Andhra Pradesh High Court - Amravati

M/S. Subbaratnamma General ... vs The Assistant Commissioner on 29 September, 2022

           HON'BLE SRI JUSTICE C.PRAVEEN KUMAR

                                  AND

          HON'BLE SRI JUSTICE A.V. RAVINDRA BABU

                      W.P. No. 26825 of 2022

ORDER: (Per Hon'ble Sri Justice C. Praveen Kumar)

1.    Heard Sri. G. Narendra Chetty, learned Counsel appearing

for the Petitioner and Sri. Y. N. Vivekananda, learned Government

Pleader for Commercial Tax.


2.    The present Writ Petition is filed seeking issuance of Writ of

Mandamus to declare the impugned Assessment Order vide A.A.O.

No. ZH370722OD15092, dated 12.07.2022, passed by first

Respondent for the tax periods 2009-10 to 2011-12 under A.P.

VAT Act, 2005, as barred by limitation and violative of principles

of natural justice.

3. The facts, in issue, are as under:

(i) The first Respondent herein passed an Assessment Order,

dated 26.08.2014, stating that the Regional Vigilance and

Enforcement Department Officers, inspected the business

premises of one M/s. Gontla Brothers, Dharmavaram, and

recorded the statement of one Sri. Ranganath, who is said to

have stated that he has sold cigarettes to the Petitioner. The

said inspection material was forwarded by the Regional

Vigilance and Enforcement Department to the first

Respondent, which revealed that, the Petitioner purchased

cigarettes worth of Rs.1,68,56,071/- from M/s. Gontla

Brothers, Dharmavaram, who sold the same without

informing the department and, thus, evaded tax to a tune of

Rs.23,00,000/-.

(ii) The said Assessment Order was challenged by way of

Statutory Appeal before the Appellate Deputy Commissioner

(CT), Kurnool, vide Appeal No. 34/2014-15 (ATP), which was

dismissed confirming the Order of the Assessment Authority

on 12.03.2015. Thereafter, a second Statutory Appeal came

to be preferred before the VAT Tribunal, Visakhapatnam,

vide T.A. No. 60 of 2015, following the judgment in M/s.

Balaji Flour Mills V. Commercial Tax Officer-II, Chittoor

Circle1, the matter was remanded back to the Assessing

Authority vide Common Order, dated 06.12.2018, within

three [03] months from the date of receipt of the Order. It is

said that, at the time of filing an appeal, the Petitioner

MANU/AP/0850/2010 = (2011) 40 VST 150, (2011) 52 APSTJ 85

claims to have deposited 15% of the disputed tax towards

statutory deposit.

(iii) Pursuant to the assessment, the first Respondent issued

show-cause notice on 04.05.2021 proposing to pass the

same order. A reply came to be filed by the Petitioner

disputing the purchase made from M/s. Gontla Brothers

and selling the same. His plea, in the reply, appears to be

that, he is only doing business in kirana and groceries and

that he has not purchased any cigarettes. In any event, the

Petitioner has sought for the following documents from the

Assessing Officer, which are as under:

a. "The material of the Regional & Vigilance Officials passed on to the Assessing Authority and basing on which the proposal for levy of tax has been made on sale of cigarettes said to have been sold by us during the period covered by assessment notice.

b. The name and place of the dealers from whom the cigarettes said to have been purchased during the period covered by the assessment notice.

c. The details relating to the payment of consideration with mode of payment of consideration made by us against the purchases of cigarettes to the selling dealers during the period covered by assessment notice.

At this juncture we submit that the consideration plays a vital role in deciding the transactions as a sale as no dealer likes to supply the goods free of cost without receiving the consideration for the value of goods.

We further request to kindly provide an opportunity to cross-examine the dealers at the other end in the presence of Assessing Authority so as to confirm the transactions which are genuine and which are not genuine for levy of tax under the Act."

4. After considering the reply to the show-cause notice, the

impugned Order came to be passed on 12.07.2022 imposing tax of

Rs.25,26,531/-.

5. Though various grounds are raised in the affidavit filed in

support of the Writ Petitioner, Sri. G. Narendra Chetty, learned

Counsel appearing for the Petitioner, mainly submits that, the

authorities failed to furnish the vigilance report, which was made

the basis to pass the Assessment Order. Apart from that, the

learned Counsel would contend that the assessment made is

barred by limitation as three years period of limitation, as

contemplated under Section 37 of AP VAT Act, expired on

21.02.2022. He relied upon the judgment of the Hon'ble Supreme

Court in S. Kasi V. The Inspector of Police2, in support of the

same.

6. (i) The same is opposed by Sri. Y. N. Vivekananda, learned

Government Pleader for Commercial Tax, contending that the

circumstances under which the Judgment in Kasi (cited 2nd

supra), came to be delivered is different. According to him, in the

said case, the liberty of an individual was involved and, as such,

the Court held that provisions of Section 167 Cr.P.C., to be

mandatory in nature, cannot be given a liberal interpretation by

extending time for filing of charge-sheet.

