2012 (11) TMI 253 - HC - VAT and Sales Tax

Tax Penalty Overturned, Refund Ordered with Interest

The Sales Tax Appellate Tribunal set aside the penalty imposed on the petitioner for suppressing turnover under the Central Sales Tax Act and A. P. ... A. P. General Sales Tax Act - Interest under section 33F – Held that:- Principal amount of the tax deferment benefit availed of by the petitioner was deposited - No steps were taken thereafter by the Revenue to recover the amount of interest allegedly due from the petitioner on the belated payment of the sales tax deferment liability - Such discovery was not made even when the principal amount was refunded to the petitioner on February 28, 2012 and after the filing of the writ petition. It is only when the petitioner was pleading for payment of the interest enjoined by section 33F of the 1957 Act that the Revenue appear to have discovered that the petitioner was liable to pay interest in respect of another transaction - conduct of the respondent was unfair and arbitrary - writ petition is allowed Issues:1. Revision of assessment under Central Sales Tax Act and A. P. General Sales Tax Act.2. Imposition of penalty for suppressing turnover.3. Appeal to Sales Tax Appellate Tribunal.4. Refund of penalty amount and interest under section 33F of the 1957 Act.5. Delay in refund process by the Revenue.6. Withholding of interest and reasons provided by the Revenue.7. Comparison with a similar case involving refund and interest payment.8. Arbitrary conduct of the Revenue in processing refund and interest payment.9. Direction by the court to compute and pay interest to the petitioner.10. Granting of costs to the petitioner.Analysis:1. The judgment dealt with the revision of assessment under the Central Sales Tax Act and the A. P. General Sales Tax Act for the assessment year 1997-98, where the Deputy Commissioner revised the assessment and imposed a penalty on the petitioner for suppressing turnover. The petitioner appealed to the Sales Tax Appellate Tribunal (STAT), which eventually allowed the appeal and set aside the penalty order.2. The issue of refund of the penalty amount and interest under section 33F of the 1957 Act arose after the Tribunal's decision in favor of the petitioner. The Revenue was obligated to refund the deposited amount with interest, as per the statutory provision, but delays were noted in the refund process by the Revenue.3. The court examined the reasons provided by the Revenue for withholding interest payment, citing the petitioner's alleged liability for sales tax deferment and subsequent payment made by the petitioner. However, no order was passed under section 33C of the 1957 Act for withholding the refund or interest due to the petitioner.4. Drawing a parallel with a similar case, the court highlighted the arbitrary conduct of the Revenue in delaying the refund process despite the petitioner's entitlement to the refund and interest payment. The court emphasized the lack of justification for the delay and noted the unfairness in the Revenue's actions.5. Ultimately, the court directed the respondents to compute and pay the interest due to the petitioner within a specified period, considering the statutory mandate of section 33F of the 1957 Act. Additionally, the court awarded costs to the petitioner, recognizing the need to address the arbitrary conduct of the Revenue and ensure timely compliance with refund obligations.