2012 (7) TMI 1041 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the reduction in the sales tax exemption limit.
2. Justification for the amendment of the eligibility certificate.
3. Timeliness and procedural correctness of the amendment.
4. Entitlement to refund of the amount deposited by the petitioner.

Summary:

1. Validity of the reduction in the sales tax exemption limit:
The petitioner challenged the order dated 9th October 2001, issued by the Deputy Industries Commissioner and General Manager, which reduced the sales tax exemption limit from Rs. 41,64,000/- to Rs. 40,08,434/-. The petitioner argued that the reduction was made without proper reasons and after a significant delay, which prejudiced their rights as they had already exhausted the exemption limit and could not recover the differential amount from their customers.

2. Justification for the amendment of the eligibility certificate:
The petitioner contended that the eligibility certificate and exemption certificate were issued after due inquiry, and there was no fraud or misrepresentation on their part. The respondents argued that the initial exemption limit was granted based on incorrect figures provided by the Gujarat State Financial Corporation, and the amendment was necessary to correct this mistake. However, the court found that the respondents failed to provide specific reasons or evidence of how the initial certificate was not in consonance with the policy.

3. Timeliness and procedural correctness of the amendment:
The court noted that the scheme envisages two stages for granting eligibility certificates: a provisional certificate pending verification and a final certificate upon verification. The final eligibility certificate was issued after due verification, and any amendment should be made within a reasonable time. The court held that the amendment made long after the petitioner had exhausted the exemption limit and could not recover the tax from customers was unreasonable and prejudicial to the petitioner.

4. Entitlement to refund of the amount deposited by the petitioner:
The court directed the respondents to refund the amount of Rs. 1,55,566/- deposited by the petitioner, along with simple interest at the rate of 9% from the date of deposit till the date of payment. This was in line with the interim order passed during the admission of the writ petition, which stated that any payment made by the petitioner would be treated as a deposit and abide by the final outcome of the petition.

Conclusion:
The petition was allowed, and the impugned amendment certificate dated 9th October 2001, the consequential reduction by the Assistant Sales Tax Commissioner, and the order dated 15th April 2004 were quashed and set aside. The respondents were directed to refund the amount deposited by the petitioner with interest.