Allowed

M/S Rohini Power Tech v. the Commercial Taxes Officer I

Andhra Pradesh HC5 Feb 2021WP/23574/2020

Case brief

AI extract

What is this about?

The court allowed a writ petition quashing an entry tax assessment and recovery notice issued by commercial tax authorities. The court held that the authorities violated principles of natural justice by ignoring the petitioner's submissions claiming exemption for traders and failing to specify the tax period in the order.

What did the court decide?

Impugned assessment order dated 01.12.2018 and recovery notice dated 20.11.2020 set aside; 1st respondent directed to issue fresh notice specifying tax period and afford opportunity to submit explanat

M/S Rohini Power Tech Vs the Commercial… — Writ and Judicial Review | Andhra Pradesh HC (2021)

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HON'BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE MS. JUSTICE J. UMA DEVI

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Writ Petition No.23574 of 2020

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ORDER: ( Per Hon’ble Sri Justice U.Durga Prasad Rao )

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The challenge in this writ petition is to the order of the 1^st respondent dated 01.12.2018 in A.A.O.No.139204 passed under the provisions of the Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001 (for short, ‘the Act, 2001’) and the recovery notice issued by 2^nd respondent dated 20.11.2020 in terms of Section 29 of the A.P. VAT Act, 2005 to the banker of petitioner i.e., 6^th respondent herein seeking payment of entry tax amount of Rs.13,13,194/allegedly due by the petitioner for the tax period 2016-17 as illegal, arbitrary and bad in law and without jurisdiction.

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2. The petitioner’s case succinctly is thus:

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The petitioner is the authorized dealer for Kirloskar Green Diesel Generator Sets. It buys the generators from the manufacturer/wholesaler and resells the same locally in the same form/condition. The petitioner is the registered dealer on the rolls of 1^st respondent and regularly files returns under concerned laws.

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The 1^st respondent issued show cause notice dated 09.11.2017 proposing to levy entry tax on the notified goods on the ground that they are imported from other States and therefore, they are taxable in terms of the Act, 2001. Identical notice was issued on 17.11.2017. In response, the petitioner submitted its reply dated 09.11.2017 stating that the impugned goods purchased by it against statutory ‘C’

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declaration forms and the petitioner does not indulge in any manufacturing activity as it is merely a trader and hence, the proposed imposition of the entry tax is not legally justified. However, without referring to the petitioner’s objections, successive notices dated 04.12.2017 and 15.11.2018 were served on the petitioner recording therein erroneously that the petitioner did not respond to the earlier notices. The petitioner once again submitted its objections on 01.12.2018 and requested to drop the proceedings. In none of the above notices issued by the 1^st respondent, the tax period for which the proposal for levying tax was mentioned nor the manner in which the turnover has been arrived was mentioned.

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While so, ignoring the objections of the petitioner the 1^st respondent completed the assessment on 01.12.2018 and sought to levy tax on the notified goods imported by the petitioner. The 1^st respondent failed to see that all the notified goods imported by the petitioner are resold and petitioner is merely a trader. The said assessment order was passed in utter disdain to the provisions of the A.P. VAT Act, 2005, particularly Section 3(2) of the said Act. Further even in the assessment order there was no mention of the tax period for which the assessment was made. The objections of the petitioner were not considered. It was wrongly mentioned as if the petitioner did not file objections despite granting opportunities. Added to it, no original assessment order was served on the petitioner. The petitioner vide letter dt. 26.11.2020 informed the 1^st respondent

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that the original assessment order was not served on him and there was no mention of the tax period for which the impugned assessment was made. However, there was no reply from 1^st respondent till date.

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While the matter stood thus, the 2^nd respondent issued a notice on 20.11.2020 under Section 29 of the A.P. VAT Act to the banker of the petitioner i.e., 6^th respondent and sought to recover a sum of Rs.13,13,194/- being the alleged dues of entry tax from the petitioner for the tax period 2016-17. The said notice was not served on the petitioner. The said notice was served on 6^th respondent seeking to freeze its C.C. account. The petitioner came to know about the said fact on 23.11.2020. The said notice was issued without obtaining authorization from the Deputy Commissioner (CT).

