2008 (7) TMI 877 - HC - VAT and Sales Tax

Period of limitation - Held that - The fact that the show-cause notice and personal hearing were given at the fag end of the expiry of the period of four years may not be much in dispute, but, however the orders passed on July 20, 1996 give rise to several doubts, especially, when it has taken two months for the parties to send the said orders to be served on the appellant and for actual service to be effected four months thereafter. When in all such hurriedness show-cause notice and the personal-hearing notice can be served on the same day, why have the parties taken such a leisure manner to take steps to serve the orders? Therefore, it does not create any confidence that the order could have been passed on the same day in which it was stated to be passed. Therefore, we are of the view that the very action on the part of the revisional authority in disposing the matter in such a late hour is wholly misconceived and unsustainable. Appeal allowed.

Summary

Issues:
- Challenge to orders of the Commissioner of Commercial Taxes under section 20 of the Andhra Pradesh General Sales Tax Act, 1957.
- Levy of tax on containers used for selling liquor.
- Applicability of the period of limitation under section 20 for exercising powers.
- Compliance with procedural requirements for issuing show-cause notice and passing orders.

Analysis:

The appellant, a liquor manufacturer, challenged orders of the Commissioner of Commercial Taxes under section 20 of the Andhra Pradesh General Sales Tax Act, 1957 regarding the levy of tax on containers used for selling liquor. The appellant contended that the action was unsustainable due to being at the fag end of the four-year limitation period prescribed by the Act. The main issue was whether the exercise of powers under section 20 was sustainable given the procedural and timing aspects involved. The court refrained from delving into the merits of the case due to the limitation plea raised by the appellant.

The court analyzed the timeline of events, noting that the order of the appellate authority was dated July 17, 1992, and subsequent orders were passed by the assessing authority on October 23, 1992. The Commissioner issued a show-cause notice on July 6, 1996, and after objections and a personal hearing, passed orders on July 20, 1996. The court highlighted discrepancies in the timing of issuing notices and passing orders, raising doubts about the efficiency and fairness of the process. The court emphasized the importance of exercising revisionary powers within a reasonable period and before the expiration of the prescribed time limit.

The court referred to the provisions of section 20, which empower the Commissioner to revise orders if prejudicial to revenue. However, the court found the actions of the revisional authority in this case to be misconceived and unsustainable due to the delayed issuance and service of orders, despite prompt issuance of show-cause notices and personal hearing notices. Ultimately, the court allowed the appeal, setting aside the impugned order dated July 20, 1996, passed by the Commissioner of Commercial Taxes, Hyderabad.