2016 (6) TMI 502 - HC - VAT and Sales Tax

Validity of Assessment order in Form VAT 305 and penalty order under Rule 25(5) of the A.P. VAT Rules dated 08.03.2016 - Unit shifted from Gaganpahad to Shivarampally - Rejection of tax deferment amount and demand of duty - Violation of conditions of eligibility certificate - not awaited for clarification from the Industries Department. Held that - the fourth respondent had sent a letter to the third respondent informing him of all the facts with regards the present case including violation of condition No.5 of the Final Eligibility Certificate by the petitioner; the fourth respondent had proposed cancellation of the Final Eligibility Certificate; in view of the proposals from the fourth respondent, the third respondent would take necessary action regarding the Final Eligibility Certificate by following the due procedure of law as early as possible; and the petitioner s representation would be disposed of within three months. As the petitioner s entitlement under the Final Eligibility Certificate is only for deferment of tax, we see no reason to interfere with the impugned assessment order. It would suffice if respondent Nos.1 and 2 are directed not to take any coercive steps for recovery of the tax due, under the impugned assessment order, for a period of four (4) months from today. As the order of penalty was passed because of the petitioner s failure to comply with the conditions of the Final Eligibility Certificate, which issue is now under consideration of the third respondent, we consider it appropriate to set aside the impugned order of penalty. - Petition disposed of

Summary

Issues:
Challenge to assessment order in Form VAT 305 dated 01.02.2016 and consequential penalty order under Rule 25(5) of the A.P. VAT Rules dated 08.03.2016.

Analysis:
The petitioner established a manufacturing unit in 1991, shifted it in 2012, and received sales tax deferment under the Target Scheme, 2000. The petitioner paid deferred tax for specific years, but the assessing authority rejected a portion of the deferment amount due to the unit's relocation. The Appellate Deputy Commissioner remanded the matter for clarification from the Industries Department. The impugned assessment order and penalty were passed without awaiting clarification.

The Special Standing Counsel for Commercial Taxes argued that due to the lack of response from the Industries Department, the assessing authority had to pass the assessment order to avoid limitation issues. The penalty order was justified as the petitioner violated Rule 25(5) of the A.P. VAT Rules. The Industries Department's lack of response led the Court to direct the third respondent to appear with records. The third respondent acknowledged the violation and proposed canceling the Final Eligibility Certificate, committing to take necessary action following due procedure.

Considering the counter affidavit, the Court directed respondent Nos.1 and 2 not to take coercive recovery steps for four months. The third respondent was instructed to notify the petitioner, provide a hearing opportunity, and pass orders within three months. The penalty order was set aside pending the third respondent's decision on the violation issue. The Court clarified that the setting aside of the penalty order did not prevent initiating penalty proceedings again after the third respondent's decision.

Both Writ Petitions were disposed of without costs, and any pending miscellaneous petitions were closed.