(ii) Insofar as non-submission of vigilance report is concerned,

the Counsel submits that, in the earlier round of litigation, such a

plea was never taken and only for the first time, the Petitioner

herein sought to challenge the validity of the assessment on the

said ground. In any event, learned Government Pleader submits

that, since there is an appeal against the order impugned, nothing

prevented the Petitioner from availing the said remedy and that

the Petitioner cannot come to this Court directly under Article 226

of the Constitution of India.

Crl. Appeal No. 452 of 2020 (SLP CCRL) No. 2433/2020, dated 19.06.2020.

7. In reply, Sri. G. Narendra Chetty, learned Counsel appearing

for the Petitioner, would contend that, since the issue involved is

violation of principles of natural justice, the Petitioner has every

right to invoke the jurisdiction of this Court under Article 226 of

the Constitution of India.

8. Two issues that fall for consideration in this Writ Petition are

(i) non-supply of vigilance report; and (ii) the proceedings are

barred by limitation.

9. Insofar as non-supply of vigilance report is concerned, in Sri

Nallana Sambasiva Rao, Krishna District V. State of Andhra

Pradesh & Others3, a Division Bench of the composite High

Court for the State of Telangana and the State of Andhra Pradesh,

has categorically held that, "when the order of assessment is

passed on material report submitted by Regional Vigilance and

Enforcement, it is obligatory on the part of authorities to supply

material along with the notice of assessment and invite objection

from the petitioner, before passing the revised assessment order.

It would be appropriate to extract the relevant paragraph of the

said judgment, which is as under:

(2015) 61 APSTJ 255 (HC - Telangana & A.P.)

"5. When the order of assessment is solely based on the material and reports submitted by the Regional Vigilance and Enforcement Officer, Vijayawada, it is obligatory on the part of authorities to supply such material along with the notice of assessment and invite objections from the petitioner, before passing the revised assessment order. We have also perused the judgment of this Court in the case of Sri Uma Maheshwara Rice and Flour Mill (supra), which supports the claim of petitioner for invalidation of impugned order on the ground that the material basing on which such order is passed, is not supplied to him.

6. On this short ground, without going into merits of the matter, we set aside the impugned assessment order dated 29.03.2014, and remit the matter for fresh consideration by the respondent. Respondent shall furnish to the petitioner, the reports/material supplied by the Regional Vigilance and Enforcement Officer, Vijayawada, and thereafter, pass appropriate orders afresh as expeditiously as possible, preferably within a period of four months from today."

10. In Sri Uma Maheshwara Rice and Flour Mill, Vetlapalem

& others Vs. Commercial Tax Officer, Peddapuram & others 4,

delivered by a Division Bench in batch of Writ Petitions, the Court

held as under:

"4. Similarly, in the revisional order, it is noted that the contention of the petitioner was that the Commercial Tax Officer has passed the assessment order blindly following

(2012) 54 APSTJ 51

the report of the Vigilance and Enforcement Officer without conducting an enquiry. It is also noted that in the grounds of appeal and during the course of personal hearing it was contended that the assessing authority did not apply its mind but simply acted upon the information furnished by the Regional Vigilance and Enforcement Officer, Rajahmundy.

5. The facts of the case show that the assessing officer took a decision against the assessees but in appeal the Appellate Deputy Commissioner (CT), Visakhapatnam, allowed the appeals and held that a best judgment assessment requires the assessing authority to conduct an enquiry rather than relying only on the report of the Vigilance and Enforcement Department.

6. The appellate orders were sought to be revised by the Joint Commissioner (CT) (Legal) but as noted above the said authority did not deal with the contention of the petitioners that the report of the Vigilance and Enforcement Department was not supplied to the petitioners and yet it was used against them.

7. Learned Special Counsel for the Commercial Taxes Department says that the petitioners will be supplied with the report of the Vigilance and Enforcement Department within one week and the matter will be considered afresh by the assessing authority.

8. In view of this submission and statement by learned Special Counsel for the Commercial Taxes Department, we set aside the orders passed against the petitioners and remand the matter back to the assessing authority to take a decision after supplying a copy of the report of the Vigilance and Enforcement Department to the petitioners."

11. Similar view is taken by another Division Bench of composite

High Court in ITC Limited, Sarapaka, Khammam District V.

The Assistant Commissioner of Commercial Taxes, LTU,

Warangal5, wherein, it was held as under:

"The order of assessment dated 26-05-2009 is challenged inter alia on the ground that it was passed without a fair and reasonable notice and opportunity to the petitioner as to the contents of the report of the Enforcement department, an allegation whose factual basis is conceded by the respondent in the oral submission of the learned Special Government Pleader.

As the petitioner was denied reasonable opportunity to respond to and file objections after communication of the report of the Enforcement officials, which is the basis for the rejection of the petitioner's claim for input tax credit, the order of assessment dated 26-05- 2009 cannot be sustained and is accordingly set aside. The matter is remanded to the respondent for enabling passing of a fresh order of assessment after the petitioner is furnished a copy of the report of the Enforcement officials. The petitioner shall be afforded a reasonable opportunity to submit its objections within the time to be stipulated in a notice to be issued. The fresh order of assessment shall be passed thereafter."