2010 (7) TMI 905 - HC - VAT and Sales Tax

Whether the assessing authority (first respondent) was justified in refusing to examine the petitioner s request, made under section 72 of the Act, on the ground that he was not competent to review the order already finalized ; and that the remedy available to the petitioner was only by way of an appeal? Held that - For instance when an appeal is preferred, against the order of assessment, section 72 would comes into play and the appellate authority and the STAT are disentitled from setting aside the assessment order merely on account of any defect or irregularity in the procedure followed by the assessing authority in passing the said order, unless the appellate authority/STAT is satisfied that such defect or irregularity has caused material hardship, or has occasioned failure of justice. In the absence of a power of review, section 72 cannot be pressed into service before the assessing authority himself. Once an order of assessment is passed, the statutory remedy available to an assessee, to question the validity of the assessment order, is only by way of an appeal, and not under section 72 of the Act. Appeal dismissed.

Summary

Issues:
Challenge to endorsement of the first respondent under section 72 of the Andhra Pradesh Value Added Tax Act, 2005.

Analysis:
The petitioner, a registered dealer, engaged in the manufacture and sale of organic manure from neem fruits, challenged the endorsement of the first respondent as illegal, arbitrary, and ultra vires section 72 of the Act. The petitioner sought a direction to consider their representation and redress the grievance. The assessing authority relied on a clarification from the Advance Ruling Authority classifying the product as bio-fertilizers and imposed a tax of four per cent. The petitioner requested a re-examination under section 72, but the first respondent refused, citing lack of competence to review the finalized matter, advising an appeal instead. The petitioner contended that the order was illegal since the STAT had not concurred with the Advance Ruling Authority. The main issue was whether the assessing authority was justified in refusing to examine the request under section 72, stating that the remedy was only through an appeal.

The court analyzed section 72 of the Act, which prohibits setting aside an assessment order for procedural defects unless it causes material hardship or failure of justice. The Act only provides for appeals against assessment orders, not for review by the assessing authority. The power of review must be explicitly conferred by law, and section 72 does not grant such power to the assessing authority. The court clarified that section 72 restricts interference in assessment orders based on procedural defects, allowing it only if such defects cause material hardship or failure of justice. The statutory remedy available to challenge an assessment order is through appeal, not under section 72.

The court held that the refusal of the first respondent to entertain the application under section 72 did not warrant interference through article 226 of the Constitution. The court emphasized that they did not assess the merits of the assessment order but focused on the scope of section 72 and the validity of the assessing authority's refusal to review the order. The petitioner was advised to pursue remedies through appeal for any grievances on the assessment order. The writ petition was dismissed, allowing the petitioner to seek other legal remedies available to challenge the assessment order.