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Hence, the writ petition.

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3. Heard Sri Karthikeya, counsel representing Sri J.V.Rao, learned counsel for the petitioner, and learned Assistant Government Pleader for Commercial Tax representing the respondents.

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4. The main plank of the argument of learned counsel for petitioner is that as against the successive show cause notices issued by the 1^st respondent proposing to levy entry tax, the petitioner submitted its reply dated 09.11.2017 and 01.12.2018 clearly mentioning therein that he was merely a trader i.e., purchasing generators from the manufacturer/wholesaler and selling the same to the customers in the State of Andhra Pradesh in the same condition and therefore, he is not liable to pay the entry tax on the notified

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goods. However, his objections/explanation were not at all considered and the impugned assessment order dated 01.12.2018 was passed by the 1^st respondent. It is further contended that in the impugned order the 1^st respondent did not mention about the tax period for which the assessment was being made. Therefore, the petitioner was not in a position to appraise the sales and purchases of generators for the relevant period. Learned counsel thus prayed to set aside the impugned assessment order and consequential notice, which was issued under Section 29 of the AP VAT Act, 2005 to the banker of the petitioner seeking payment of the entry tax amount, and remand the matter to 1^st respondent to give opportunity to the petitioner to submit its case.

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5. In oppugnation, learned Assistant Government Pleader for Commercial Taxes argued that as against the impugned order, the petitioner ought to have filed the appeal before the Deputy Commissioner (CT), Tirupathi and without following the said procedure, he cannot file the writ petition.

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6. In the light of the above respective arguments, we gave our anxious consideration to the impugned assessment order dated 01.12.2018. Without going into the other merits, it can be stated that, as against the notice dated 09.11.2017 of the 1^st respondent, the petitioner submitted its reply to 1^st respondent on 09.11.2017 and the 1^st respondent acknowledged its receipt on 18.11.2019. The petitioner filed copy of his reply notice dated 09.11.2017 which contains the

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stamp of the office of 1^st respondent dated 18.11.2017. In the said reply, the petitioner took the objection against the proposal to levy entry tax by the 1^st respondent on the ground that the petitioner purchases the generators inter-state and selling the same to various customers against the Form ‘C’ declaration and the petitioner is not involved in any manufacturing activity and therefore, the purchase of notified goods are exempted from entry tax. As can be seen from the impugned assessment order dated 01.12.2018, the 1^st respondent in the reference only mentioned about the successive notices issued by it, but did not mention about the reply given by the petitioner on 09.11.2017 and 01.12.2018. So also the 1^st respondent in its impugned order did not mention about the objections taken by the petitioner in its reply notices. It was only mentioned that despite numerous opportunities offered, the dealer neither filed reply nor appeared in person during personal hearing and hence, an ex parte order was passed confirming the tax proposed. We find the impugned order is not justified in view of the above factual background, particularly in the light of replies submitted by the petitioner taking legal objection against the proposed entry tax. Mere availability of alternative relief of appeal in our view will not come in the way of entertaining writ petition because the 1^st respondent did not follow the principles of natural justice by referring the objections in reply notices and affording an opportunity to the petitioner to submit its case.

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In the result, this Writ Petition is allowed and the impugned assessment order dated 01.12.2018 in A.A.O.No.139204 passed by 1^st respondent and recovery notice dated 20.11.2020 issued by 2^nd respondent are hereby set aside and the 1^st respondent is directed to issue fresh notice to the petitioner specifying therein the tax period for which the proposed assessment made for levying entry tax and give an opportunity to the petitioner to submit his explanation/objections and after hearing the petitioner, pass an appropriate order on merits in accordance with the governing law and Rules. No costs.

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_________________________ U.DURGA PRASAD RAO, J

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_____________ J.UMA DEVI, J

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05.02.2021 MVA

M/S Rohini Power Tech v. the Commercial Taxes Officer I

Case brief

What is this about?

What did the court decide?

M/S Rohini Power Tech v. the Commercial Taxes Officer I

Case brief

What is this about?

What did the court decide?

What the court decided

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