HDFC plea admitted

By S A Ishaqui
Hyderabad, Oct 31:The AP High Court admitted a petition filed by the HDFC Bank Limited challenging the notice issued by the commercial tax department saying that sale of motor vehicles by the bank to recover debt due to it from borrowers was chargeable to VAT under the AP VAT Act. Mr N. Pratap Kumar, legal manager of the bank filed the petition, stating that the commercial tax department served the notice for the assessment years 2005-06 and 2006-07 to pay Rs 3.5 crore as VAT.
While arguing the case, senior counsel, Mr S.R. Ashok, contended that the principal borrower would not be liable under VAT if the vehicle is sold because he does not sell his vehicle as part of his business, which was a mandatory requirement under Section 2(28) of the VAT Act.
He told the court that the transaction remains a financial one. A division bench comprising Justice Meena Kumari and Justice Ramesh Ranganathan admitting the petition asked the bank to deposit one third of the amount and issued notice to the commercial tax department.