1995 (3) TMI 441 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Commercial Tax Officer was justified in initiating recovery proceedings against the petitioner ignoring the temporary eligibility certificate?

Analysis:
The petitioner, a dealer under the Andhra Pradesh General Sales Tax Act, sought a writ of mandamus for a refund of Rs. 3,06,901 with interest from the Commercial Tax Officer. The petitioner, a small-scale industry, applied for benefits under a government scheme granting incentives to newly established industries, including tax-holiday on sales tax. The petitioner received a temporary eligibility certificate valid for five years, but the fourth respondent ignored it and recovered the tax amount. The final eligibility certificate was later issued for a higher amount. The petitioner filed for a refund, but the respondent did not take any action, justifying the recovery by claiming non-compliance with conditions. The court considered the actions of the respondent as high-handed and directed the refund of the tax amount with interest, as recovery was deemed illegal and arbitrary.

2. Whether the actions of the Commercial Tax Officer were in accordance with the guidelines for availing sales tax exemption?

The court referred to the guidelines issued by the Government of Andhra Pradesh for availing sales tax exemption, which stated that the concerned industry is entitled to the exemption facility after receiving a temporary eligibility certificate. The amount mentioned in the temporary certificate should be adjusted in the final eligibility certificate. The court found that the respondent failed to give due weight to the temporary eligibility certificate and unjustly recovered the tax amount. The court emphasized that the reasons provided by the respondent, such as non-utilization of tax for industry development and alleged closure of the industry, were irrelevant post the application for refund. The court deemed the actions of the respondent as illegal, arbitrary, and high-handed, directing the refund of the tax amount with interest.

In conclusion, the High Court of Andhra Pradesh held that the Commercial Tax Officer was unjustified in initiating recovery proceedings against the petitioner without considering the temporary eligibility certificate. The court found the actions of the respondent to be illegal, arbitrary, and high-handed, leading to the direction of refunding the tax amount with interest. The judgment favored the petitioner, emphasizing the importance of adhering to government guidelines and respecting the validity of issued certificates in such matters.