Softwareone India Pvt. Ltd. v. State Of Haryana And Another

Factual and Procedural Background

The petitioner challenged the validity of the definition of "sale price" in Section 2(1)(zg) of the Haryana VAT Act, 2003 and a Government of Haryana, Excise and Taxation Department clarification dated 20.08.2013 which provided that the element of service tax would be included for the purpose of sale price and taxed. The writ petition was entertained initially because the Tribunal (before which an appeal against the clarification lies) was not functional. At the time of this decision the Tribunal had become functional but a vacancy created by the retirement of the third Member had not been filled. The opinion notes that appeals against clarifications under Section 56(3) of the Haryana VAT Act are to be heard by a Bench of not less than three Members. The State's counsel, after consulting the Advocate General, undertook that the vacancy would be filled within two months.

Legal Issues Presented

1. Whether the definition of "sale price" in Section 2(1)(zg) of the Haryana VAT Act, 2003 is valid (as challenged by the petitioner).
2. Whether the Government clarification dated 20.08.2013, treating the element of service tax as part of the sale price and taxable, is valid.
3. Procedural: whether the petitioner should be relegated to the appellate remedy before the Tribunal given the Tribunal's required composition under Section 56(3) of the Haryana VAT Act and the existing vacancy.

Arguments of the Parties

Petitioner's Arguments

• The petitioner challenged the validity of the definition of "sale price" in Section 2(1)(zg) of the Haryana VAT Act, 2003.
• The petitioner challenged the Government clarification dated 20.08.2013 that service tax element is to be included in the sale price for levy of tax.
• At the time of initial hearing, counsel for the petitioner argued that the Tribunal was not functional, justifying interference by the Court.

State's Arguments / Submissions

• Learned counsel for the State, after consulting the Advocate General, submitted that the vacancy caused by the retirement of the third Member of the Tribunal would be filled within two months.
• Implicitly relied on availability of the appellate remedy before the Tribunal under Section 56(3) of the Haryana VAT Act.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court observed that the petition had been entertained earlier because the Tribunal was not functional. It noted the present fact that the Tribunal was functional though short of the third Member required for a Bench of not less than three Members to hear appeals under Section 56(3). Given (a) that an appeal against the Government clarification is available and (b) the State's undertaking to fill the vacancy within two months, the Court concluded that the petitioner should be relegated to the appellate remedy before the Tribunal. To protect the petitioner's rights given the delay while the writ petition remained pending, the Court directed that if an appeal is filed within 30 days it shall not be dismissed for delay and must be considered on its merits. The Court expressly stated that it had not examined the validity of Section 2(1)(zg) of the Haryana VAT Act.

Holding and Implications

Core Ruling: The writ petition is disposed of and the petitioner is relegated to file an appeal before the Tribunal.

Implications:

• The petitioner may file an appeal against the Government clarification; if filed within 30 days it shall not be dismissed for delay and must be considered on merits.
• The State undertook to fill the vacancy of the third Member of the Tribunal within two months to enable constitution of a Bench of not less than three Members under Section 56(3) of the Haryana VAT Act.
• The Court did not decide on the substantive validity of Section 2(1)(zg) of the Haryana VAT Act, 2003; no new precedent on that point was established by this opinion.