M/S Real Regrigeration vs The Commercial Tax Officer
2021 Latest Caselaw 1982 AP

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

               Writ Petition Nos.20417 and 20419 of 2020


COMMON ORDER: (Per UDPR,J)

      Writ petition Nos.20417/2020 and 20419 of 2020 are filed by the

petitioner challenging the entry tax on Rs.11,53,783/- for the assessment

year 2016-17 and Rs.7,94,779/- for the assessment year 2017-18

respectively levied by the 1st respondent under the Andhra Pradesh Tax on

Entry of Goods into Local Areas Act, 2001.

2. The petitioner's case succinctly is thus:

a) The petitioner is a registered dealer under A.P. VAT Act, 2005 on the

rolls of the 1st respondent. The petitioner is engaged in execution of

Refrigeration and Electrical works, awarded by M/s Garrison Engineers (I),

Dock Yard Maintenance, Naval Dockyard, Visakhapatnam from time to

time. The contractee used to deduct tax at source as per Section 22(3) of the

VAT Act, 2005, while making payments to the petitioner and used to issue

TDS certificates in Form 501A. Thus the petitioner has paid VAT after

availing the input tax credit eligible to works contractors in respect of the

value of the goods transferred, including the goods imported from outside

the State and used in execution of such contracts. Hence, the transfer of

value of such goods is nothing but sale price as defined under Section 2(28)

of VAT Act. After considering the regular returns in Form VAT 200 filed

by the petitioner and taking into consideration the TDS certificates issued by

the contractee, the petitioner was assessed for assessment year 2015-16

under VAT Act and assessment order A.O.No.89945, dated 28.11.2017 was

passed on the net turnover of Rs.1,75,55,591/- as applicable to the works

contractor. The said turnover includes value of the goods of Rs.8,34,734/-

related to purchases made from outside the State of Andhra Pradesh. Hence,

the goods purchased from outside the State were considered as sale

involving transfer of property in execution of the works contact. Similarly,

for the assessment year 2016-17 also the contractee made TDS and the

petitioner paid VAT.

b) While so, so far as Constitutional validity of Section-3 of the Andhra

Pradesh Tax on Entry of Goods into Local Areas Act, 2001 (for short 'Tax

on Entry Act") is concerned, pursuant to the judgment of 9 Judges bench of

Hon'ble Apex Court in Jindal Stainless Ltd., and Ors Vs. State of Haryana

and Ors1, the writ petitions are filed and pending before Hon'ble High Court

of Andhra Pradesh. Pending the same, the 1st respondent issued show cause

notice dated 08.10.2018 levying entry tax on Rs.13,38,388/- for the

assessment year 2016-17 and Rs.9,21,944/- for the assessment year 2017-18

on the Air Conditioners and Spares imported from outside the Sate and used

in execution of works contracts.

c) In response to the above notice, the petitioner filed objections dated

03.06.2019 inter alia contending that appropriate VAT was already paid on

the value of goods including air conditioners and spare parts used and

transferred in execution of works contract and therefore transfer of the value

of such goods is nothing but the sale price as defined Under Section 2(28) of

AIR 2016 SC 5617 = MANU/SC/1475/2016

A.P VAT Act and in that view of the matter, as per Section 3(2) of Tax on

Entry Act, no tax shall be levied on the goods imported from outside the

State as they were imported for the purpose of resale in the State of Andhra

Pradesh. It was clearly mentioned in the objections that the subject goods

were resold by way of transfer of property in execution of works contract

which amounts to "sale" as contemplated under Section 2(28) of A.P VAT

Act. However, without considering the objections of the petitioner and the

relevant provisions under Section 2(28) of A.P. VAT Act and Section 3(2)

of Tax on Entry Act, the 1st respondent passed the impugned Assessment

Order Nos.200913 and 200916 dated 06.03.2020.

d) The further case of the petitioner is that as against the impugned

assessment order for the year 2016-17, he filed appeal No.VSP/13/2020-21

before the Appellate Joint Commissioner (ST), Vijayawada i.e., the 3rd

respondent along with stay application and the same is pending

consideration. As against the similar orders passed by the 1st respondent for

the assessment years 2012-13, 2013-14 and 2014-15 also, the petitioner filed

appeals before the 3rd respondent and same are pending. So far as the

impugned assessment order for the assessment year 2017-18 is concerned,

the petitioner has not filed appeal but directly filed writ petition

No.20419/2020.

e) In both the above writ petitions the petitioner thus prays that the

impugned assessment orders for the assessment period 2016-17 and 2017-18

may be set aside.

3. Heard Sri A. Sarweswara Row, learned counsel for the petitioner and

learned Government Pleader for Commercial Taxes representing

respondents.

