Dismissed

M/S. Naga Jyothi Stone Crushers, v. the Assistant Commissioner of Commercial Taxes and Another

Andhra Pradesh HC12 Sept 2024WP/16412/2005

Case brief

AI extract

What is this about?

This writ petition challenged the collection of tax and compounding fees without a formal assessment order. The court held that while the collection violated established judicial guidelines, the petitioner's unexplained 10-month delay barred the petition on grounds of laches.

What the court decided

AI extract

M/S. Naga Jyothi Stone Crushers… — Constitutional and Fundamental Rights | Andhra Pradesh HC (2024)

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IN THE HIGH COURT OF ANDHRA PRADESH::AMARAVATI

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(Special Original Jurisdiction)

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FRIDAY, THE THIRTEENTH DAY OF SEPTEMBER ^
HO TCJi
TWO THOUSAND AND TWENTY FOUR :d
Cy

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PRESENT

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THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO

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AND

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THE HONOURABLE SRI JUSTICE HARINATH.N

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WRIT PETITION NO: 16412 OF 2005

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Between:

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M/s, Naga Jyothi Stone Crushers, Kondakavuvu, Narsaraopet Mandal Guntur, Rep. by its Partner M. Siva Krishna Prasad S/o. Venkateswarlu aged about 41 yrs.

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...PETITIONER..

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AND

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The Assistant Commissioner of Commercial Taxes (Int),^Division-ll

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Guntur,

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2, Deputy Commercial Tax Officer, Narsaraopet.

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...RESPONDENTS

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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 an appropriate writ, order or direction particularly in the nature of Writ of Mandamus declaring the action on the part of the first respondent that is the Assistant Commissioner of Commercial Taxes (Int)

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No.2 Division Guntur in obtaining a statement on 13-8-2004 from the partner of the petitioner firm with simulataneous issue of order on the same day for the purpose of collecting an amount of Rs. 96,072/- by way of money receipt and Rs. 2,000/- towards compounding fees by way of money receipt towards the undetermined and unassessed taxes for the assessment year 2003-04 and also the compounding fees U/s. 30-A of the APGST Act without there being any assessment order and demand as illegal, arbitrary without authority of law and without jurisdiction and against the teeth of the law lay down by this Honourable Court in the recent full bench judgment reported in 2005(2) ALD 704 as well as 42 STC Page 225 and consequently direct the respondents to refund the amount of Rs. 96,072/- collected as unassessed tax and also the compound^feesofRs. 2,000/- forth with along with the interest at 12% from the date of Collection of the tax till the date of refund and grant such other relief as much deemed fit and proper in the circumstances of the case.

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I.A. NO: 1 OF 2005fWPMP. NO: 20856 OF 20051

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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 direct the authorities to refund the tax and compound fees of Rs. 96,072/- and Rs. 2,000/- collected on 13-8-2004 in the absence of any assessment order and grant such other relief or reliefs as are deemed fit and proper in the circumstances of the case.

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Counsel for the Petitioner: SRI M.V.J.K.KUMAR

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Counsel for the Respondent No.1: DANTU SRINIVAS (SPL SC FOR CT) Counsel for the Respondent No.2: GP FOR COMMERCIAL TAX

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The Court made the following: ORDER

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RRR,J & HN,J W.P.No.16412/2005

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APHC010476892005

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction)

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[3488]

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FRIDAY, THE THIRTEENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO

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THE HONOURABLE SRI JUSTICE HARINATH.N

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WRIT PETITION NO: 16412/2005

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Between:

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M/s. Naga Jyothi Stone Crushers,

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...PETITIONER

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The Assistant Commissioner Of Commercial Taxes Another and Others

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...RESPONDENT(S)

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Counsel for the Petitioner:

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1.M V J K KUMAR

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Counsel for the Respondent(S):

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DANTU SRlNIVAS( SPL SC FOR CT)

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2.GP FOR COMMERCIAL TAX

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The Court made the following Common Judgment:

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(Per Hon’ble Sri Justice R. Raghunandan Rao)

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Heard Sri M.V.J.K. Kumar, learned counsel appearing for the petitioner and learned Government Pleader for Commercial Tax for the respondents.

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The petitioner, who was registered on the rolls of the 1 St respondent-Assistant Commercial Tax officer, Narsaraopet,^{undertheAndhra}

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RRR,J & HN,J W.P.No.16412/2005

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Pradesh General Sales Tax Act, 1957 and the Central Sales Tax Act, 1956, was doing business in the sale of stone chips and metal chips.

