2005 (8) TMI 635 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Assessment of tax on disputed turnover under Andhra Pradesh General Sales Tax Act, 1957.
2. Appeal against the assessment order and deposit requirements.
3. Eligibility for exemption of cream turnover.
4. Refund of deposited amount and failure to respond to representations.
5. Jurisdiction of High Court under Article 226 for illegal withholding of refund.
6. Issuance of directions for immediate refund and payment of interest.

Issue 1: The petitioner, a private limited company dealing in milk and milk products, was provisionally assessed for the assessment year 2003-04 under the Andhra Pradesh General Sales Tax Act, 1957. The assessing authority levied tax on the disputed turnover, including the sale turnover of cream and SNF, rejecting the claim of exemption based on a government order.

Issue 2: The petitioner appealed the assessment order before the appellate authority, depositing 12.5% of the disputed tax amount as required by law. The appellate authority, upon considering the appeal on merits, allowed it, holding that the cream turnover is eligible for exemption, thereby setting aside the assessing authority's order.

Issue 3: Following the favorable appellate decision, the petitioner sought a refund of the deposited amount. Despite repeated representations and requests, including a writ petition under Article 226 of the Indian Constitution, the department failed to refund the amount, prompting the petitioner to seek legal intervention for the release of the funds.

Issue 4: The High Court, after considering the facts and the department's conduct, observed that there was no legal basis for withholding the refund, especially in light of a show cause notice proposing to revise the appellate orders. The court criticized the department's actions as high-handed and arbitrary, directing an immediate refund of the deposited amount along with interest at 18%.

Issue 5: The court, in its judgment, emphasized the lack of provisions allowing the authorities to withhold refunds merely based on a show cause notice for revising appellate orders. It condemned the department's actions, stating that the petitioner was lawfully entitled to the refund and that the department's conduct was unjustifiable.

Issue 6: The High Court allowed the writ petition, directing the respondents to refund the deposited amount promptly within a week, along with interest at the prescribed rate. The court also awarded costs to the petitioner and made it clear that no further extensions would be granted for the refund process, ensuring compliance with the court's order without delay.