Zuari Agro Chemicals Ltd vs The Commercial Tax Officer
2021 Latest Caselaw 1428 AP

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

                  Writ Petition No.19352 of 2020

ORDER: (Per UDPR,J)

      The challenge in this writ petition is to the assessment order

No.205525 dated 27.03.2020 passed by the 1st respondent.

2. The petitioner is a dealer of VAT and CST and engaged in the

business of manufacturing, trading and marketing of chemical

fertilizers and other agro-products manufactured at its Goa

manufacturing plant and some chemical fertilizers like DAP and MOP

which are imported in bulk to Indian Ports.

a) During the assessment year 2015-2016, the petitioner received

branch transfers from the Head Office with regard to fertilizers along

with F-Forms and has submitted all the required material such as F-

forms to the 1st respondent along with returns to be filed monthly in

Form CST-VI. The petitioner dispatched fertilizers to various dealers

and farmers within the State of Andhra Pradesh and has paid VAT to

be payable on such sales.

b) The 1st respondent issued a show cause notice dated 29.06.2017

for the assessment year 2015-2016 and the petitioner sent a letter

dated 24.07.2017 intimating the Assessing Authority that the correct

value of the stock transfer should be Rs.365,04,66,096/- as against the

reported stock transfer value of Rs.407,64,33,823/- which is reported 2 UDPR,J & JUD,J W.P.No.19352 of 2020

by them in the monthly CST-VI returns which is due to arithmetic

mistake occurred in the Head Office and explained the correct

turnover and has submitted 18 F-Forms covering a turnover of

Rs.219,17,24,747/- as per the detailed list enclosed with the reply and

prayed 20 days time for filing the balance of F-Forms for

Rs.145,87,41,349/-.

c) While so, another show cause notice dated 03.09.2019 was

issued by the 1st respondent to file written objections, if any, which

was received on 21.10.2019. However, the petitioner has already

submitted a letter dated 07.08.2019 along with the statement for the

assessment year 2015-2016 and also statutory forms disclosing

number of F-Forms covering the value of Rs.152,61,32,422/-

intimating about 18 F-Forms bringing the turnover of

Rs.219,17,24,747/- which was acknowledged by the 1st respondent.

The petitioner submitted a revised return in Form CST-VI disclosing

the correct turnover in the reply to the 1st show cause notice and as

against the 2nd show cause notice, the petitioner again filed Form

CST-VI revised return along with CA certificate. On the request of

the petitioner, the Head Office at Goa deputed Sri Ravi Raj G Shetty

from Pune Branch as an Authorized Representative to explain in detail

about the turnover particulars to the 1st respondent.

d) In the meanwhile, Covid-19 pandemic had spread all over the

World and the entire country underwent lockdown from 24.03.2020.

Because of such situation, the Authorized Representative could not 3 UDPR,J & JUD,J W.P.No.19352 of 2020

come to Vijayawada. After the lockdown was lifted and when

services were resumed in the month of June, 2020, the petitioner

contacted the 1st respondent to inform a date so as to approach him to

submit the particulars. However, to their surprise and shock, the

petitioner came to know that the 1st respondent has passed the

impugned order on 27.03.2020 without hearing the petitioner.

e) In the impugned order, though the replies filed by the petitioner

were discussed, the claim made by the petitioner that the actual

turnover was only Rs.365,04,66,096/- but not Rs.407,64,33,823/-, was

disallowed. However, the 1st respondent accepted the statutory forms

for a sum of Rs.371,78,57,169/-. So far as the balance amount is

concerned, the same was rejected on the ground that no documentary

evidence has been filed. The 1st respondent has not properly

appreciated the replies submitted by the petitioner to his show cause

notices. Further, no personal hearing was made and no reasonable

opportunity was granted to the petitioner to explain the deficiencies,

despite availability of sufficient time. On the other hand, the

impugned order was passed in a hurried manner. It is contended that

the 1st respondent ought not to have passed the order in a post haste

manner during the lockdown period and in view of the judgment of

Hon'ble Supreme Court in suo moto writ petition (Civil) No.3 of 2020

extending the limitation of all cases with effect from 15.03.2020, the

1st respondent ought to have waited till the lockdown was lifted. The

petitioner is ready with the books of accounts and also the statements 4 UDPR,J & JUD,J W.P.No.19352 of 2020

and other relevant forms and willing to appear before the 1st

respondent on any date that would be fixed by this Court if an

opportunity is given.

Hence the writ petition.

