1988 (3) TMI 407 - SC - VAT and Sales Tax

Sales tax liability - Held that - Review petition should be dismissed. This is on account of the fact that after the Forty-sixth amendment of the Constitution, State legislation was necessary to give effect to liability of sales tax and the Andhra Pradesh Act was a prospective legislation. The incidence of sales tax is ordinarily passed on to the customer and in the event of accepting the retrospective amendment a liability would be created without affording any opportunity to the hoteliers to pass on the incidence of the tax. In these circumstances there is any justification for review. The petition is accordingly dismissed.

Issues:
1. Interpretation of the Forty-sixth amendment regarding sales tax on supplies made by eating places.
2. Applicability of the amending provisions of the Andhra Pradesh General Sales Tax Act.
3. Burden of proof on assessees for exemption under the Forty-sixth amendment.
4. Right to opportunity for assessees to establish exemption.
5. Procedure for refund of collected amounts in case of no liability or excess liability.
6. Review petition challenging the judgment based on subsequent amendments.

Issue 1: Interpretation of the Forty-sixth amendment regarding sales tax on supplies made by eating places.
The Supreme Court analyzed the impact of the Forty-sixth amendment, which treated transactions by eating houses as assessable for tax. The amendment changed the taxability of supplies made by eating places, previously not considered sales assessable to tax. The Court noted the significance of the amendment in altering the tax treatment of such transactions.

Issue 2: Applicability of the amending provisions of the Andhra Pradesh General Sales Tax Act.
The Court discussed the amending provisions of the Andhra Pradesh General Sales Tax Act, which extended the benefits of the Forty-sixth amendment up to the date of the State legislation. It was acknowledged that the State legislation aligned with the constitutional amendment, and the petitioners were required to demonstrate that no tax was collected before the relevant amendments.

Issue 3: Burden of proof on assessees for exemption under the Forty-sixth amendment.
The judgment highlighted that the burden of proving that tax was not collected on supplies made by eating places lay with the assessees seeking exemption under the Forty-sixth amendment. The Court emphasized the importance of satisfying the designated authority regarding the exemption criteria.

Issue 4: Right to opportunity for assessees to establish exemption.
The Court directed the assessing officer to provide the petitioners with an opportunity to demonstrate their eligibility for exemption under the relevant amendments. It emphasized the need for the assessees to prove that no tax was collected before the specified dates and set aside the assessments for further review.

Issue 5: Procedure for refund of collected amounts in case of no liability or excess liability.
Regarding the refund process, the Court ruled that no further collection should be made until the assessees had the opportunity to establish their exemption status. It outlined the refund procedure, specifying that amounts collected need not be refunded immediately, but should be refunded within one month of determination if no liability was found, along with interest at 12%.

Issue 6: Review petition challenging the judgment based on subsequent amendments.
In response to a review petition filed by the State, the Court considered the implications of subsequent amendments to the State Sales Tax Act. The Court dismissed the review petition, citing the prospective nature of the State legislation and the potential adverse impact of retrospective amendments on the hoteliers. It emphasized the need for a balanced approach in imposing tax liabilities retrospectively.

This detailed analysis of the judgment provides insights into the Court's interpretation of the legal provisions, the burden of proof on assessees, the refund process, and the considerations in dismissing a review petition based on subsequent amendments.

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