2019 (5) TMI 802 - HC - VAT and Sales Tax

Validity of Form-I notice - Andhra Pradesh Revenue Recovery Act, 1864 - seizure and sale of movable property for the arrears of the revenue - HELD THAT - When arrears of taxes are sought to be recovered as arrears of land revenue, the determination of the liability precedes invocation of the provisions of the Act, 1864. Where a mere land revenue is sought to be recovered, a person may be in the dark as to the determination of the amount but where arrears of taxes are sought to be recovered under this Act, if a determination has preceded the invocation of the provisions of the Act and if such determination has attained a finality, the assessee cannot feign ignorance of their liability. That all the columns in Form-I notice are not filled up can hardly be an excuse for an assessee under the relevant taxing statutes, once it is shown that taxes were assessed after following due process of law and once it is shown that such determination has also been served on the assessee concerned. In this case the notices before passing orders of assessment and penalty were served on the petitioner. The orders of assessments and orders of penalty were sent by registered post. It is not the case of the petitioner that they had no knowledge about the order of assessment or the order of penalty. Therefore, an attack a mere demand made in writing, which is the first step prescribed in Section 8 of the Act, 1864, cannot be sustained. Petition dismissed.

Summary

Issues:
Challenging a notice issued under Section 8 of the Andhra Pradesh Revenue Recovery Act, 1864.

Analysis:
The petitioner, a dealer under the Telangana Value Added Tax Act, 2005, challenged a notice issued under Section 8 of the Act, 1864. The petitioner claimed to have faced financial difficulties in 2016, resulting in a VAT due of ?46,77,802. Subsequently, they received a notice under Section 8 in Form-I demanding ?1,38,28,350, which was contested by the petitioner. The petitioner argued that the prescribed steps in Section 8 were not followed, and the notice contained discrepancies. The respondent, represented by the Special Standing Counsel, provided documents showing previous tax assessments and penalties totaling more than the amount in the challenged notice.

The court examined Section 8 of the Act, 1864, which outlines a three-step procedure for the seizure and sale of movable property for revenue arrears. The first step involves a written demand to the defaulter, followed by a notice stating the property will be sold, and then service in case of the defaulter's absence. The Form-I notice challenged was deemed a written demand under Section 8, specifying the amount due and the tax period. The court emphasized that when tax arrears are sought to be recovered, the liability must be determined before invoking the Act, and the assessee cannot claim ignorance if assessments have been duly served.

It was noted that the petitioner had received notices of assessment and penalty orders, indicating awareness of their tax liabilities. The court clarified that the steps outlined in Section 8 aim to inform the unaware, not to reiterate known liabilities. Consequently, the court found no irregularities in the written demand by the respondents and dismissed the Writ Petition. The petitioner was granted two weeks to make payment without facing coercive measures by the respondents.

In conclusion, the court upheld the legality of the written demand under Section 8, emphasizing the importance of prior tax assessments in determining liability. The judgment highlighted the distinction between informing the unaware and reinforcing known liabilities, ultimately leading to the dismissal of the challenge against the notice.