2001 (11) TMI 997 - HC - VAT and Sales Tax

Court Invalidates Retroactive Withdrawal of Tax Benefits on Napa Slabs

The court declared G.O. Ms. No. 780 and section 14-C(2) of the Andhra Pradesh General Sales Tax Act, 1957 as ultra vires, ruling that the government ... - Issues:Challenge to the validity of G.O. Ms. No. 780 dated September 12, 1997 and section 14-C(2) of the Andhra Pradesh General Sales Tax Act, 1957 as arbitrary, illegal, and violative of articles 14 and 19(1)(g) of the Constitution of India. Withdrawal of benefits retrospectively to dealers in Napa slabs. Refund of excess tax paid by dealers.Analysis:The writ petitions challenged the validity of G.O. Ms. No. 780 dated September 12, 1997, and section 14-C(2) of the Andhra Pradesh General Sales Tax Act, 1957, as arbitrary and beyond legislative and governmental powers. The petitioners, dealers of Napa slabs, argued that they opted to pay tax at 2% under section 14-C due to turnover below five lakhs, but the government retrospectively withdrew this benefit through G.O. Ms. No. 780. The petitioners contended that such retrospective withdrawal was unauthorized and ultra vires, citing legal precedents supporting limitations on retrospective legislation. The Government Pleader defended the government's actions, asserting the legality of retrospective amendments under the Act.The court considered the legality of G.O. Ms. No. 780 issued by the Andhra Pradesh government, which withdrew benefits from dealers in Napa slabs retrospectively. Referring to legal precedents, the court emphasized that subordinate legislation, including executive orders, must align with legislative intent and cannot grant retrospective effect unless explicitly authorized. The court held that the government lacked authority to withdraw benefits retrospectively under section 14-C, declaring G.O. Ms. No. 780 ultra vires the State Government's powers under the Act. The court's decision was based on established legal principles restricting the retrospective operation of subordinate legislation.Regarding the refund of excess tax paid by dealers at 16% instead of the reduced rate of 2% under section 14-C, the court directed the assessing authority to complete assessments for the relevant period. The court instructed the authority to determine if dealers had paid tax at the higher rate and not passed on the burden to customers. If excess tax was confirmed, the authority was mandated to include provisions for refunds in the assessment orders. The court set a timeline of four months for completing the assessments and emphasized the need for compliance with the refund directives. Ultimately, the writ petitions were allowed, with no costs imposed on either party.