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On 05.08.2004, the 1®* respondent had conducted inspection^of the premises of the petitioner and a statement was recorded from the partner of the petitioner firm. The petitioner contended that this statement was obtained forcibly. Thereafter, the partner of the petitioner firm had appeared' before the 1®* respondent and had given a statement that the petitioner had a turnover of Rs. 12,00,900/- for the assessment year^{2003-2004andthatatax} of Rs.96,072/- at the rate of 8%, was required to be paid by the petitioner. On the basis of this statement, a show cause notice, dated 10.08.2004 was •issued to the petitioner, calling upon the petitioner, to show cause why action should not be initiated against the petitioner for^{non-maintenanceofbooksof} accounts and non-filing of necessary returns, showing^{theactualturnoverof} the. petitioner. Thereafter, a statement is said to^{havebeenobtainedfromthe} partner of the petitioner-firm again on 13.08.2024 wherein the partner^is said to have stated that there was no objection to pay tax of Rs.96,072/- along with compounding fee of Rs.2000/- for getting the offence compounded under Section 30-A of the APGST Act. The petitioner is also^{saidtohaveissueda} cheque for payment of the said tax and compounding fees and a receipt for ■ the said amount was also issued.

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The petitioner being aggrieved,, by the action of the 1 respondent, in obtaining such statements on 13.08.2004 and calculating tax of

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RRR,J & HN,J W.P.No.16412/2005

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Rs.96,072/and compouipding fee of Rs.2000/without passing any assessment order and without following the principles of natural justice, as well as the procedure set out under the Acts and Rules, has approached this Court by way of the present writ petition.

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The contention of the petitioner is that all the staternents^recorded from the partners of the petitioner, as well as the employee of the petitioner. were obtained forcibly and these statements were not voluntary statements. It was further contended that admission of tax as well as compounding fee, on. the same day, is without authority of law and without jurisdiction and that the erstwhile High Court of Ahdhra Pradesh had held that^such actions are arbitrary and are required to be set aside.

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The petitioner relies upon the judgment of a Division^Benchinthe case of Ambica Lamp House vs. Commercial Tax Officer (Int)-I Enforcement and Ors.,\

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The 1®' respondent had filed a counter affidavit. In^thecounter affidavit, it is stated that the petitioner, under Section 14(E) of the APGST Act read with Rule 15D(1) of the APGST Rules, was required to file returns in Form AA9 before the assessing authority within 90 days^{fromthedateofclose} I of the assessment year. However, the petitioner had not filed such a form within the stipulated time and within the expiry of^time for the Assessment Years 2003-2004. The inspection, conducted on 05.08.2004, had also

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2005 (2) ALD 704, 2005 (3) ALT 190, (2004) 40 APSTJ^{56,(2005)40APSTJ56,(2.005)142STC551(AP)}

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RRR,J&HN,J W.P.No.16412/2005

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revealed that the petitioner had not maintained necessary^{booksofaccounts} and had not paid tax for the said year. It was only^{aftertheinspectionhad} ■ revealed that the petitioner was not complying with^{therequirementsoflaw} that he had given statements on 05.08.2004, 10.08.2004^and 13.08.2004 admitting the liability of the petitioner and offering^{tocompoundtheoffenceof} non-compliance with the provisions of the APGST Act^andRules.

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The 1®* respondent, however, contends that the judgments^ofthe Division Bench of the erstwhile High Court of Andhra^{Pradeshreported} in Ambica Lamp House vs. Commercial Tax Officer (Int)-I^{Enforcementand} Ors., as well as the judgment reported in The Deputy^{Commissionerof} Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs. Bharat Refineries Limited, Madras^ would not be applicable to the facts of the present case, in as much as, tax and compounding fee^{hadbeencollectedon} the date of inspection itself, whereas in the present^{caseinspectionhasbeen} conducted on 05.08.2004 and tax and compounding fee^{hadbeencollected} on 13.08.2004.

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The 1"‘ respondent also contended that the present^{writpetitionis} an afterthought, as the present writ petition has been^{filednearlyoneyear} I after the payment of tax in August, 2004.

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. 10. In Ambica Lamp House vs. Commercial Tax Officer (Int)-I Enforcement and Ors.,, certain guidelines and directions^were issued in

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'(1978) 42 STC 225

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RRR,J & HN,J W.P.No.16412/2005

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I relation to collection of tax and penalty in case of inspection. The said guidelines are set out herein below;

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Common Order; (Per Court)

