2002 (4) TMI 909 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the proceedings of the first respondent, dated February 8, 2002, in G.I. No. 7206/2000-2001 are illegal, arbitrary, and unjust.
2. Whether the petitioner was entitled to purchase plant and machinery at concessional rates of tax against the issue of "C" declaration forms during the course of inter-State trade or commerce.
3. Whether the first respondent's imposition of a penalty of Rs. 12,29,544 on the petitioner was in violation of the provisions of section 10A of the Central Sales Tax Act, 1956.

Issue 1:
The petitioner sought a writ of certiorari declaring the proceedings of the first respondent as illegal, arbitrary, and unjust. The petitioner, a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956, constructed a cold storage and purchased plant and machinery for installation. The first respondent imposed a penalty of Rs. 12,29,544 on the petitioner, which was challenged in the writ petition on various grounds, including violation of natural justice principles.

Issue 2:
The petitioner believed it was lawfully entitled to purchase plant and machinery at concessional rates of tax for the cold storage project. The petitioner placed orders with suppliers in other States based on this understanding. However, the registering authority alleged misuse of "C" forms issued to the petitioner for these purchases, leading to the imposition of the penalty. The petitioner's entitlement to purchase machinery at concessional rates was a key contention in the case.

Issue 3:
The central issue revolved around the alleged violation of section 10A of the Central Sales Tax Act, 1956 in imposing the penalty. The petitioner argued that the penalty imposition was violative of the provisions of section 10A, which require the authority to provide a reasonable opportunity of being heard before imposing a penalty. The court analyzed the language of section 10A and concluded that the authority must give a fair hearing to the other party, allowing them to present all relevant material.

The court, after considering the submissions from both parties, focused on the interpretation of section 10A of the Central Sales Tax Act, 1956. It highlighted the obligation of the authority to provide a reasonable opportunity of being heard to the party facing penalty. The court found that the petitioner was not adequately heard before the penalty was imposed, leading to the decision to set aside the order and remit the matter to the registering authority. The petitioner was granted the opportunity to present all relevant material and court decisions in support of its claim before the authority. The court emphasized that the petitioner need not wait for further notice and directed them to appear before the authority for a fair hearing. Ultimately, the writ petition was allowed, and no costs were imposed, granting relief to the petitioner.