4. The principal contention of the learned counsel for petitioner in both

the writ petitions is that the air conditioners and goods that were purchased

were used in execution of works contract and therefore, the value of those

goods fall within the definition of "sale" under Section 2(28) of VAT Act,

for which VAT was duly paid as the contractee has deducted the tax at

source and issued TDS certificates since those goods fall within the ambit of

sale under VAT Act. They come under exemption provided under Section

3(2) of Tax on Entry Act and hence, the petitioner is not liable to pay entry

tax for the value of those goods. However, the 1st respondent without

considering the legal aspect in right perspective and taking Section 3(1) of

Tax on Entry Act alone into consideration, passed the impugned Assessment

Orders for the assessment years 2016-17 and 2017-18. Since the Assessing

Authority has committed a grave error of law, the writ petitions are filed.

a) Learned counsel also submitted that so far as impugned assessment

order for the assessment year 2016-17 is concerned, he already preferred

appeal No.VSP/13/2020-21 before the Appellate Joint Commissioner (ST),

Vijayawada i.e., 3rd respondent. Incidentally, the appeals preferred against

similar orders for the assessment years 2012-13, 2013-14 and 2014-15 are

also pending before the 3rd respondent. He further submitted that the stay

application dated 15.06.2020 filed by him in appeal No.VSP/13/2020-21 for

the assessment year 2016-17 was dismissed by the 3rd respondent. He also

submits that so far as impugned assessment order for the assessment year

2017-18 is concerned, appeal is not filed and writ petition No.20419/2020 is

directly filed. He thus prayed to allow the writ petitions.

b) Learned Government Pleader for Commercial Taxes representing

respondents opposed the writ petitions.

5. We gave our anxious consideration to the respective submissions. On

perusal, the impugned assessment orders would show that the petitioner, by

way of his objections to the show cause notices dated 08.10.2018 took the

legal plea that the refrigeration goods purchased by him from out side the

State were used in the works contract for which VAT has been paid during

the relevant years and therefore, the value of those goods fall under the

definition of "sale" within Section 2(28) of VAT Act, 2005 and

consequentially the petitioner need not pay entry tax in respect of value of

those goods in view of the exemption provided under Section 3(2) of Tax on

Entry Act. The 1st respondent discarded the above objections of the

petitioner and passed the impugned order. However, we are constrained to

observe that the Assessing Authority has not discussed about the

applicability or non-applicability of Section 3(2) of Tax on Entry Act to the

petitioner's case. Therefore, we do not have the advantage of knowing the

mind of the Assessing Authority/1st respondent.

6. Be that it may, admittedly, the petitioner has filed appeal

No.VSP/13/2020-21 before the Appellate Joint Commissioner (ST),

Vijayawada i.e., 3rd respondent, so far as the impugned Assessment Order

No.200913, dated 06.03.2020 for the assessment year 2016-17 is concerned,

and the same is pending before the 3rd respondent. Hence, it is not apt to

take up the writ petition No.20417 of 2020. Instead, we consider it apposite

to direct the 3rd respondent to dispose of the said appeal within a specified

time. So far as the impugned Assessment Order No.200916, dated

06.03.2020 for the assessment year 2017-18 is concerned, admittedly the

petitioner did not prefer any appeal but directly filed the writ petition. Since

in respect of identical question of law, he already filed appeals against

previous assessment orders and same are pending before the 3rd respondent,

we deem it apt to direct the petitioner to prefer an appeal before the 3rd

respondent as against the assessment order for the assessment year 2017-18

also by giving reasonable time.

7. In the result

(i) Writ petition No.20417/2020 is disposed of directing the 3rd

respondent to consider the factual and legal points raised by the

petitioner and after hearing both parties pass an appropriate order

in the appeal No. VSP/13/2020-21 in accordance with governing

law and rules expeditiously but not later than three (3) months

from the date of receipt of a copy of this order. On the request of

petitioner, the 3rd respondent may hear the other similar appeals

filed by petitioner together.

(ii) Writ petition No.20419/2020 is disposed of giving liberty to the

petitioner to file an appeal against impugned Assessment Order

No.200916, dated 06.03.2020 for the assessment year 2017-18

before the 3rd respondent within three (3) weeks from the date of

receipt of a copy of this order, in which case, the 3rd respondent

shall admit the appeal and after hearing both sides, pass

appropriate order in accordance with governing law and rules

expeditiously but not later than three (3) months from the date of

filing of the appeal.

Till passing of the final order in the above two appeals, the respondent

authority shall not take any coercive steps against the petitioner for

realization of the demanded tax for the assessment years 2016-17 and

2017-18. No costs.

As a sequel, interlocutory applications, if any, pending for

consideration shall stand closed.

_________________________ U. DURGA PRASAD RAO, J

______________ J. UMA DEVI, J 15th June, 2021 krk

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

Writ Petition Nos.20417 and 20419 of 2020

15th June, 2021 krk