Allowed

M/S. Kamakshi Metal Arch.Pvt.Ltd., v. the Deputy Commissioner (Ct)

Andhra Pradesh HC13 Sept 2023WP/7352/2023

Case brief

AI extract

What is this about?

This Court allowed a writ petition challenging a commercial tax revision order. The High Court held that natural justice was violated due to lack of personal hearing after written objections and addressed jurisdictional issues regarding unassessed periods. The order was set aside and remanded.

What did the court decide?

The impugned revisional order dated 17.02.2023 is set aside and the matter is remitted to the respondent to afford an opportunity of hearing and pass an appropriate order.

M/S. Kamakshi Metal Arch.Pvt.Ltd., Vs the… — Execution and Attachment | Andhra Pradesh HC (2023)

¶1

IN THE HIGH COURT^{OF ANDHRA PRADESH :: AMARAVATJA} (Special Original Jurisdiction)

¶2

WEDNESDAY, THE THIRTEENTH DAY^{OF SEPTEMBER} TWO THOUSAND AND^{TWENTY THREE}

¶3

PRESENT

¶4

THE HON'BLE SRI JUSTICE^{U.DURGA PRASAD RAO} AND

¶5

THE HON'BLE SMT. JUSTICE VENKATA^{JYOTHIRMAI PRATAPA}

¶6

WRIT PETITION NO: 7352 OF 2023

¶7

Between:

¶8

M/s. Kamakshi Metal Arch Pvt.Ltd.,^{Sy.No.226/3A,KesavaramRoad,Rajavolu} Village, Rajamahendravaram Rural Mandal E.G District.^{A.P.Rep.byitsManaging} Director Sri Nandigrama Thrimurthulu.

¶9

...PETITIONER

¶10

AND

¶11

The Deputy Commissioner (CT), Rajamahendravaram Division, Rajamahendravaram, E.G. District.

¶12

The Commercial Tax Officer, Alcot Gardens Circle, Rajamahendravaram.

¶13

The Deputy Commercial Tax officer- II, Peddapuram, East Godavari District.

¶14

The State of Andhra Pradesh, Rep. by its Principal Secretary, Revenue (CT) Department, A.P. Secretariat, Velagapudi, Amaravati. Guntur District.

¶15

...RESPONDENTS

¶16

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Wirt of Mandamus or any other appropriate writ or order or direction A) declaring the action of the 1S` Respondent in passing the revision Proceedings under Section 32 of the AP VAT Act, for the tax periods from January, 2016 to June 2017 is without jurisdiction, contrary to the Provisions of the Act as well as binding decisions, arbitrary, high handed and in violation of principles of natural justice B) declare the Revision Proceedings of the^1st respondent, in R.F.No.10 (18)/2019-20, dated 17.02.2023, for the tax period from January, 2016 to June 2017, as void and nonets under law C) and consequently, set aside the Revision Proceedings of the^Pt respondent dated 17.02.2023.

¶17

IA NO: 1 OF 2023

¶18

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to grant stay of all further proceedings, pursuant to the Revision Proceedings of the 1st respondent, in R.F.No.10 (18)/2019-20, dated 17.02.2023, for the tax period from January, 2016 to June 2017, as otherwise, the Petitioner would be put to severe loss and hardship.

¶19

IA NO: 2 OF 2023

¶20

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit this petitioner to file the order of the 1St respondent dated 17.02.2023 as additional Material paper Annexure.P17 in W.P.No.7352 of 2023 in the interest of Justice.

¶21

Counsel for the Petitioner: SRI R. K. ACHARYULU Counsel for the Respondents: GP FOR COMMERCIAL TAX

¶22

The Court made the following: ORDER

¶23

HON'BLE SRI JUSTICE U.I)URGA PRASAD RAO

¶24

AND

¶25

HON'I3LE SMT. JUSTICE VENKATA JYOTFIIRMAI

¶26

I' RATA PA

¶27

Writ Petition No.7352 of 2023

¶28

ORDER: (Per Hon? b/c Sri Justice U. Dur a Prasacl Rao)

¶29

In this petition filed under Section 226 of Constitution of India,

¶30

the petitioner prays for writ of mandamus for the following reliefs:

¶31

(a) Declaring the action of the 1 tit respondent 1n passing the revision proceedings under Section 32 of the AP VAT Act, for the tax periods from January. 2016 to June. 2017 is without jurisdiction, contrary to the provisions of the Act as well as binding decisions, arbitrary high handed and in violation of principles of natural justice.

