IMPORTANT POINT
The service tax component collected by the petitioners is not includible as part of the taxable turnover of sales for the purpose of paying VAT, based on the interpretation of relevant provisions and previous case law.

JUDGMENT :

Bhargav D. Karia, J.

1. These petitions are arising out of the common issue regarding charging of service tax on the amount of value added tax collected by the petitioners.

1.1 As the issue is common, these petitions are heard analogously and are being disposed of by this common judgment and order.

1.2 Rule in Special Civil Application Nos.16620 of 2022, 17011 of 2022, 19080 of 2022, 16446 of 2023 and 16515 of 2023, returnable forthwith. Learned Assistant Government Pleader Mr.Chintan Dave waives service of notice of Rule on behalf of the respondents in these petitions.

2. For the sake of convenience, Special Civil Application No.705 of 2021 is treated as a lead matter.

3. The respondent raised a preliminary issue with regard to maintainability of the petitions in view of availability of the alternative remedy of filing statutory appeal under Section 73 of the Gujarat Value Added Tax Act, 2003.

3.1 The coordinate Bench of this Court vide order dated 12th January, 2021, considering the decision rendered in Tax Appeal No.349 of 2016 in case of Ambuja Cement Ltd. dealing with the similar issue applicable to the facts of the present case, has entertained this petition by issuing notice.

4. Brief facts of the case of Special Civil Application No.705 of 2021 are as under.

(i) The petitioner is a company incorporated under the provisions of the Companies Act, 1956 having franchisee of Pizza Hut at Vadodara.

(ii) The petitioner was initially carrying on business activities in the name of Dodsal Hospitality Pvt. Ltd. which was incorporated on 05th October, 2012 and thereafter had acquired the Pizza Hut franchisee business pursuant to the scheme of demerger approved by this Court.

(iii) M/s.Dodsal Hospitality Pvt. Ltd. was registered under the provisions of the Gujarat Value Added Tax Act, 2003 (for short ‘the Act’) and continued to file its Returns accordingly under the provisions of the said Act.

(iv) Thereafter, name of M/s.Dodsal Hospitality Pvt. Ltd. was changed to Sapphire Hospitality and Recreation Private Limited on 09th October, 2015.

(v) It is the case of the petitioner that erstwhile M/s.Dodsal Hospitality Pvt. Ltd., so as to avail the option under Section 14 of the Act for making lump sum consolidated payment of the Value Added Tax (VAT), preferred an application under Section 14D of the Act, payable as Composition Tax and permission was granted on 24th November, 2014 with effect from 09th July, 2014 by the respondent authority.

(vi) As per the provision of Section 14D, the petitioner is entitled to make payment of VAT at the rate of 4% instead of usual 15%, however no set-off is available on input tax credit. The dealer has to comply with the provisions of Section 14(3) and 14(4) of the Act.

(vii) The respondent-State Government notified Rule No.28C of the Gujarat Value Added Tax Rules, 2006 (for short ‘the Rules’) which provides for procedure and conditions for lump sum payment under Section 14D of the Act.

(viii) The petitioner was making regular payment under Section 14D of the Act from 2014-15 as under.

(ix) On 27th March, 2019 the Assistant Commissioner of State Tax passed an ex parte order raising demand of Rs.20,12,800/- under Sections 32, 34 and 35 of the Act for the A.Y. 2014-15.

(x) The petitioner was also paying service tax regularly including the cess from 2014-15 to 2018-19 as under.

(xi) With effect from 09th June, 2017 Section 14D of the Act has been repealed.

(xii) The petitioner thereafter received notice dated 14th October, 2019 from the Commercial Tax Officer-4, Vad