2013 (10) TMI 1328 - HC - VAT and Sales Tax

Whether the supplies made by the agents of the petitioner to the foreign going vessel are sales and are eligible to tax under the A.P. VAT Act in the hands of the petitioner and whether the petitioner is entitled to claim input VAT credit,

Summary

Issues:
1. Rejection of petitioner's application under Section 32(5) of A.P. Value Added Tax Act, 2005 seeking deferment of assessment for the tax period April 2010 to March 2011.

Analysis:
The petitioner's application for deferment of assessment was rejected by the Commissioner of Commercial Taxes, Hyderabad. The petitioner had been assessed for the tax period 2006-07 to 2009-10, and a demand was raised. The petitioner sought deferment of assessment for the tax period 2010-11 due to pending legal proceedings related to a previous assessment. The High Court had earlier set aside an order imposing a condition of furnishing a Bank guarantee, directing a fresh decision. The subsequent rejection order cited that the petitioner's company did not produce books of accounts for verification, leading to the proposed assessment for the year 2010-11. The rejection was based on the grounds that the issue involved was the same as a pending case, but deferment was not in the interest of government revenue.

The petitioner contended that the rejection was beyond the Commissioner's jurisdiction under Section 32(5) of the A.P. VAT Act. The petitioner argued that the pending legal matter directly impacted the assessment proceedings for the tax period 2010-11, warranting deferment. The rejection order, while acknowledging the similarity of issues, solely rejected deferment on the basis of government revenue interest. The Court noted that the Commissioner did not provide reasons for the rejection beyond revenue concerns, which is essential for a valid order by a statutory functionary.

The Court referenced a previous order that deemed the requirement of a Bank guarantee for deferment as contrary to the purpose of Section 32(5) of the Act. It emphasized that deferment facilitates coherent tax administration policy and does not prejudice revenue. The Court found the rejection order to be against its previous directions and lacking the required exercise of discretion under the Act. Consequently, the Court set aside the rejection order and directed the Commissioner to issue a fresh order in line with previous observations.

In conclusion, the Court found the rejection of the petitioner's deferment request to be unjustified, lacking proper reasoning, and not in line with statutory provisions. The Court emphasized the need for the Commissioner to exercise discretion under Section 32(5) in conformity with legal guidance and previous orders for coherent tax administration policy.