¶32

(b) Declare the Revision Proceedings of the 1 `` respondent. in R.F.No.10 (1O/2019-20, dated 17.02.2023, for the tax period fi'om January, 2016 to June, 2017. as void and nonets under law and

¶33

(c) And consequently, set aside the Revision Proceedings of the 1^st respondent dated 17.02.2023 and to pass such other order or orders as the 1-lon'ble Court may deem 11t and proper in the circumstances of the case. as otherwise, the petitioner would be put to irreparable loss and severe hardship.

¶34

The petitioner's case succinctly is thus:

¶35

(a) The petitioner is small scale industry and it purchases iron

¶36

and steel plates / sheets 1-IR coils, PPGL Coils, MS Plates and MS

¶37

rounds etc., which are the different forms /categories of iron and steel

¶38

::2::

¶39

items enumerated in entry 70 of Schedule IV of AP VAT Act, 2005 and conducts the process of forming, cutting and welding in various shapes and sizes as per customer requirements and thus all those items are .taxable items @ 5% as iron and steel. The items sold by the petitioner will fall under sub items V to VII of item 70 of Schedule IV and they cannot be classified as general goods falling under Schedule V. It is submitted the petitioner is not manufacturer of any of the aforesaid items with any material other than iron and steel.

¶40

(b) While so, on the authorization issued by the 1 S respondent, the DCTO, Kakinada Division conducted audit of the petitioner's concern for the tax period from January, 2016 to January, 2017 and submitted audit report dated 29.05.2017 to the 1 respondent. Thereafter the 1 respondent issued an assessment authorization dated 31.05.2017 to the 3rt respondent to make assessment.

¶41

(c) Pursuant to the authorization, the 3r`i respondent passed assessment order on 27.06.201 7 wherein while approving the transaction recorded in the books of accounts of the petitioner, however held that petitioner has to pay tax of Rs.34,061/- at 5% on the alleged under reported sales turnover of Rs.6,81,226/- for the

¶42

period from January, 2016 to March, 2016 and as the aforesaid tax is a small amount the petitioner did not challenge the same. The 3`¹ respondent found no discrepancy for the remaining period of assessment i.e., April, 2016 to January, 2017.

¶43

(d) While so, the respondent took up suo moto revision of the said assessment order and issued show cause notice dt: 30.12.20 19 on the main ground that the turnover is excisable to tax at 14.5 % as applicable to general goods under- Schedule V of the Act and that the assessing officer- failed to levy the differential tax of Rs.1,81,37,221/-. The petitioner received notice and filed objections dt: 27.05.2020 contending that the petitioner is not a manufacturer of pre engineering steel structural and only purchasing raw material such as iron and steel and doing the process of forming, cutting and welding in different shapes and hence all the items are taxable at 5% as iron and steel. On 06.01 .2021 when the matter was posted for personal hearing, due to paucity of time and non-availability of the counsel of the petitioner, his accountant Yesubabu attended the office of 1St respondent and filed some available copies of invoices and requested for an opportunity to file other material and to submit

¶44

arguments. However, the 1 St respondent passed the revision order on 12.01.2021 observing that the Yesubabu filed a letter stating that they have no further arguments. It was further observed as if the petitioner was manufacturing new products such as roofing sheets HR build-up sections, Pui lips, HR purlins and MS Plates etc., which are not found place in entry 71 of Schedule IV and that they are liable to be taxed at 14.5% for the manufacture goods and sold as under Schedule V of the Act. The petitioner never claimed that his commodity falls under Entry 71 of Schedule IV but his case is that they will fall under Entry 70 of Schedule IV. That aspect has not been properly considered.

¶45

(e) Added to above, the respondent in his order included the turnover relating to February, 2017 to June, 2017 for which^period there was no assessment at all. Hence the said order passed by the 1" respondent is without jurisdiction.

¶46

(f) Aggrieved, the petitioner filed W.P.No.6801/2021 and this Court set aside the said impugned revision order and remitted^the matter back to the I S` respondent to pass appropriate order on merits. Pursuant to the said order, when the matter came up for hearing before I `` respondent on 09. 1 1.2022 the petitioner sought for further

¶47

time to file his documents and objections. Accordingly, the matter was posted to 16.11 .2022 on that date the petitioner submitted his objections. Thereafter without granting further time for hearing the petitioner and without dealing with various objections raised by the petitioner, the 1^St respondent passed impugned revision order dated 17.02.2023.

¶48

Hence the writ petition.

¶49

Heard learned counsel for petitioner Sri R.K.Acharyulu, and learned Government Pleader for Commercial Tax representing the respondents.

¶50

The main contentions raised by the learned counsel for petitioner as against the impugned suo mote revision order dated 17.02.2023 passed by the 1 St respondent are thus:

¶51

(a) The iron and steel items sold by the petitioner fall under sub-items (v) to (vii) of item 70 of schedule IV but they cannot be classified under schedule V of the AP VAT Act, 2005 as observed in the impugned order.

