THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.14386 of 2011 Dated:24.06.2011 Between: M/s.Prakash Spectra Cast Pvt.Ltd. .. Petitioner And The Deputy Commissioner (CT), No.II division, Vijayawada, Krishna District, And others. .. Respondents THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.14386 of 2011 ORDER: (per Hon’ble Sri Justice V.V.S.Rao) The petitioner – a company engaged in manufacturing iron/alloy steel castings, is a dealer on the rolls of the second respondent under the Andhra Pradesh Value Added Tax Act, 2005, and the Central Sales Tax Act, 1956 (CST Act). The dealer availed incentive by way of deferment of sales tax for a period of fourteen years under the Government scheme to promote industries. For the period from 07.04.1996 to 06.04.2010 the Department of Industries granted eligibility certificate enabling the petitioner to avail the incentive of deferment of tax of Rs.1,75,61,050/-. Be that as it is, for the assessment year 2005-2006 the second respondent, the territorial Assessing Officer completed assessment duly permitting the petitioner to avail deferment of Rs.1,58,31,053/- out of the total deferment of tax. In purported exercise of power under Section 20(2) of the Andhra Pradesh General Sales Tax Act, 1957, read with Section 9(2) of the CST Act, the first respondent issued show cause notice proposing to revise the assessment for the year 2005-2006. The first respondent proposed to revise the assessment on the ground that the petitioner wrongly availed the benefit of deferment on sales turnover representing sales of finished iron/alloy steel castings for which there was no eligibility certificate. Inter alia, the turnover of Rs.3,41,457/- towards cast steel finished products against C Forms and Rs.7722/- towards cast iron finished products against C Forms was sought to be disallowed. The petitioner submitted explanation contending that, as per the eligibility certificate, all the items manufactured and sold by the petitioner are eligible for tax deferment. By the impugned order dated 30.03.2011 the first respondent, however, overruled the objections and confirmed the proposal to withdraw the benefit of deferment of tax in a sum of Rs.11,31,324/-. The petitioner mainly contends that, as per the eligibility certificate, no distinction can be made among the products manufactured and sold by the petitioner as the benefit was conferred in respect of Sphiroidal Graphite Iron Castings – Alloy Steel Castings and, as long as the eligibility ceiling remains prescribed, the amount of benefit cannot be denied to the petitioner. It is only contended by the petitioner that, even if the eligibility certificate is construed as giving benefit only in respect of unfinished iron/alloy steel castings, the impugned order travelled beyond the show cause notice and that, out of these eight items in respect of which tax deferment was sought to be withdrawn, only two items as referred to hereinabove represent the turnover of finished goods. At the stage of admission itself, as directed by this Court, the first respondent filed counter affidavit. The first respondent would submit that the petitioner was sanctioned sales tax deferment for a period of fourteen years for an amount of Rs.1,75,61,050/- for production of Sphiroidal Graphite Iron Castings/Alloy Steel Castings; that after going through the assessment year 2005-2006 the answering respondent found that the petitioner sold cast steel finished machinery goods and cast iron finished machinery goods which are not eligible as per the eligibility certificate dated 15.11.1996; and therefore, he proposed to revise the assessment order. The other allegations made by the petitioner are denied. A perusal of the assessment order of the second respondent, and the impugned order, would lend support to the petitioner’s contention that the first respondent sought to withdraw the benefit of tax deferment only in respect of those items which by the very nature of description are finished products. Given the undisputed legal position that the Department of Industries allowed the benefit of tax deferment to the petitioner only in respect of iron/alloy steel castings (unfinished products) any claim for tax deferment, in relation to finished products, is unsustainable. Curiously the impugned order also takes into consideration the turnover in respect of the unfinished products as well. In that view of the matter, it is certainly a case which does not satisfy the audi alteram partem rule causing prejudice to the petitioner, as the petitioner was not put on notice with regard to the proposed withdrawal of tax deferment benefit in respect of the unfinished products as well. In the result, for the above brief reasons, we set aside the impugned order and remit the matter to the first respondent. The first respondent shall now issue a show cause notice afresh and pass appropriate orders. This exercise shall be completed within a period of six weeks from the date of receipt of a copy of this order. The writ petition stands disposed of accordingly with the above observations and directions. _______________ (V.V.S. RAO, J) ____________________________ (RAMESH RANGANATHAN, J) 24.06.2011 vs