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In the light of the two separate judgments prepared by Mr. Justice S. Ananda Reddy and Mr. Justice L. Narsimha Reddy, the reference is answered with the following observations^and directions: (i) Under the provisions of the Act and the Rules,^{theOfficersof} the Vigilance/Intelligence Wing of the Department can^exercise the powers that are conferred, such as inspection of the business premises, books of accounts, stock verification, etc., apart from recording any statement from any of the responsible person of the business concern, (ii) Basing on such information, if any of the officer^ofthesaid Vigilance or Intelligence Wing Department is empowered to make assessments, such officer can proceed to frame assessments basing on the material and such assessments could be completed only after complying the procedure provided under the provisions of the Act and Rules, i.e., granting sufficient opportunity to adduce evidence by the dealer for the proposed assessment, i.e., as to the quantities^aswell as valuation of the stocks, etc. ; otherwise such material or information can be forwarded to the assessing authority having jurisdiction for taking appropriate action including the assessment, reassessment, etc. (iii) There shall be at least a gap of one week between^thedate of an order of assessment, or demand notice, as the case may be, and an order compounding the offence, wherever^the-dealer comes forward with such an offer.

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(iv) The judgments in S.R. Traders and Bhavani Traders v. Assistant Commissioner of Commercial Tdxes [1994] 92^STC 626 (AP) : (1993) 17 APSTJ 125, Kaki Butchi Raju Son^v.State of Andhra Pradesh [1995] 96 STC 634 (AP) ; (1994) 19^APSTJ 19, Badrinath Oil Company v. Assistant Commissioner (1995) 21 APSTJ 28, Bharat Metals v. Special Assistant Commercial Tax Officer [1999] 112 STC 63 (AP) (1998) 27 APSTJ^72and Sri Lakshmi Venkata Raghava Traders V: Commercial Tax Officer (Int. & Enforcement Wing) (W.P. No. 10668 of^1993— Decided on September 8, 1993), cannot be said to be the authorities for the proposition that the inspecting^{officialsofthe} Commercial Tax Department are empowered to pass orders compounding the alleged offences on the same day of inspection-andto collect the amount specified in such^orderson the same day. (v) After completion of the assessment, it is open to the department to issue a demand notice along with the assessment order by providing time as contemplated^underthe provisions of the Act for collection of the tax. (vi) If any penalty proceedings are initiated by the competent authorities, even such proceedings are to be completed after giving notice and sufficient opportunity to the dealer, and thereafter the penalty order could be served along^withanotice of demand, giving sufficient time for payment of the^amountof penalty, if levied, (vii) If the. penalty proposed is unrelated to the assessment^of the tax liability, such penalty could be levied independent^ofthe assessment proceedings, but if penalty is related to the assessable tax, such penalty proceedings could be initiated^and completed only after completion of the assessment and not before.

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(viii) The petitioners shall be refunded the amounts^collected from them, or be provided with an option to agree for adjustment of the same towards payment of the tax in^future.

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(ix) If the inspecting authorities are of the opinion^thatthebooks of account are required to be seized, they can do so only in accordance with the procedure contemplated under the^Actand the Rules and not otherwise. Similarly even with reference^to the seizure of the goods, the same is to be done as per the procedure provided, and in such cases, the dealer can^also avail the benefit of getting the release of the goods on furnishing security as provided under the provisions^oftheAct and Rules. ' (x) The Commissioner of Commercial Taxes is further^directed to issue necessary circular to comply the directions^ofthisCourt by all the concerned officers.

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A perusal of these orders would show that these directipns require that tax or penalty should not be collected^{onthedateoftheorderof} assessment or demand notice or order of compounding^{andthatthereshould} be a gap of at least one week before such collection^{oftaxorcompounding} fee is carried out. It would appear that this period^{wassoughttobeplaced} between the date of order apd the collection of tax,^{toenablethedealers,who} are coerced into signing statements or documents, and paying tax and penalties under such coercion, can avail of their remedies.^{Theguidelinesalso} require that such tax or penalty should be collected^{onlyafteraformalorderof} assessment or order of levy of penalty is passed.

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RRRJ & HN,J if' W.P.No.16412/2005

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In the present case, the counter affidavit does not set out any details of any formal assessment order being papsed. The entire contention appears to be that the tax and compounding fee were collected on a voluntary ■ offer made by the petitioner.

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It would have to be held that the said collection is not in accordance with the guidelines set out in the above judgment. However, it must be kept in mind that the said judgment set out the above guidelines as a measure of protection for dealers against the arbitrary action of the tax authorities. Such protection would be available where the dealers approach the Court within a reasonable period. In the present case, the petitioner approached this Court in June, 2005 in relation tb events which had taken place in August, 2004. The long gap of 10 months would show that the petitioner did not have any initial objections to the collection of tax or compounding fee and the filing of the writ petition after a gap of almost 10 months, raises the question of laches also.

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This Court, while being in respectful agreement with the guidelines set out by the erstwhile High Court of Andhra Pradesh in the above judgment, would have to hold that the inordinate delay of 10 months in approaching this Court, which has not been explained, would non suit the petitioner.

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