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2010 (9) TMI 980 - HC - VAT and Sales TaxValidity of G.O. Ms. No. 503, Revenue (CT-II) Department, dated May 8, 2009, whereby rule 67 of the Andhra Pradesh Value Added Tax Rules, 2005 was amended challenged as being illegal, arbitrary, in violation of articles 14, 19(1)(g) and 265 of the Constitution of India, contrary to the industrial policy of the State Government in G.O. Ms. No. 108 dated May 20, 1996, and the final eligibility certificate issued to the petitioners. Held that:- Section 69(1) of the VAT Act has no application to those tax holiday units whose period of availment expired by March 31, 2005. As the converted units and the original tax deferment units constitute two distinct and separate classes, the contention that the persons similarly situated are treated differently does not merit acceptance.The challenge to the validity of the amendment, by G.O. Ms. No. 503 dated May 8, 2009, on the ground of arbitrariness and violation of article 14 of the Constitution of India must, therefore, fail. The Legislature, in its wisdom, has left it to the rule-making authority to decide the manner in which this degree of parity should be brought about and, since the amended rule does bring about a high degree of parity between the converted and the original tax deferment units, it cannot be said to fall foul of section 69(1) of the Act. Rule 67(5) makes it clear that the amount of tax deferment availed of in the first year of conversion shall be repaid in the succeeding month in which the period for which the unit is eligible for availment of incentives is completed. Since rule 67(5) stipulates that repayment of the deferred tax would commence on completion of the balance period of availment, the mode of repayment is prescribed by the Rules and not merely by the amended illustration. This contention also necessitates rejection Since the VAT Act has itself delegated the power to the rulemaking authority, the contention that the right of deferment can only be taken away by plenary legislation does not merit acceptance. Since the converted and the original tax deferment units constitute two different and distinct classes, the question of similarly situated persons being treated differently, or equals being treated unequally, resulting in discrimination does not arise. The contention that the Rules have been applied with retrospective effect must, therefore, fail. The contention, that the Government is not entitled to resile from its promise, by substituting the illustration to rule 67, is not tenable and necessitates rejection. It is only after G.O. Ms. No. 503 dated May 8, 2009 came into force was the notice issued on June 16, 2009 calling upon the petitioners to pay the tax deferred for the assessment years 2005-06 and 2006-07 which was payable by the petitioner in May, 2008 and May, 2009, respectively. The demand notice dated June 16, 2009 accords with the substituted illustration and rule 67(5) as notified in G.O. Ms. No. 503 dated May 8, 2009. The contention that the demand is contrary to rule 67, and suffers from the vice of arbitrariness, necessitates rejection. APGST Act was repealed in its entirety, and the A.P. Value Added Tax Act, 2005 came into force on April 1, 2005. The mere fact that G.O. Ms. No. 108 dated May 20, 1996 has not been amended, or the final eligibility certificate issued thereunder was not cancelled or varied, would not enable the petitioners to either claim tax exemption or that the period for repayment of the deferred tax should be 14 years.The writ petitions are, accordingly, dismissed.
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