SC notice to BSNL on Andhra govt's plea on sale tax payment

The Supreme Court has issued notice to Bharat Snachar Nigam (BSNL) on an Andhra Pradesh government plea alleging that the state-run firm was liable to pay sales tax of more than Rs 469 crore on telephone rentals and airtime charges.     

A bench headed by Justice S H Kapadia sought reply from the state-owned telecom service provider as to why it should also be granted refund of around Rs 14.52 crore.     

It further asked BSNL to reply on the issue whether the state had the power to adjust and withhold refunds under Section 33C of the Andhra Pradesh Value Added Tax Act, 2005.     

The Andhra Pradesh High Court on July 24 had held that the tax authorities had wrongly withheld the refund amount of Rs 14.52 crore and the same along with interest should be paid to BSNL within four weeks, failing which the amount would be recovered from the officer responsible for causing delay.     

Challenging the High Court verdict, the state government submitted that it had the power to withhold refund in certain cases, where an order on giving refund to an assessee or licensee was a matter of an appeal.     

Senior counsel Rakesh Dwivedi and Rajneesh Kumar Singh, appearing for the state, said that BSNL was liable to pay more than Rs 469 crore between 1997 to 2008 and that granting of refund would definitely affect the state's revenue adversely.

According to the state government, huge amount of taxes were due from the service provider and it had failed to clear the arrears.     

It submitted that the assessing authority had withheld refund of more than 14.52 crore as the grant of refund would adversely affect revenue.      

It added that telephone rentals were goods and thus liable to sales tax.    

The state government further contended that of the APVAT Commissioner has the power to withhold refund to companies when its comes under litigation and the high court ignored this basic fact.     

The issue had reached the courts after the department had raised a tax demand of around Rs 42.87 crore on BSNL in August 2003. The PSU had moved the high court challenging the demand order.