2010 (11) TMI 868 - HC - VAT and Sales Tax

Whether the pest control services are not liable to sales tax? Held that - Special drive is required to train officers in passing quasi-judicial orders keeping in view various principles laid down by the Supreme Court and this court or at least the principles adumbrated in Order XX of Code of Civil Procedure, 1908. We do hope that better sense would prevail in the Commissionerate and the Government to give due attention to this aspect of the matter or else the assessing officers, the Appellate Deputy Commissioners and Revisional Commissioners instead of discharging the duties under the VAT Act in aid of the State would be acting detrimental to the interest of the State and its revenue. As the impugned orders are bereft of objectivity and adequate reasons and it is not possible for this court which factors weighed with the assessing officer, we set aside the impugned orders in these writ petitions and remit the matters to the Assistant Commissioner for passing appropriate orders afresh keeping in view the principles hereinabove

Summary

Issues:
Assessment of output tax under the Andhra Pradesh Value Added Tax Act, 2005 for pest control services; Rejection of objections raised by the petitioner; Quality of quasi-judicial orders passed by the Assistant Commissioner; Judicial review and remand of the matter.

Assessment of Output Tax:
The petitioner, a VAT dealer, contested the assessment of output tax for pest control services under the VAT Act. The Assistant Commissioner assessed the transactions as liable to tax under section 4(7)(a) of the VAT Act as works contracts, despite the petitioner's reliance on decisions from other High Courts and the Supreme Court. Four orders detailing the tax levied for different assessment years were challenged in the writ petitions.

Rejection of Objections:
The court expressed concern over the Assistant Commissioner's handling of the assessment proceedings, noting a lack of adherence to established legal principles and the basic tenets of quasi-judicial functions. The court criticized the officer for ignoring the principles laid down by the Supreme Court and emphasized the importance of drafting quality orders. The court highlighted the need for officers to consider various principles while passing quasi-judicial orders and emphasized the significance of accountability in public service.

Quality of Quasi-Judicial Orders:
The court scrutinized the impugned order, noting its deficiencies in terms of objectivity, reasoning, and adherence to established standards. The court expressed disappointment in the quality of orders passed by officers in the Department of Commercial Taxes, emphasizing the detrimental impact on revenue collection by the State exchequer. The court highlighted the obligation of officers to pass quality orders and underscored the importance of training officers to adhere to legal principles while discharging their duties under the VAT Act.

Judicial Review and Remand:
Due to the lack of objectivity and adequate reasoning in the impugned orders, the court set aside the orders in the writ petitions and remitted the matters to the Assistant Commissioner for fresh consideration. The court stressed the need for the assessing officers to provide detailed and reasoned orders to facilitate judicial review and ensure the protection of the State's revenue interests. The writ petitions were consequently disposed of based on the court's decision to remand the matters for reconsideration.