The Hindu Business Line : Vizag Steel objects to bid to recover sales tax from bank accounts

Corporate - Taxation
Industry & Economy - Courts/Legal Issues
States - Andhra Pradesh
Vizag Steel objects to bid to recover sales tax from bank accounts

Our Bureau

Visakhapatnam, Nov. 1 The Visakhapatnam Steel Plant, in a press release issued here on Thursday, took exception to the move made by the Andhra Pradesh Commercial Taxes Department officials to recover “sales tax dues” from the bank accounts of the plant, even while the matter is being examined by the Andhra Pradesh High Court and the verdict is awaited.

According to estimates of the AP Commercial Taxes Department, the steel plant has to pay Rs 540 crore in the form of sales tax.

The press release says that, “the steel plant produces and distributes its products based on market or demand assessment from customers at various locations across the country. The products are despatched to the branches of the VSP in different States against Form-F obtained from the Commercial Taxes Departments of the respective States. Branch transfers are made depending on production and estimated demand at various locations. Such despatches to branches are exempt from central sales tax. If the sale is made directly from the steel plant to a customer in another State, VSP is making the central sales tax payment to the Andhra Pradesh Government without fail.”

CST on transfers

For the first time in 2005-06, the Commercial Taxes Department raised the issue of CST on transfers made to the VSP branches in different States, treating them as pre-determined sales, and issued notices to the plant for payment of Rs 540 crore.

Challenging the interpretation, the steel plant moved the Andhra Pradesh High Court and the court orders are awaited.The release adds, “Normally, no action is taken for recovery of taxes pending decisions on appeals filed. In the High Court of Andhra Pradesh, it is understood that the Advocate-General has agreed that recovery action on VSP/banks will not be pursued. Contrary to this, the Commercial Taxes Department has issued notices to the banks under 29(2) of AP VAT Act. This, in effect, has frozen the accounts of the VSP. Further, the Commercial Taxes Department went one step ahead and issued notices to the bank confiscating the assets under rule 29(6).”

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