2018 (1) TMI 1352 - HC - VAT and Sales Tax

Demand notice in Form VAT 202 dated 8.1.2018 - recovery of sales tax deferment - Held that - While the petitioner is still entitled, if they so choose, to repay the entire amount even before the end of the financial year 2017-18, ie before 31.3.2018, the authorities can take coercive steps, for recovery of the said amount, only thereafter and not before - demand notice set aside. The petitioner shall pay the sales tax deferment amount due, for the assessment year 2003-04, on or before 31.3.2018, failing which it is open to the respondents to take steps for recovery of the said amount on or after 1.4.2018.

Summary

Issues:
Challenge to demand notice for outstanding sales tax deferment amount for the assessment year 2017-18. Interpretation of terms and conditions of Final Eligibility Certificate regarding repayment schedule. Justification of demand notice issuance by Commercial Tax Officer.

Analysis:
The Writ Petition challenged a demand notice in Form VAT 202 dated 8.1.2018, requiring the petitioner to pay outstanding sales tax deferment amount of ?22,24,746 for the assessment year 2017-18 within 24 hours. The petitioner relied on a Government Order (GO Ms. No.108 dated 20.5.1996) allowing deferment of sales tax repayable over 14 years. The petitioner contended that as per the terms of the Final Eligibility Certificate issued to them, the amount due for the year 2003-04 was to be repaid by 31.3.2018, and the demand notice was premature.

The Commercial Tax Officer justified the demand notice issuance, arguing that the petitioner had made partial payments during the financial year 2017-18, indicating their understanding of repayment obligations. The Officer claimed that under the A.P. VAT Act, 2005 and Central Sales Tax Act, 1956, the tax period was monthly, justifying the demand for the balance amount in January 2018, slightly over two months before the financial year end.

The Court disagreed with the Commercial Tax Officer's stance, emphasizing that the Final Eligibility Certificate mandated repayment at the "end of the year" without interest, not the end of the month. Therefore, the sales tax deferment amount for 2003-04 was due by 31.3.2018, not earlier. The Court held that the petitioner could choose to repay before the deadline, but coercive recovery actions could only be taken after 31.3.2018.

Consequently, the Court set aside the demand notice, directing the petitioner to pay the sales tax deferment amount for 2003-04 by 31.3.2018, allowing recovery steps from 1.4.2018 onwards. The Court also permitted the petitioner to respond to any penalty notices from the Commercial Tax Officer based on the new order, preserving the petitioner's rights to raise legal contentions in their defense.

In conclusion, the Writ Petition was disposed of without costs, and any related Miscellaneous Petitions were also resolved. The judgment clarified the repayment schedule under the Final Eligibility Certificate and established the timeline for payment and recovery actions, ensuring adherence to the contractual terms between the petitioner and the Commercial Tax department.