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2007 (3) TMI 703 - HC - VAT and Sales Tax
Issues:
1. Whether respondent Nos. 1 and 2 can insist on payment of arrears of tax from the petitioner for a third respondent.
2. Interpretation of the effect of section 12(7) of the Andhra Pradesh General Sales Tax Act, 1957 and rule 28(14) of the Andhra Pradesh General Sales Tax Rules, 1957 regarding the surety's liability.
3. Validity of earlier judgments by the court in light of rule 28(14) of the Rules.
Analysis:
1. The writ petitions sought a direction to prevent respondent Nos. 1 and 2 from demanding payment of arrears of tax related to a third respondent from the petitioner. The petitioner argued that his surety for the third respondent was limited to one assessment year and not perpetual, citing previous court judgments. The court considered the arguments and noted that the surety's liability is tied to the duration of the registration certificate, as per rule 28(14) of the Rules. The court found that the earlier judgments did not require reconsideration, and consequently, the impugned notices were quashed, allowing the writ petitions.
2. The court delved into the interpretation of section 12(7) of the Andhra Pradesh General Sales Tax Act, 1957 and rule 28(14) of the Andhra Pradesh General Sales Tax Rules, 1957 concerning the surety's responsibility. The learned Government Pleader contended that the surety remains valid as long as the registration certificate is active, as per rule 28(14). The court agreed with this interpretation, emphasizing that the surety's obligation extends to the tax payable for the specific year for which the surety was provided. The court's analysis highlighted the significance of the language in rule 28(14) in determining the duration and scope of the surety's liability.
3. The court addressed the validity of earlier judgments in light of rule 28(14) of the Rules. The court found that the previous judgments did not consider the implications of rule 28(14) and upheld the view that the surety's obligation remains in force for the tax payable for the specified year. By aligning the interpretation with the provisions of rule 28(14) and other relevant rules, the court concluded that the earlier judgments did not require reassessment. Consequently, the court allowed the writ petitions, quashed the impugned notices, and directed the respondents to consider the petitioner's entitlement to refunds in accordance with the Rules.