2012 (10) TMI 976 - HC - VAT and Sales Tax

Penalty and interest - demand notice - Held that - The conclusion is irresistible that there was a systematic failure on the part of the respondents in particular the first respondent in failing to execute the statutory obligation under the fourth proviso to section 33 of the 2005 Act in refunding the amount of tax deposited by the petitioner along with the applicable interest. This failure is compounded by the impugned notice dated December 28 2009 which discloses the total and fundamental non-application of mind either to the material on record or to the logical and inevitable legal consequence of the order of the Tribunal dated October 9 2009 in T.A. Nos. 143 144 and 145 of 2009. On the analysis above while quashing the notice dated December 28 2009.s issued by the first respondent we direct the first respondent to forthwith and in any event within a period of 10 days from the date of receipt of a copy of this order compute and issue orders of refund of the tax paid/deposited by the petitioner for the assessment years 2005-06 2006-07 and 2007-08 along with interest as mandated by the provisions of section 33 of the 2005 Act.

Summary

Issues involved:
Challenge to notice for payment of penalty and interest for assessment years 2005-06, 2006-07, and 2007-08; Failure to refund disputed tax; Non-compliance with statutory provisions for refund.

Analysis:
The petitioner, a distillery business, challenged a notice from the first respondent demanding payment of penalty and interest for certain assessment years. The notice was issued in response to the petitioner's request for a refund of disputed tax deposited during appeals. The court reviewed the chronology of events, focusing on a specific assessment year (2005-06) as illustrative. The petitioner had objected to the tax levy proposed in 2007, leading to assessment orders in 2008, which were later invalidated by the court due to lack of a personal hearing. Subsequent appeals and orders culminated in a Tribunal decision in 2009 nullifying the assessments and confirming the petitioner's appeal.

The court examined the statutory provisions related to appeals and refunds under the Andhra Pradesh Value Added Tax Act, 2005. It highlighted the requirement for pre-deposit of tax amounts for appeals and the obligation for authorities to refund a portion of the deposited tax if the appeal is successful. The court emphasized that the prescribed authority must refund the deposited amount without the need for a separate application, as mandated by the law.

The court criticized the first respondent for failing to refund the deposited tax despite the successful appeal and instead issuing a notice demanding penalty and interest. It noted that penalty proceedings initiated earlier were not pursued to completion, and interest liability was extinguished by the Tribunal's order nullifying the assessments. The court found a systematic failure on the part of the respondents to execute the statutory obligation of refunding the tax along with applicable interest.

Consequently, the court quashed the impugned notice and directed the first respondent to compute and issue refund orders within a specified timeframe. The court also imposed costs on the respondents for the avoidable litigation caused by their non-compliance with statutory provisions. The judgment emphasized the importance of upholding legal obligations and ensuring timely refunds in accordance with the law.

The writ petitions were allowed with costs, and the court's detailed analysis underscored the significance of adherence to statutory provisions and the consequences of failing to fulfill legal obligations related to tax refunds and appeals.