2011 (8) TMI 1013 - HC - VAT and Sales Tax

No voluntary payment of tax and penalty by the petitioner as the goods were detained along with the vehicle and, as there was urgency, the petitioner paid the tax and penalty - whether the petitioner cannot be said to have accepted the contravention or irregularity? Held that - While admitting the irregularities committed, petitioner expressed willingness to pay the tax and penalty. Though the show-notice was served, he did not choose to file any objections. Admittedly the petitioner had voluntarily paid the tax and penalty, after receiving the show-cause notice. Therefore, we do not find any illegality in the respondent s action. Hence the question of refund would not arise nor are we willing to hold that the levy and collection of tax and penalty is illegal and arbitrary. Appeal dismissed.

Summary

Issues Involved:
1. Detention of goods vehicle for lack of required documents.
2. Payment of tax and penalty under duress.
3. Legality of the tax and penalty collection process.
4. Availability of alternative remedies under the VAT Act.

Issue-wise Detailed Analysis:

1. Detention of Goods Vehicle for Lack of Required Documents:
The petitioner, a registered dealer under the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act), was transporting 20 barrels of Pongamia oil when the vehicle was detained by the respondent due to the absence of an advance way-bill in form X or form 600 and failure to produce the record of the goods vehicle, the trip sheet, and/or log book as prescribed under section 48(b) of the VAT Act. The respondent issued a show-cause notice on May 10, 2011, for the assessment of tax at four percent on the value of the goods and proposed a penalty equivalent to two times the tax due under section 45(7) of the VAT Act.

2. Payment of Tax and Penalty Under Duress:
The petitioner's authorized representative (AR) appeared before the respondent and, due to urgency, paid Rs. 22,056 towards tax and penalty to secure the release of the vehicle and goods. The AR provided a consent letter admitting the lapse and expressing willingness to pay the tax and penalty. Consequently, orders were passed on the same day, levying Rs. 7,352 towards tax and Rs. 14,704 as a penalty.

3. Legality of the Tax and Penalty Collection Process:
The petitioner argued that the payment of tax and penalty was not voluntary but made under duress due to the detention of the goods and vehicle. The petitioner cited a Full Bench judgment in Ambica Lamp House v. Commercial Tax Officer, which deprecated arbitrary tax and penalty collection. However, the court found that the petitioner's AR had accepted the irregularity and offered to pay the tax and penalty voluntarily. The court emphasized that the VAT Act and VAT Rules require the officer to act reasonably and provide a reasonable opportunity to the affected person before levying penalty. The court found no illegality in the respondent's action as the petitioner's AR had admitted the irregularities and paid the tax and penalty after receiving the show-cause notice.

4. Availability of Alternative Remedies Under the VAT Act:
The respondent argued that the petitioner had efficacious alternative remedies available under the VAT Act and that a writ petition would not lie. The court noted that the petitioner did not file objections to the show-cause notice and voluntarily paid the tax and penalty. The court highlighted the provisions of Chapter VII (sections 45 to 48) of the VAT Act, which safeguard the interest of the Revenue and prevent tax evasion while ensuring that officers do not act arbitrarily. The court concluded that the petitioner's reliance on the Ambica Lamp House case was misplaced, as the facts differed significantly.

Conclusion:
The court dismissed the writ petition, holding that the levy and collection of tax and penalty were neither illegal nor arbitrary. The petitioner's voluntary payment of tax and penalty, after receiving the show-cause notice and admitting the irregularities, precluded any claim for a refund. The court found no merit in the petitioner's arguments and upheld the respondent's actions as compliant with the VAT Act and VAT Rules.