3. The 1st respondent filed counter affidavit opposing the writ

petition and inter alia contending thus:

a) It is firstly contended that the writ petition is not maintainable,

in view of availability of efficacious and alternative remedy of appeal

before the Appellate Joint Commissioner (ST), Vijayawada.

b) The petitioner filed Form CST-VI returns for the year 2015-

2016 before the Assistant Commissioner (CT) LTU, Vijayawada,

disclosing the total and taxable turnover of Rs.407,64,33,823/-

declaring the same as stock transfer to its branches outside the State.

The Assistant Commissioner issued pre-assessment show cause notice

dated 29.06.2017 proposing to assess the entire turnover of

Rs.407,64,33,823/- and subjecting the same to tax at 14.5% treating

the same as stock transfer to branches outside the State as not

supported by F declaration forms. In response, the petitioner filed

letter dated 24.07.2017, which was received on 02.08.2018, wherein

the petitioner stated that the correct value of the stock transfer to

branches outside the State was only Rs.365,04,66,096/- as against the

wrongly reported stock transfer of Rs.407,64,33,823/- in the monthly

CST-VI returns and it is purely a clerical mistake. The contention of 5 UDPR,J & JUD,J W.P.No.19352 of 2020

the petitioner was that the reported turnover of Rs.64,12,63,277/- as

stock transfer for the month of November, 2015 as against the correct

value of Rs.21,52,95,550/- to be reported. The petitioner requested

the Assistant Commissioner to adopt the stock transfer value as

Rs.365,04,66,096/- only for the year 2015-2016 as against

Rs.407,64,33,823/- in CST-VI returns.

c) The petitioner also filed F declaration forms, 18 in number,

covering a turnover of Rs.219,17,24,747/- and requested to grant time

to enable them to file F declaration forms for the remaining turnover.

Again, the petitioner filed a letter dated 07.08.2019 in which they

stated that the turnover of stock transfer to branches outside the State

was Rs.371,78,57,169/- and requested to adopt the said turnover. The

petitioner also filed F declaration forms for a turnover of

Rs.152,61,32,422/- in addition to the F forms already filed vide letter

dated 24.07.2017 for Rs.219,17,24,747/-. It is submitted that the

petitioner has filed F declaration forms for the entire stock transfer

value of Rs.371,78,57,169/-.

d) While the assessment proceedings were pending finalization,

the Assistant Commissioner (CT) LTU, Vijayawada, transferred the

assessment file to the Territorial Commercial Taxes Officer,

Autonagar Circle, Vijayawada, for completion of assessment

proceedings vide letter dated 28.09.2019.

                                   6                        UDPR,J & JUD,J
                                                       W.P.No.19352 of 2020



e)    Consequent upon receiving the file, the 1st respondent issued

show cause notice dated 03.09.2019 proposing assessment on the

entire stock transfer value of Rs.407,64,33,823/- as disclosed in Form

CST-VI returns. In response, the petitioner filed a letter dated

21.10.2019 furnishing the statement of CST transactions made during

2015-2016 and requested to consider the F declaration forms filed for

an amount of Rs.371,78,57,169/- and also requested to include the

difference of turnover between CST-VI returns and stock transfer

value as per the statements filed and also consider the revised CST-VI

returns filed for the actual turnover. The 1st respondent passed

assessment order dated 27.03.2020 allowing exemption on the

turnover of Rs.371,78,57,169/- covered by F declaration forms and

levied tax at 5% on the difference of turnover i.e., Rs.35,85,76,654/-

between the turnover reported in CST-VI returns and as per the

statements filed concluding that the petitioner has not filed any

corroborative recorded evidence in support of the contention. This

resulted a demand of Rs.1,79,28,823/-. The respondent denied that

the assessment order was passed in a post haste manner without

giving an opportunity to the petitioner. Successive show cause

notices were issued and the petitioner responded to them and filed

their explanations which is indicative of granting sufficient time and

opportunity. However, the petitioner failed to produce the details of

CST way bills utilised by them for the stock transfers effected to

branches outside the State and reconcile the difference of turnovers

claimed by them. The petitioner thus failed to prove their contention 7 UDPR,J & JUD,J W.P.No.19352 of 2020

that there was a clerical mistake occurred in disclosing the stock

transfer to branches outside the State. The 1st respondent thus prayed

to dismiss the writ petition.

4. Heard learned counsel for the petitioner, Sri M.V.J.K. Kumar,

and learned Government Pleader for Commercial Taxes appearing for

the respondents.

