days from the service of such an order.

The judge held, “In the exercise of revisional jurisdiction, the high court has a limited mandate. The scope is primarily focused on questions of law, jurisdictional errors, or procedural irregularities. In a revision petition, the court must refrain from engaging in a de novo inquiry into factual matters already adjudicated upon by the tribunal, unless compelling grounds warranting such an intervention are made.”

The tax department had filed an appeal against the tribunal’s order on the question of law whether the cello used by the assessee were capital goods or merely containers used for the sale of ink that the assessee manufactured.

The department’s counsel argued that capital goods defined under Section 2(f) of the UPVAT Act meant any plant or machinery including apparatus, tools, and appliances used for ‘manufacturing or processing of any goods’. He added that though a storage tank formed a part of the capital goods, the cello was not a fixed part of the plant or machinery. It was merely an apparatus used for the supply of manufactured ink. Once the ink was used by the customer, the cello was fitted back into the plant for a refill.

The counsel contended that the cello fell within the definition of exempted goods under Section 2(f), which includes vehicles used for transporting goods or passengers.

On the other hand, the counsel for the assessee submitted that whether the cello was a part of the manufacturing process was a factual finding arrived at by the tribunal. Merely because the cello was movable, it could not be excluded from the definition of capital goods.

The bench held that while exercising the revisional jurisdiction, the court could not reappreciate facts and/or re-examine the evidence and findings of the tribunal.

Justice Saraf stated, “There is a presumption of finality attached to judgments and orders passed by the appellate authorities. The high courts should not lightly disturb such judgments unless there are compelling reasons. The revisional jurisdiction is not intended to be a mechanism for relitigating cases or reopening settled matters.”

He added, “The high courts cannot ordinarily interfere with the factual findings arrived at by lower courts or tribunals unless such findings are perverse, based on no evidence, or suffer from a manifest error of law. A revisional jurisdiction does not empower high courts to reevaluate factual evidence or substitute their findings for those of the lower courts or tribunals. It is aimed at correcting jurisdictional errors and excesses of law.”

Thus, while dismissing the revision petition filed by the department, the bench ruled that the tribunal had held that because the cello was sent to the customers, it did not mean it was not used to store the ink. The cello being a storage tank, was an essential part of the manufacturing process. Its moving nature could not exclude it from the definition of capital goods, which includes a storage tank under Section 2(f)(iii).