1991 (11) TMI 243 - HC - VAT and Sales Tax

High Court clarifies notice requirements for tax exemption eligibility verification under Sales Tax Act

The High Court of Andhra Pradesh addressed the validity of a notice requesting the production of account books for verification of exemption eligibility ... - Issues: Validity of notice for production of account books, Scope of power under section 20 of Andhra Pradesh General Sales Tax Act.Analysis:The judgment of the High Court of Andhra Pradesh dealt with the validity of a notice issued by the Deputy Commissioner, Commercial Taxes, Kurnool, calling for the production of account books for the year 1983-84. The petitioner challenged the notice, arguing that it was an attempt to conduct a fishing and roving enquiry beyond the scope of the law. The respondent justified the notice by stating it was to verify the eligibility of the dealer for exemption on certain turnover items not adequately addressed in the assessment order. The petitioner contended that the assessing authority had already granted exemption after verifying the accounts. The crux of the issue was whether the notice was a legitimate exercise of power under section 20 of the Andhra Pradesh General Sales Tax Act.The Court acknowledged that the Deputy Commissioner had the authority to conduct an enquiry under section 20(1) of the Act if the assessment order was prejudicial to revenue interests. The respondent clarified that no proceedings under section 20 had been initiated yet, and the purpose of the notice was to conduct a preliminary enquiry before considering revision or modification of the assessment order. However, the notice did not specify the specific turnover items for which the accounts were required, leading to the petitioner's difficulty in compliance.Upon review, the Court found that the respondent's intention was to verify the account books to ascertain the validity of the exemption granted by the assessing authority. While acknowledging the Deputy Commissioner's power to call for relevant account books, the Court directed the respondent to issue a proper notice specifying the items of turnover for which the accounts were needed. The Court emphasized that the respondent could proceed with revision or modification of the assessment order under section 20 but must adhere to due process.In conclusion, the Court disposed of the writ petition, instructing the respondent to issue a revised notice in line with the provisions of section 20 and proceed lawfully. The judgment highlighted the importance of clarity in communication and adherence to legal procedures in tax matters.