“Instead of issuing SCN for Imposing penalty Under APVAT Act, Revenue wasted six years in litigation”: Supreme Court [Read Judgement]

In a significant case, the Supreme Court criticized the revenue department’s action of conducting 6 years litigation on issue of invalid penalty order under the Andhra Pradesh Value Added Tax Act 2005 (APVAT). The two judge bench  criticized that “Instead of issuing Show cause notice (SCN) for Imposing penalty under APVAT Act, the revenue wasted six years in litigation”.

“What is more disturbing is that instead of accepting the order passed by the High Court and issuing a show cause notice so as to give an opportunity to the assessee to show cause as regards the penalty, the revenue has wasted six years in this litigation which is now coming to end with the dismissal of this petition”, Justice J.B. Pardiwala and Justice R. Mahadevan observed.

Leela Saie Ram Steel Enterprises, the assessee challenged before the High Court on an order of penalty passed under the APVAT Act, 2005. The challenge was on the ground that without issuing a show cause notice the order of penalty came to be passed. The assessee succeeded before the High Court in getting such an order of penalty quashed.

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The revenue challenged the order of the High Court. Without providing an opportunity to the assessee to show cause as regards the penalty, the revenue has spent  six years in this litigation. The bench criticized this act of department.

The bench viewed that it has been fairly conceded before us that the order of penalty was passed without issuing any show cause notice. Further held that It is needless to clarify that if the revenue wants to issue a fresh show cause notice to the assessee, it may do so, if permissible in law and dismiss the petition.

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