2020 (10) TMI 955 - HC - VAT and Sales Tax

Court sets aside Assessment Order under VAT Act, emphasizes procedural compliance in tax assessments.

The Court allowed the Writ Petition, setting aside the Assessment Order levying penal interest and penalty under the T.S. VAT Act, 2005 for the period ... Principles of Natural Justice - validity of Penal Interest Order and Penalty Order - tax payments were made belatedly by the petitioner - periods April, 2016 to June, 2016, September, 2016, October, 2016 and December, 2016 to March, 2017 - HELD THAT:- The 1st respondent passed the impugned orders on 21.08.2020 levying both penal interest and penalty by separate Proceedings without considering the objections by merely stating that the contention of the petitioner is not considered. There is no discussion about the detailed objections filed by the petitioner on 21.11.2019 or reply dt.27.12.2019 - Since there is non-consideration of the objections dt.21.11.2019 or reply dt.27.12.2019 filed by the petitioner to the show-cause notice dt.01.11.2019, the impugned Penalty Order as well as Penal Interest Order cannot be sustained. The matters are remanded to the 1st respondent to consider the objections dt.21.11.2019 and 27.12.2019 filed by the petitioner, provide a personal hearing to the petitioner, pass a reasoned order in accordance with law and communicate the same to the petitioner - petition allowed by way of remand. Issues:Assailing Penal Interest Order and Penalty Order under T.S. VAT Act, 2005 for the period 2016-17. Non-consideration of objections filed by the petitioner. Justification of penal interest and penalty under Section 51(1) of the A.P. VAT Act. Procedural irregularities in passing the impugned orders.Analysis:The petitioner challenged the Penal Interest Order and Penalty Order passed by the 1st respondent for the period 2016-17 under the T.S. VAT Act, 2005. The initial order levying penal interest and penalty was set aside in a previous Writ Petition due to non-compliance with the procedure prescribed by Rule 24(4) of the A.P. VAT Rules, 2005. The Court directed the petitioner to file objections and the respondent to pass fresh orders. Subsequently, the respondent issued a notice for objections, treating the previous order as a show-cause notice. The petitioner contended that it engaged in catering services to SEZ Units with no tax liability and had paid taxes for services in non-SEZ Units. The delay in payment was attributed to reasons such as non-receipt of funds from clients and technical issues with payment portals.The respondent, however, passed the impugned orders levying penal interest and penalty without adequately considering the objections raised by the petitioner. The Court noted that there was no discussion or consideration of the detailed objections filed by the petitioner. Citing previous judgments, the Court emphasized that the assessing authority must not only refer to the dealer's explanations but also provide reasons if those explanations are deemed unacceptable. As a result, the Court held that the impugned orders cannot be sustained due to the non-consideration of the petitioner's objections.Consequently, the Court allowed the Writ Petition, setting aside the Assessment Order levying penal interest and penalty. The matters were remanded to the 1st respondent to reconsider the objections filed by the petitioner, provide a personal hearing, and pass a reasoned order in accordance with the law. The Court emphasized the importance of proper consideration of objections and adherence to procedural requirements in such matters. The judgment highlighted the necessity for a fair and reasoned decision-making process in tax assessments under the A.P. VAT Act.