M/S.Bhavani Medical Agencies vs The Deputy Commercial Tax Officer ...
2021 Latest Caselaw 1670 AP

         HON'BLE SRI JUSTICE A.V.SESHA SAI
                         &
          HON'BLE MS JUSTICE J.UMA DEVI

                     W.P.NO.6602 OF 2021
ORDER: (Per AVSS,J)

      The challenge to the present writ petition is to the penalty

proceedings, dated 23-10-2020, issued by the Deputy Commercial Tax

Officer No.II, Circle No.II, Nellore-1st respondent herein, levying a sum

of Rs.16,95,242/-.

2. It is contended by the learned counsel for the petitioner that in

contravention of the mandatory procedure contemplated under Section

53 of the Andhra Pradesh Value Added Tax Act,2005 ( for short "the

Act") and Rule 25(5) of the Andhra Pradesh Value Added Tax

Rules,2005 ( for short "the Rules"), the 1st respondent herein passed

the impugned order of penalty.

3. The material on record discloses that the respondents-authorities

pursuant to a best judgment order, dated 18-03-2020, issued a

penalty notice in Form VAT 203-A inviting written objections against

the penalty proposed. There is absolutely no controversy with regard

to the fact that the dealer-petitioner herein received the notice on

22-06-2020. Thereafter, on 22-07-2020 a request was made by the

petitioner herein to grant 30 days time to file a reply. Obviously

acceding to the said request, the 1st respondent granted a month's

time, vide endorsement, dated 28-07-2020. On the ground that the

petitioner herein failed to submit objections after lapse of time so

granted, the 1st respondent herein issued the impugned proceedings

imposing 100% penalty. According to the learned counsel for the

petitioner, the impugned penalty order besides being opposed to the

principles of natural justice is contrary to the provisions of the Act in

general and Section 53 of the Act in particular and Rule 25 of the 2 AVSS,J&JUDG,J W.P.6602_2021

Rules. It is contended in an elaboration by the learned counsel for the

petitioner that Section 53(3) of the Act mandates the authority to

afford reasonable opportunity of being heard and according to the

learned counsel, the said mandatory requirement has been given go-

bye. In this context, it may be appropriate to refer to the provisions of

Section 53 of the Act and Rule 25(5) of the Rules and the said

provisions of law read as under:-

Section 53 of the A.P.Vat Act,2005

53. (1) Where any dealer has under declared tax, and where it has not been established that fraud or willful neglect has been committed and where under declared tax is:-

i) less than ten percent of the tax, a penalty shall be imposed at ten percent of such under-declared tax.

ii) more than ten percent of the tax due; a penalty shall be imposed at twenty five percent of such under-declared tax.

(2) Where any dealer, prior to the detection by any authority prescribed, voluntarily declares that tax due for a tax period is under declared and he pays the tax due along with interest, no penalty shall be imposed provided that such declaration is made within the time limit and in the manner prescribed.

(3) Any dealer who has under declared tax, and where it is established that fraud or willful neglect has been committed he shall be liable to pay penalty equal to the tax under declared; besides being liable for prosecution:

Provided that before levying penalty under this Section the authority prescribed shall give the dealer a reasonable opportunity of being heard.

Rule 25(5) of the A.P.Vat Rules,2005

Where any VAT return filed by the VAT dealer appears to the authority prescribed

to be incorrect or incomplete that authority prescribed shall assess the tax

payable to the best of his judgment on Form VAT 305 after affording a reasonable

opportunity to the dealer in Form VAT 305 A. He shall serve upon the VAT dealer

an order of the tax assessed, the penalty and interest due on form VAT 305. The

VAT dealer shall pay the sum within the time and manner specified on the notice.

4. It is evident from a reading of the above provisions of law that

before imposing penalty, it is obligatory and mandatory on the part of

the assessing authority to afford a reasonable opportunity of being

heard. It is not the case of the respondents that after the lapse of time 3 AVSS,J&JUDG,J W.P.6602_2021

granted for filing objections, the assessing authority issued a notice of

hearing to the petitioner. Therefore, this court comes to an irresistible

conclusion that the order passed by the 1st respondent is in violation of

the mandatory provisions of Section 53(3) of the Act.

5. For the aforesaid reasons, the impugned proceedings issued by

the 1st respondent vide A.O.No.ZH3710200D57672, dated 23-10-2020

are liable to be set aside and in order to have a quietus for the issue in

question, this court deems it appropriate to remand the matter to the

assessing authority.

Accordingly, the writ petition is allowed at the stage of admission

and the proceedings issued by the 1st respondent vide

A.O.No.ZH3710200D57672, dated 23-10-2020 are set aside and the

matter is remanded to the 1st respondent for consideration of the issue

afresh after giving an opportunity to the petitioner as mandated in the

above provisions of law and consequently the notice issued by the

2nd respondent in TIN No.37119369841, dated 16-01-2021, also set

aside. No order as to costs.

Miscellaneous Applications pending, if any, shall stand closed in

consequence.

_______________ A.V.SESHA SAI,J

___________________ J. UMA DEVI,J

22ND MARCH,2021 TSNR