Devyani International Ltd. v. State Of Haryana And Another

Factual and Procedural Background

The petitioner challenged the validity of the definition of "sale price" contained in Section 2(1)(zg) of the Haryana VAT Act, 2003, the Government of Haryana, Excise and Taxation Department clarification dated 22.08.2013 (which provides that element of service tax will be considered for the purpose of sale price and tax shall be levied on that), and a notice dated 24.04.2014 issued to the petitioner. The writ petition was entertained earlier because the Tribunal, where an appeal against the clarification is maintainable, was not functional at that time. At the time of this opinion the Tribunal is functional but the vacancy created on retirement of the third Member has not been filled.

Legal Issues Presented

1. Whether the definition of "sale price" in Section 2(1)(zg) of the Haryana VAT Act, 2003 is valid.
2. Whether the Government clarification dated 22.08.2013 (treating element of service tax as part of sale price) is valid.
3. Whether the notice dated 24.04.2014 issued to the petitioner is valid.
4. Whether an appeal against the clarification can be heard given the Tribunal's requirement under Section 56(3) of the Haryana VAT Act to have a Bench consisting of not less than three Members and the existing vacancy.

Arguments of the Parties

Petitioner's Arguments

• The Tribunal, which is the forum for appeal against the Government clarification, was not functional (argument advanced to justify entertaining the writ petition).

State's Arguments

• Learned counsel for the State, after consulting the Advocate General, submitted that the vacancy created on retirement of the third Member shall be filled up within two months.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

1. The court noted that appeals against clarifications issued under Section 56(3) of the Haryana VAT Act must be heard by a Bench of not less than three Members.
2. The court observed that although the Tribunal is now functional, the third Member's vacancy remains unfilled, affecting the constitution of the required three-Member Bench.
3. Having regard to the availability of the statutory remedy of appeal before the Tribunal, the court relegated the petitioner to avail that remedy rather than adjudicate the substantive validity of the challenged provisions or clarification.
4. The court directed that if the petitioner files the appeal within 30 days, the appeal shall not be dismissed on account of delay and shall be considered on its merits.
5. The court recorded the State's undertaking (through its counsel and the Advocate General) that the vacancy will be filled within two months.
6. The court expressly stated that it did not examine the validity of Section 2(1)(zg) of the Haryana VAT Act and left the petitioner free to challenge it later if necessary.

Holding and Implications

DISPOSED OF.

Direct consequences:

• The writ petition is disposed of by relegating the petitioner to file an appeal against the Government clarification before the Tribunal constituted under Section 56(3) of the Haryana VAT Act.
• If the appeal is filed within 30 days, it shall not be dismissed for delay and shall be considered on its merits.
• The State undertook to fill the vacancy of the third Member of the Tribunal within two months.
• The court did not decide on the substantive validity of Section 2(1)(zg) of the Haryana VAT Act; no precedent or broader legal rule was established by this opinion.