Court upholds assessment order within time limit, denies CST exemption claim. Petitioner to bear costs.

The court held that the impugned assessment order was not barred by limitation as it was completed within the prescribed period of four years. The court also found that the assessment was valid and in accordance with the law, rejecting the petitioner's claim of exemption from CST. The petitioner was directed to bear the costs, and the writ petition was dismissed.

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Issues Involved:
1. Whether the impugned assessment is barred by limitation.
2. Whether the impugned assessment is in accordance with law.

Issue-wise Detailed Analysis:

1. Question of Limitation:

The court examined whether the assessment order dated March 30, 2011, was barred by limitation as prescribed under section 21(3) of the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act). The court noted that section 9(2) of the Central Sales Tax Act, 1956 (CST Act) mandates that the machinery and method of assessment of CST shall be in accordance with the provisions of the general sales tax law of the State. Rule 14A of the Central Sales Tax (Andhra Pradesh) Rules, 1957 (State Rules) specifies that if the return is filed within the prescribed time and is in order, it shall be accepted as self-assessment, subject to adjustment of any arithmetical error. However, the assessing authority can undertake assessment within four years from the date of filing of the return if the turnover has escaped assessment or was under-assessed.

The court held that the impugned assessment order was not barred by limitation. The assessment for the financial year 2006-07 was completed within the prescribed period of four years from the expiry of the year to which the turnover relates. The court rejected the petitioner's contention that the assessment was antedated and concluded that the assessment order dated March 30, 2011, was within the limitation period as per rule 14A(8) of the State Rules.

2. Question of Validity of Assessment:

The petitioner claimed exemption from CST on the basis that the goods sold were "cotton terry towelling fabrics," which fall under entry 45 of the First Schedule to the VAT Act and are exempt from VAT. The assessing authority, however, treated the goods as "cotton terry towels" taxable under entry 52 of the Fourth Schedule to the VAT Act. The court noted that the petitioner did not furnish the necessary declaration forms to support the claim of exempt sales and that the turnover was not supported by C forms.

The court observed that the petitioner's factory was producing cotton terry towels in different lengths and that most of the sales were made to hotels and traders. The CTO verified the petitioner's machinery and confirmed that the petitioner was producing terry towels. The court held that the petitioner's claim of exemption under entry 45 of the First Schedule was not tenable as the goods manufactured were cotton terry towels, which fall under entry 52 of the Fourth Schedule and are taxable.

The court also noted that the petitioner did not pay Central excise duty from April 2005, and therefore, the goods manufactured could not be exempt under the VAT Act. The court concluded that the impugned assessment order was valid and in accordance with the law. The petitioner had an effective alternative remedy of filing an appeal before the Appellate Deputy Commissioner but chose to file a writ petition instead.

Conclusion:

The writ petition was dismissed, and the court upheld the validity of the assessment order dated March 30, 2011, as it was neither barred by limitation nor contrary to the law. The petitioner was directed to bear the costs.

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