AP High Court seeks fresh affidavit on Vizag Steels

By S A Ishaqui
Hyderabad, Aug. 1: The Andhra Pradesh High Court asked the commercial tax
department to file a fresh affidavit on the issue of slapping notice on the Rashtriya
Ispat Nigam Limited (Vizag Steels), Visakhapatnam, to pay tax amounting to Rs 365
crore for the assessment year 2004-05.
On March 31, 2008, the assistant commissioner of commercial taxes,
Visakhapatnam, ordered Visakhapatnam Steels to pay taxes for inter-state sales of
its products.
Mr R.C. Mohanty, an official of the (RINL), filed a petition challenging the orders of
the commercial department. He submitted to the court that their factory produces
different products and supplies to its branches throughout the country.
The petitioner told the court that the company never accepts or undertakes
individual orders from any customer.
It submitted that the Long Term Contracts (LTCs) were signed by the branches
depending on the nature and quantity of the products.
The petitioner contended that LTCs did not set out any details such as grade and
size and specification of product and hence cannot be termed as an agreement of
sale.
The petitioner told the court that transactions between the head office and its
branches have been exempted from levy of taxes under the scheme of the CST Act
1957.
It was also told that the commercial tax department of the state has been accepting
their claim with regard to branch transfers all along.
Surprisingly, the assistant commissioner issued a notice to the company in February
this year stating that it proposed to assess the branch transfers as inter-state sales
under Section 3 (a) of the Commercial Tax Act, the petitioner added.
According to the petitioner the commercial tax authorities allowed for tax
exemption for about Rs 410, 09, 91, 208 , but remaining turnover of Rs
2798,40,48,470 treated as interstate sales and assessed to tax for the year 2004-05.
Finally the assessing authority has not allowed exemption on total value of sales Rs
3208, 50, 39, 678. The petitioner said that this would seriously jeopardise the interest
of the Vizag Steels.