Court quashes assessment orders for violation of judicial orders

The court disposed of the writ petition by quashing the assessment orders for 2000-01 to 2002-03 due to their violation of judicial orders. The case was remanded to the first respondent for verifying if the petitioner collected sales tax, without imposing costs.

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Issues Involved:
1. Jurisdiction to levy sales tax.
2. Validity of assessment orders during the interim period.
3. Compliance with judicial orders and principles of res judicata.
4. Examination of whether sales tax was collected by the petitioner.

Detailed Analysis:

1. Jurisdiction to Levy Sales Tax:
The petitioner, a small-scale industrial unit, obtained a final eligibility certificate under G.O. Ms. No. 108 dated May 20, 1996, entitling it to a sales tax holiday for Rs. 1,33,73,140 from February 11, 1999, to February 10, 2006. Clause 11(vi) of the certificate prohibited the petitioner from collecting sales tax from its consumers. The first respondent issued a show-cause notice on July 29, 2000, proposing to assess the petitioner based on a circular memo dated May 17, 2000, which withdrew the tax holiday for industrial gases. The petitioner challenged this in W.P. No. 22175 of 2000, resulting in an interim order preventing the withdrawal of the tax holiday. The General Manager, District Industries Centre, Medak, later canceled the final eligibility certificate, leading to another writ petition (W.P. No. 19631 of 2001), which was allowed on the grounds of lack of jurisdiction.

2. Validity of Assessment Orders During the Interim Period:
Despite the interim order in W.P. No. 22175 of 2000, the first respondent finalized the assessments for 2000-01, 2001-02, and 2002-03. The Full Bench in Panchalingal Carbonic Gas Pvt. Ltd. v. State of Andhra Pradesh held that converting oxygen/carbon dioxide from liquid to gaseous form did not constitute a manufacturing process, and the tax holiday was only for industries involved in manufacturing. The Division Bench, following this judgment, dismissed W.P. No. 22175 of 2000. The first respondent issued garnishee notices to recover tax arrears, which the petitioner contested, claiming they had not collected sales tax and were running on a tight budget.

3. Compliance with Judicial Orders and Principles of Res Judicata:
The court emphasized that all decisions are presumed valid until set aside by a competent court. Orders, even if interim, are binding until quashed. The assessment orders for 2000-01 and 2001-02 were passed during the interim order period, and the 2002-03 order was passed after the final order in W.P. No. 22175 of 2000. The court held that these orders violated both interim and final orders, making them void. The principle of res judicata prevents re-litigating the same issue between the same parties once a decision has been made.

4. Examination of Whether Sales Tax Was Collected by the Petitioner:
The Full Bench in Panchalingal Carbonic Gas Pvt. Ltd. stated that the government could only recover sales tax if it was collected by the industrial unit. The petitioner asserted they had not collected sales tax, but this required verification. The court remanded the matter to the first respondent to examine records and determine if sales tax was collected during the relevant years.

Conclusion:
The writ petition was disposed of with the assessment orders for 2000-01 to 2002-03 being quashed due to their contravention of judicial orders. The matter was remanded to the first respondent for further examination of whether the petitioner collected sales tax, without imposing costs.

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