2003 (8) TMI 484 - HC - VAT and Sales Tax

Summary

Issues:
1. Adjustment of security deposit against sales tax liability under the Assam General Sales Tax Act, 1993.
2. Validity of the assessment order raising further demand and levying penal interest.
3. Revisional authority's decision regarding the adjustment of security deposit by the assessee.

Issue 1: Adjustment of security deposit against sales tax liability under the Assam General Sales Tax Act, 1993.
The petitioner, a dealer in crockery, submitted a return under the Assam General Sales Tax Act, 1993, and had deposited security money under the Assam Finance (Sales Tax) Act, 1956. The petitioner sought adjustment of the security amount against dues under the Assam General Sales Tax Act. The assessing authority had raised a demand and penal interest, which the petitioner challenged through a revision petition. The petitioner claimed that the security deposit made was adjustable and should be allowed to offset the sales tax liability. The court noted that the petitioner had deposited adjustable security under the relevant Acts and was entitled to adjust the amount against the sales tax paid, thereby setting aside the interest levied by the assessing authority.

Issue 2: Validity of the assessment order raising further demand and levying penal interest.
The assessing authority had raised a demand and levied penal interest on the petitioner, which led to the revision petition. The court observed that the notices demanding security did not disclose any grounds or reasons, as required by law. The court also noted that there was no written document confirming the agreement for adjustable security. The petitioner had deposited the security amount, which was accepted by the authority. The revisional authority had dismissed the revision, stating that the security furnished by an assessee could not be adjusted against tax liability. However, the court held that the security deposit made by the petitioner was adjustable and should be allowed to offset the tax liability, thereby setting aside the interest and revision order.

Issue 3: Revisional authority's decision regarding the adjustment of security deposit by the assessee.
The revisional authority had dismissed the revision petition, stating that the security deposit could not be adjusted by the assessee against tax liability. The petitioner had not sought to adjust the security deposit made under the Assam Finance (Sales Tax) Act after the Assam General Sales Tax Act came into force. The court found that the petitioner was entitled to adjust the security amount against the sales tax liability, as the amount was already deposited with the department. The court allowed the adjustment of the security deposit and directed the assessing authority to reframe the assessment order accordingly, relieving the petitioner from paying interest.

In conclusion, the High Court allowed the writ petition, setting aside the interest levied and the revision order, and directed the assessing authority to allow the adjustment of the security deposit against the sales tax liability.