2009 (10) TMI 842 - HC - VAT and Sales Tax

Calling upon the petitioner to arrange payment of the wrong adjustments of tax due, under tax deferment, for ₹ 7,90,64,705 Held that - The respondent should have undertaken the exercise of extending tax deferment benefit under the scheme apportioning the production relatable to the original unit and the expanded unit notionally or proportionately, whichever he considered appropriate or relevant. The respondent shall put the petitioner on notice regarding the notional basis which it proposes to adopt for bifurcating production between the original and the expanded unit, and thereafter make the assessment de novo after giving the petitioner an opportunity of being heard. W.P. allowed.

Summary

Issues:
1. Challenge to the order of the Assistant Commissioner for tax deferment.
2. Interpretation of tax deferment benefits under the Andhra Pradesh Value Added Tax Act, 2005.
3. Requirement of segregating production between original and expanded units for tax benefits.
4. Dispute over the denial of tax deferment benefit due to lack of segregation of production.
5. Legal validity of denying tax deferment based on failure to provide separate quantitative particulars.

Analysis:
1. The judgment concerns a writ petition challenging the order of the Assistant Commissioner (CT), Nalgonda, regarding tax deferment for the period April to July, 2009. The petitioner, a company engaged in cement manufacturing, contested the denial of tax deferment benefits for production from the original and expanded units. The petitioner argued that it had availed tax deferment on base production and tax holiday for increased production, which was accepted by the Commercial Taxes Department previously.

2. The petitioner contended that under the tax holiday scheme, there was no requirement to segregate production between the original and expanded units. The Assistant Commissioner argued that the petitioner lost eligibility for tax deferment by not providing separate quantitative details for each unit. The Court noted that the Assistant Commissioner should have apportioned production between the units notionally or proportionately and set aside the assessment order denying tax deferment benefits entirely.

3. The Assistant Commissioner insisted on the necessity of segregating production between the original and expanded units to claim tax benefits. The Court disagreed with the denial of benefits solely based on the lack of segregation, emphasizing the need for a notional or proportionate method for bifurcating production between the units. The judgment highlighted the importance of providing the petitioner with an opportunity to be heard before reassessment.

4. The Court found the denial of tax deferment benefits without proper apportionment of production unsustainable. The judgment directed the respondent to notify the petitioner of the proposed method for segregating production between the units and conduct a fresh assessment after hearing the petitioner. The order was set aside, allowing the writ petition, but without costs.

5. In conclusion, the judgment addressed the legal validity of denying tax deferment benefits due to the failure to segregate production between the original and expanded units. It emphasized the importance of a fair assessment process and the need for proper apportionment of production for tax benefits under the scheme.