1989 (2) TMI 387 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 14(4)(cc) of the A.P. General Sales Tax Act, 1957.
2. Power of the assessing authority to reassess turnover for wrongly granted exemptions or deductions.
3. Retrospective effect of section 14(4)(cc) and its application to assessments finalized before its enactment.

Analysis:
The judgment by the Andhra Pradesh High Court delves into the interpretation of section 14(4)(cc) of the A.P. General Sales Tax Act, 1957. The case involved a dealer in fertilizers who was granted exemption on a turnover but later reassessed due to the assessing authority finding that the turnover represented first sales within the State, not second sales as initially believed. The assessing authority exercised power under section 14(4)(cc) to demand tax on the reassessed turnover, which was confirmed in appeal by the Assistant Commissioner. The Sales Tax Appellate Tribunal, however, held that section 14(4)(cc) did not have retrospective effect and could not be applied to assessments finalized before its enactment on 17th January, 1978. The Tribunal relied on the decision in Udipi Vasanta Vihar v. Deputy Commercial Tax Officer to support its stance.

The Court analyzed previous judgments, including Sri Balaganesh Textiles v. Commercial Tax Officer, to determine whether the assessing authority had the power to reassess turnover for wrongly granted exemptions or deductions even before the incorporation of section 14(4)(cc). The Court concluded that the power under section 14(4) could be exercised in cases where turnover had escaped assessment or been under-assessed, which included situations where exemptions or deductions were wrongly allowed. It was held that section 14(4)(cc) was clarificatory, and the assessing authority had the inherent power to assess the correct tax amount even without its specific provision.

The Court emphasized that the power under section 14(4) could be invoked when turnover had escaped assessment or been under-assessed, regardless of whether a deduction or exemption had been wrongly granted. As the record did not disprove the assessing authority's findings during reassessment, the Court upheld the order of reassessment dated 10th January, 1980, confirming the liability of the turnover to tax. The revision case was allowed, setting aside the Sales Tax Appellate Tribunal's order and confirming the reassessment order.