2012 (11) TMI 451 - HC - VAT and Sales Tax

Andhra Pradesh General Sales Tax Act - option of composition of tax under section 5F of the Act Held that - In taxation measures composition schemes are not unknown and when such scheme is availed of by the assessee it is not at all permissible for him to turn around and ask for regular assessment - there is no procedure which enables a dealer to avail of the hybrid procedure namely for some time the assessment under section 5F of the Act and for some time composition of tax in the same assessment year - Decided against the assessee.

Summary

Issues:
- Whether a dealer can withdraw the option for composition of tax under section 5G of the Act and seek assessment under section 5F of the Act.

Analysis:
The judgment involves the consideration of revision cases filed under section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957. The court noted that the common issue in these cases was whether a dealer, who elected for composition of tax under section 5G of the Act for a specific assessment year, could withdraw that option and request assessment under section 5F of the Act. The facts of the case revolved around a petitioner engaged in works contracts, whose assessment was initially computed under section 5G but later proposed to be revised by the Additional Commissioner under section 5F. The petitioner contended that there was no express prohibition against withdrawing the composition option and that the composition was not beneficial due to the nature of their contracts.

The court delved into the legal framework governing works contracts, highlighting the definitions and charging sections under the Act. It outlined the two methods of computing tax on goods involved in works contracts: section 5F and section 5G. Section 5G allows for composition of tax payable, subject to prescribed conditions, while rule 6B provides the procedural aspects of opting for composition. The court emphasized that once a dealer opts for composition under section 5G and obtains permission in Form L1, they are bound by that choice for the entire year, as per the provisions of the Act and Rules.

Drawing parallels with a Supreme Court judgment in a similar context, the court reiterated that once a taxation composition scheme is availed, it is not permissible for the dealer to revert to regular assessment mid-year. The court rejected the petitioner's arguments for a hybrid approach of assessment methods within the same year, emphasizing the importance of consistency in tax assessment procedures. Ultimately, the court dismissed the revision cases, upholding the decisions of the Additional Commissioner and the Sales Tax Appellate Tribunal, and ruled that there was no merit in allowing the dealer to switch assessment methods during the assessment year.

In conclusion, the judgment provides a detailed analysis of the legal provisions governing the computation of tax in works contracts under the Andhra Pradesh General Sales Tax Act, emphasizing the binding nature of the composition option once chosen by a dealer. The court's decision underscores the importance of consistency and adherence to chosen tax assessment methods, barring dealers from switching between methods mid-year for their benefit.