The assessment orders passed under TN VAT Act against M/s SHV Energy Pvt.Ltd. were quashed by the Madras High Court observing that the petitioner cannot be made to suffer two levies of sales tax and service tax. SHV Energy Private Ltd. provides services of terminalling and storage of LPG at Tuticorin Port. The said company pays service tax for its services under the head ‘storage and warehousing’ under the Finance Act.
However, terming that its activities amounted to transfer of right of usage of goods, the Assessing Officer under TN VAT Act issued order levying Value Added Tax with respect to the consideration received by the company for its services to BPCL.
The order was challenged by the company on following grounds :-
The Court was in agreement with the above legal contentions taken by the petitioner. The Court observed as follows :- “ the third respondent has failed to address the important aspect raised by the petitioner by contending that they having discharged the service tax liability, they cannot be directed to pay VAT for the same transaction” It was also observed that the question would be as to whether the petitioner could be made to suffer two levies, namely, sales tax and service tax.
The Court held that the assessment order did not deal with several legal questions involved in the matter. Hence, the Court quashed the orders, and remanded the matter for re-doing the assessment by discussing the legal issues pointed out by the Court. It was observed as follows:
Thus, for all the above reasons this Court is of the considered view that the assessment under the said head requires to be re-done taking note of the legal position, circular issue by the Central Board, factual matrix and the non-exclusivity of the agreement between the petitioner and the BPCL and that the petitioner cannot be made to suffer by two levies, namely, sales-tax and service tax.