5. The main plank of argument of learned counsel for the

petitioner is that in the turnover of stock transfer to branches outside

the State, instead of mentioning Rs.371,78,57,169/-, by mistake it was

mentioned as Rs.407,64,33,823/- which is a clerical mistake and when

the 1st respondent prepared to assess the tax on the said turnover and

issued show cause notices, the petitioner has submitted explanations

stating that the actual turnover was only Rs.371,78,57,169/- but not

Rs.407,64,33,823/- and also submitted F-Forms in two installments

covering an amount of Rs.371,78,57,169/-. The 1st respondent, on one

hand, accepting the said figure, but erroneously mentioned in his order

as if the petitioner failed to produce documentary evidence with

regard to differential amount of Rs.35,85,76,654/-. Learned counsel

strenuously argued that when the actual turnover i.e, the transfer of

stock to branches outside the State was only Rs.371,78,57,169/- but

not Rs.407,64,33,823/-, the question of the petitioner producing

record for the difference amount does not arise. The petitioner was

ready to produce all the F forms and other relevant material available

with it, and in view of the lockdown, the petitioner was under the 8 UDPR,J & JUD,J W.P.No.19352 of 2020

impression that an opportunity will be given to them to produce the

material and submit clarification through their Authorised

Representative by fixing a date. However, all of a sudden, the 1st

respondent passed the impugned order without imbibing the

successive explanations submitted by the petitioner and also without

giving an opportunity of personal hearing through their Authorized

Representative. Thus, the principles of natural justice are a casualty

in this case. He thus prayed to allow the writ petition.

6. Per contra, learned Government Pleader for Commercial Taxes

appearing for the respondents supported the assessment order and

contended that the assessment was made, only after giving sufficient

opportunity to the petitioner and the writ petition is not maintainable,

in view of availability of alternative remedy of appeal.

7. The point for consideration is, whether there are merits in the

writ petition to allow?

8. POINT: As can be seen from the facts emanating from the

respective pleadings, it is the case of the petitioner that the actual

turnover of fertilizers and other agro-products as stock transfers to its

branches outside the State for the assessment year 2015-2016 was

only Rs.371,78,57,169/- but not Rs.407,64,33,823/- which figure was

mentioned by mistake and it was a clerical error . Their specific case

is that they reported a turnover of Rs.64,12,63,277/- as stock transfer

for the month of November, 2017 as against the correct value of 9 UDPR,J & JUD,J W.P.No.19352 of 2020

Rs.21,52,95,550/-. Even according to the impugned assessment order,

the petitioner requested through their reply letters that they would

produce F forms covering the said amount of Rs.371,78,57,169/- and

in fact, they produced F forms covering the said turnover in two

installments. It is also the case of the petitioner that they wanted to

furnish a detailed explanation in support of their claim through their

Authorized Representative namely Ravi Raj G. Shetty from the Head

Office, once the lock down is lifted and they were waiting for an

opportunity of hearing from the 1st respondent fixing the date of

hearing. However, in the meanwhile, the 1st respondent passed the

assessment order stating that for the differential turnover amount of

Rs.35,85,76,654/-, there was no evidence and hence imposed tax of

Rs.1,79,28,833/-. As rightly submitted, the impugned order was

passed during the prevalence of the virulent form of Covid-19

pandemic. We are of the considered view that when the petitioner

wanted to offer a detailed explanation through their Authorized

Representative, Sri Ravi Raj G. Shetty, from Pune Branch, to clarify

that the actual turnover by transfer of stock to their branches outside

the State was only Rs.371,78,57,169/-, the 1st respondent ought to

have given the personal hearing instead of passing the order during

the lockdown period. Hence, there was a violation of the principles of

natural justice. In similar circumstances, when an assessment order

was passed during the lockdown period without affording the

petitioner therein an opportunity of hearing, this Court in

W.P.No.1930 of 2021 set aside the impugned assessment order and 10 UDPR,J & JUD,J W.P.No.19352 of 2020

directed the respondent therein to afford an opportunity of hearing to

the petitioner to submit the relevant documents.

9. Accordingly, this writ petition is allowed and the impugned

assessment order No.205525 dated 27.03.2020 passed by the 1st

respondent is set aside and the 1st respondent is directed to afford an

opportunity of hearing to the petitioner to submit the relevant

documents, and consider the same and pass assessment order afresh,

in accordance with the governing law and rules expeditiously. There

shall be no order as to costs.

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

consideration shall stand closed.

_________________________ U. DURGA PRASAD RAO, J

______________ J. UMA DEVI, J 8th March, 2021 cbs 11 UDPR,J & JUD,J W.P.No.19352 of 2020

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

Writ Petition No.19352 of 2020

8th March, 2021 cbs