SC Criticizes Revenue for Delaying SCN Issuance for Penalty Under APVAT Act

Commercial Tax Officer & Ors. Vs Leela Saie Ram Steel Enterprises (Supreme Court of India)

Supreme Court addressed a petition filed by the Revenue challenging a High Court decision that quashed a penalty order under the Andhra Pradesh Value Added Tax (APVAT) Act, 2005. The High Court had ruled in favor of Leela Saie Ram Steel Enterprises, holding that the penalty was imposed without issuing a mandatory show cause notice to the assessee. The Supreme Court found no merit in the Revenue’s appeal and highlighted procedural shortcomings, emphasizing that the absence of a show cause notice invalidates the penalty order.

The Court expressed discontent over the Revenue’s six-year litigation instead of resolving the matter by issuing a proper show cause notice as mandated by law. The Supreme Court affirmed the High Court’s order and dismissed the petition, clarifying that the Revenue retains the right to issue a fresh show cause notice if permissible under legal provisions. This decision underscores the importance of adhering to procedural requirements to ensure fair legal proceedings and avoid undue delays.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

1. The subject matter of challenge before the High Court was an order of penalty passed under the APVAT Act, 2005. The challenge was essentially on the ground that without issuing a show cause notice the order of penalty came to be passed.

2. The assessee succeeded before the High Court in getting such order of penalty quashed.

3. The revenue is here before us with the present petition seeking to challenge the order of the High Court.

4. We fail to understand the basis for the revenue to challenge such orders before this Court. It has been fairly conceded before us that the order of penalty was passed without issuing any show cause notice.

5. 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.

6. 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.

7. The petition therefore fails and is hereby dismissed.

8. Pending application(s), if any, stand disposed of.