HDFC BANK LTD. Vs. STATE OF GUJARAT

JUDGEMENT

(1.) By way of this petition, the petitioner challenges the legality, validity and propriety of the impugned notices dated 19/03/2004 and 29/03/2004 issued by the respondent No.2 whereby the petitioner was asked showcause as to why the penalty to the tune of Rs.1,27,11,168/ should not be imposed upon the petitioner for the alleged breach of Section 8(3) of the Central Sales Tax Act, 1956.

(2.) The short facts of the case are that the petitioner is engaged in the banking business as a scheduled bank. The petitioner while carrying out the business transactions, at the request of one IndoGulf Fertilizer and Chemical Corporation Ltd., to provide financial facilities for acquisition of various types of industrial machineries and equipments for setting up a unit called "Birla Copper" at Dahej, Bharuch entered into a tripartite agreement for lease finance for the equipment called "Secondary Gas Scrubbing System" with one Asea Brown Boveri Ltd. It is the case of the petitioner that as per the agreement, the supplier of the said machinery was Asea Brown Boveri Ltd, the lessee was IndoGulf Fertilizer and Chemical Corporation Ltd., and the petitioner ­ Corporation Bank Ltd., was the lessor. The said agreement was entered into at New Delhi on 04/09/1997.

(3.) Learned Senior Counsel Mr.Manish Bhatt appearing with Mr.Manan Bhatt has contended that the impugned notices and order are without jurisdiction and it is beyond the dispute because the transaction of lease is a sale/resale as contemplated under Section 8(3) of the Act. He has further contended that the impugned notices and order are contrary to the Circular dated 20/05/1997 issued by the respondent No.1 and the same will be binding upon respondent No.2 because the transaction of lease of a purchased asset would not contravene the provisions of Section 8(3) of the Act.