1991 (9) TMI 323 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to demand notice for sales tax dues under Andhra Pradesh General Sales Tax Act, 1957. Request for payment by instalments. Liability of auction purchasers for arrears of sales tax dues. Granting liberty to pay arrears by instalments with conditions. Acceptance of undertaking for payment. Directions for payment by monthly instalments. Consequences of default in payment. Issuance of registration certificate. Liability for current sales tax. Rights of petitioners to recover arrears from original owner. Rights of second respondent to recover arrears from original owner.

Analysis:
The judgment pertains to a writ petition challenging a demand notice for sales tax dues under the Andhra Pradesh General Sales Tax Act, 1957. The petitioners sought to challenge the legality and validity of the demand notice issued by the Assistant Commercial Tax Officer, requiring payment of arrears amounting to Rs. 1,38,995 and indicating that a registration certificate would not be issued until the dues are cleared. The petitioners expressed readiness to pay the entire sales tax dues but requested payment by reasonable instalments. The counsel for the Assistant Commercial Tax Officer agreed to grant a registration certificate upon payment of the dues and left the decision on instalments to the court, emphasizing the need for reasonable instalments to cover the entire demand within a reasonable period.

The court considered various aspects, noting that the petitioners were auction purchasers not primarily liable for the arrears of sales tax dues, which were originally the responsibility of a third party. However, due to certain legal provisions, the liability had been transferred to the petitioners. The court acknowledged that the petitioners' business was suffering due to the lack of a registration certificate, preventing them from engaging in legal transactions. Consequently, the court decided to grant the petitioners the liberty to pay the arrears by instalments, subject to specific terms and conditions, including a default clause.

The petitioners, through their counsel, provided an undertaking to pay the entire amount covered by the demand notice in monthly instalments as directed by the court, with the condition that failure to make payments would result in the cancellation of the registration certificate. The court accepted this undertaking and issued specific directions for payment, stipulating monthly instalments of Rs. 20,000 each, with the final instalment covering the remaining balance. In case of default, the Assistant Commercial Tax Officer was authorized to cancel the registration certificate and recover the outstanding balance in accordance with the law.

Additionally, the court directed the issuance of the registration certificate by a specified date, maintained the petitioners' liability for current sales tax, and clarified the rights of the petitioners to recover the arrears from the original owner, as well as the rights of the second respondent to pursue recovery from the original owner if necessary. The judgment concluded by disposing of the petition without imposing any costs and specifying the advocate's fee.