¶52

(b) The tax period only relates to January 2016 to January 2017. However, without there being any assessment for the period relating to February 2017 to June 2017, the 1'respondent has included the said period in the impugned revisional order and assessed to tax for the total period from January 2016 to June 2017 which is illegal and without jurisdiction. The petitioner would submit that so far as the tax period February 2017 to June 2017 is concerned, the return filed by the petitioner for the said tax period was accepted u/s 20(2) of the AP VAT Act and no audit was taken up or any assessment order was passed for the said period by the CTO, Rajahmundry or by any other authority u/s 21 of the AP VAT Act. Therefore, the 1 respondent cannot exercise the power of revision of a non-existing order. The power of revision u/s 32 can be exercised only when there is an order or proceedings recorded by the subordinate authority prejudicial to the interest of the revenue. However, without there being an assessment order or proceedings recorded by any authority relating to the period February 2017 to June 2017 much less prejudicial to the interest of the revenue, the l ~`

¶53

::7::

¶54

respondent cannot assume jurisdiction to^{revises uo iiiotiiuponanon-} existing order.

¶55

(c) Pursuant to the order dated 19.10.2022 in W.P.No.6801 /2021, the hearing of revision petition was taken up by the 1^S respondent and the petitioner filed his written objections dated 16.11.2022. Thereafter, without granting further time for hearing the petitioner on his objections and without dealing with various objections raised by the petitioner, the impugned order came to be passed on 17.02.2023 and thereby principles of natural justice were violated.

¶56

In oppugnation, learned GP for Commercial Tax contended that the written objections filed by the petitioner were well considered by the 1'` respondent and ultimately concluded that the petitioner in terms of schedule V of the AP VAT Act is liable to pay tax a 14.5% on the steel and iron items sold by him and the said order is legally justified. He argued that if the petitioner is aggrieved, he ought to have filed appeal against the said order before the AP VAT Appellate Tribunal and in view of availability of efficacious and alternative remedy, the writ petition is not maintainable.

¶57

::8::

¶58

The point for consideration is whether there are merits in the writ petition to allow?

¶59

As can be seen, vide order dated 19.10.2022 in W.P.No.6801/2021, a Division Bench of this High Court set aside the earlier revision proceedings in R.F.No.18/2019-20 dated 12.01 .2021 passed by the l' respondent and remanded the matter back to 1 ~ respondent with a direction to issue notice to the petitioner, in which case the petitioner shall appear with his documents if any and thereupon the l s` respondent shall hear both parties and pass an appropriate order on merits in accordance with governing law and rules expeditiously.

¶60

(a) The above order, therefore, pellucidly states that the^1St respondent shall afford an opportunity of hearing to the petitioner before passing of the order.

¶61

(b) While so, a perusal of the impugned revisional order dated 17.03.2023 shows that as per the reference mentioned therein, written objections of the petitioner were filed on 16.11.2022 and thereafter the impugned order was passed on 17.02.2023. Though Ref.No.13 shows that personal hearing was held on 09.1 1 .2022, it should be

¶62

noted that the said personal hearing was a^{preliminary one asbythat} date the petitioner had not filed a detailed written^{objections,which} he admittedly filed only on 16.11.2022. After filing of written objections; no personal hearing was afforded to the petitioner to^argue his case with reference to the written objections filed by him. In the body of the order also, no specific mention was made about granting of personal hearing to the petitioner subsequent to his filing the written objections. Added to it, one of the main objections of the petitioner that the l" respondent has no power to pass the revision order relating to the tax period February 2017 to June 2017 as no assessment order for that period was passed by the primary authority was not discussed and answered by the I'` respondent. However, in the revision, assessment was made for the period January 2016 to June 2017. Therefore, we find force in the contention of the petitioner that principles of natural justice were violated. So far as the contention of the learned GP that in view of the availability of efficacious and alternative remedy of appeal, writ petition is not maintainable is concerned, we find no much force in it. It should be noted that in the instant case, the petitioner raised the grounds of

¶63

::10::

¶64

violation of principles of natural justice and also lack of power of the revisional authority to assess for the tax period January 2017 to June 2017 in the absence of assessment by the primary authority. In such instances, going by the principle laid down in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai' this Court can exercise its plenary jurisdiction under Article 226 of the Constitution of India. In the said decision, Hon'ble Apex Court observed thus:

¶65

"15. Under Article 226 of the Constitution, the High Court, having regard to the facts of a case, has a discretion to entertain or not to entertain a writ petition. But the High Court had imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged."

¶66

Accordingly, the Writ Petition is allowed and the impugned revisional order- in R.F.No. I 0 (18)12019-20, dated 17.02.2023 is set aside and matter is remitted back to the 1 tl respondent with a direction

¶67