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1996 (2) TMI 520 - HC - VAT and Sales Tax
Issues:
Challenge to the validity of a Government Memo and consequential notice regarding taxation of "Pan masala/gutka" for the assessment year 1994-95. Analysis: The petitioner, a registered company under the Indian Companies Act, 1956, challenged the validity of a Government Memo and a notice issued by the Commercial Tax Officer regarding the taxation of "Pan masala/gutka" for the assessment year 1994-95. The assessment proceedings for the year 1993-94 had exempted a turnover related to the sale of "junta" from sales tax. However, a circular issued by the Commissioner of Commercial Taxes clarified that "junta" should be treated as a tobacco product. Subsequently, the Governor of Andhra Pradesh made amendments to the Act, causing confusion regarding the taxability of "Pan masala/gutka." The Government Memo dated January 23, 1996, withdrew the earlier clarification, leading to a show cause notice to the company for provisional assessment of tax rates. The petitioner contended that the retrospective withdrawal of exemption was illegal. The court found the writ petition premature as the show cause notice was merely a preliminary step, and the final decision on taxability was pending. The court refrained from expressing an opinion on the retrospective effect of the Government Memo and the impact of the amendments to the Act. The petitioner relied on a case precedent to argue against retrospective taxation. However, the court distinguished the case, emphasizing that the Government had not made a final decision on taxability, and the show cause notice was intended to allow the company to present its objections. Ultimately, the court dismissed the writ petition as premature but allowed the petitioner to file objections to the show cause notice within a specified period. The court directed the first respondent to consider the objections and make decisions in accordance with the law. The dismissal of the writ petition was subject to the petitioner's right to raise legal arguments in response to the show cause notice.
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