High Court upheld CTO’s assessment under CST, pending appeal

1. Petitioner company manufactured eco-friendly organic fertilizers and was a registered dealer under the A.P. VAT Act, 2005 and the Central Sales Tax Act, 1956.

2. It made an application u/s 67(1) of the VAT Act to the ARA for advance ruling with regard to classification of its 17 products, which petitioner believed were exempt from tax.

3. ARA held that 11 products were liable to tax.

4. Petitioner’s filed an before the STAT which was pending.

5. The Commercial Tax Officer issued show cause notice, and assessed the petitioner to tax.

On writ petition, the High Court held as under:

6. We therefore hold that S. 67 does not empower the said Authority to issue clarifications or rulings in respect of implementation of statutes such as the Central Sales Tax Act (other than the VAT Act).

7. In this view of the matter we are of the opinion that the 1st Respondent is entitled to initiate and complete the assessment under the Central Sales Tax Act in respect of the petitioner when its application for "Advance Ruling" was pending before the Authority for Advance Ruling..

8. Pendency of its appeal against the said ruling before the S.T.A.T would also not impede or operate to disentitle the 1st respondent in any way in initiating or completing assessment under the Central Sales Tax Act, as provisions of S.67 of the VAT Act would not apply to assessments made under the Central Sales Tax Act. 

Case Reference - M/S.Prathista Industries Ltd. vs Commercial Tax Officer.

Andhra High Court