Andhra Pradesh High Court - Amravati
M/S Sri Gajalakshmi Paints vs The Commercial Tax Officer on 15 February, 2023
Bench: U.Durga Prasad Rao, T Mallikarjuna Rao
HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
W.P.No.629 of 2021
Between:
M/s Sri Gajalakshmi Paints,
D.No.25/51/2, 3rd Cross Road,
Kabela Road, Ramarajya Nagar,
Vijayawada - 520 012, Krishna District, Andhra Pradesh.
Rep. by its Proprietor K. Sambasiva Rao.
.. Petitioner
And
The Commercial Tax Officer,
Bhavanipuram Circle No.1 Division,
Vijayawada, Krishna District and four others.
.. Respondents
DATE OF JUDGMENT PRONOUNCED: 15.02.2023
SUBMITTED FOR APPROVAL:
HON'BLE SRI JUSTICE U. DURGA PRASAD RAO
HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO
1. Whether Reporters of Local newspapers Yes/No
may be allowed to see the Judgments?
2. Whether the copies of judgment may be Yes/No
marked to Law Reporters/Journals?
3. Whether Their Ladyship/Lordship wish to Yes/No
see the fair copy of the Judgment?
_________________________
U. DURGA PRASAD RAO, J
___________________________
T. MALLIKARJUNA RAO, J
2
*HON'BLE SRI JUSTICE U.DURGA PRASAD RAO
AND
HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO
+W.P.No.629 of 2021
%15.02.2023
# M/s Sri Gajalakshmi Paints,
D.No.25/51/2, 3rd Cross Road,
Kabela Road, Ramarajya Nagar,
Vijayawada - 520 012, Krishna District, Andhra Pradesh.
Rep. by its Proprietor K. Sambasiva Rao..
.. Petitioner
Vs.
$ The Commercial Tax Officer,
Bhavanipuram Circle No.1 Division,
Vijayawada, Krishna District and four others.
.. Respondents
<GIST:
>HEAD NOTE:
! Counsel for petitioner: Sri Girish Kumar
Counsel for respondents: Learned Advocate General
? CASES REFERRED:
1. (2006) 12 SCC 138 9. MANU/SC/0279/1988 = AIR 1989 SC 611
2. AIR 1985 SC 585 = MANU/SC/0387/1985 10. AIR 1992 SC 224 = MANU/SC/0052/1992
3. AIR 2004 SC 4139 = MANU/SC/0604/2004 11. MANU/SC/0844/1998 = (1998) 1 SCC 384
4. MANU/SC/0903/2002 = AIR 2003 SC 250 12. MANU/SC/0483/2000 = AIR 2000 SC 2905
5. AIR 1957 SC 657 13. MANU/SC/1605/1999 = AIR 1999 SC 1275
6. MANU/SC/0097/1957 = AIR 1957 SC 907 14. MANU/SC/0789/2018 = AIR 2018 SC 3606
7. MANU/SC/0113/1966 = AIR 1966 SC 1342 15. AIR 1956 SC 354 = MANU/SC/0037/1956
8. MANU/SC/0283/1968 = AIR 1970 SC 1173 16. AIR 1999 SC 22 = MANU/SC/0664/1998
3
THE HON'BLE SRI JUSTICE U. DURGA PRASAD RAO
AND
THE HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO
Writ Petition No.629 of 2021
ORDER: (Per Hon'ble Sri Justice U. Durga Prasad Rao)
The petitioner seeks writ of mandamus
(a) declaring the action of respondents 2 and 3 in levying tax
U/s 4(1) of the AP VAT Act on the same turnover which has
already suffered tax U/s 4(2) for the tax periods June, 2015 to
August, 2016 as arbitrary, without jurisdiction, barred by limitation
and violative of Article 265 of the Constitution of India.
(b) declaring the words "any dealer make purchases or sales
in the course of inter-state trade or commerce" in Clause (b) of
Sub-Section 5 of Section 17 of AP VAT Act is ultra vires to Sub-
Sections 3 and 7 of Section 17 of AP VAT Act and
(c) consequently set aside the Assessment of VAT for the tax
periods April, 2013 to August, 2016 levied by the 3rd respondent
vide proceedings dated 04.08.2018 and confirmed by the 2nd
4
respondent vide AO No.ZH371020OD80888, dated 22.10.2020 and
pass such other orders.
2. Petitioner's case succinctly is thus:
(a) Petitioner is doing business in paints and a registered
turnover tax (TOT) dealer U/s 17(7) of AP VAT Act. For the tax
period from 01.04.2013 to 30.09.2016 the petitioner filed returns
regularly and paid tax @ 1% of its turnover in terms of Section 4(2)
of the Act.
(b) The 3rd respondent while conducting audit of petitioner's
accounts having found that the petitioner made one purchase of
paint on 06.06.2015 worth of Rs.54,000/- from Sri Anantha
Padmanabha Swami Enterprises, Hyderabad, passed a best
judgment assessment order on 04.08.2018 treating the petitioner as
a VAT dealer in terms of Section 17(5)(b) of the VAT Act w.e.f
06.06.2015 and levied tax @ 14.5% U/s 4(1) of the Act for the tax
period from 06.06.2015 to 31.09.2016 and raised a demand of
Rs.8,27,315/- and also imposed 100% penalty by separate order
dated 18.09.2019.
5
(c) Petitioner submits that he never involved in regular inter-
state trade and commerce in any purchase or sale of paints or any
other goods from outside the State of Andhra Pradesh. Prior to
June, 2014 the petitioner was purchasing paints from dealers
situated in Hyderabad but however the petitioner stopped purchases
from Hyderabad after division of composite State w.e.f.
02.06.2014. While so, one of the dealers at Hyderabad from whom
the petitioner was earlier purchasing paints, has, by mistake sent
one consignment of paints during June, 2015 which was
inadvertently accepted by the clerk of the petitioner. Except the
one and only inter-state trade worth of Rs.54,000/- on 06.06.2015,
the petitioner has not involved in the inter-state trade or commerce.
As such, the petitioner is not liable to pay the tax as VAT dealer.
(d) The further case of the petitioner is that even assuming
that the petitioner failed to get registered as a VAT dealer in terms
of Section 17(5)(b), the maximum punishment U/s 49(2) of the AP
VAT Act will be a penalty of 25% of the amount of the tax due
prior to the date of registration and the petitioner will not eligible
for Input Tax Credit (ITC) for the sales made prior to date from
6
which registration is affected. However under no circumstances tax
can be levied again on the same turnover U/s 4(1) since the said
turnover has already suffered tax U/s 4(2) of the Act.
(e) Aggrieved by the action of 3rd respondent, the petitioner
filed appeal before the 2nd respondent. However the appeal was
unjustly dismissed by the 2nd respondent. Hence the writ petition.
3. The 1st respondent filed counter and opposed the writ petition
inter alia contending thus:
(a) The writ petition is not maintainable as the petitioner has
alternative and efficacious remedy of appeal before VAT Appellate
Tribunal, Visakhapatnam.
(b) The petitioner is a TOT dealer and for the tax period from
01.04.2013 to 30.09.2016, the petitioner filed TOT returns in
Form-007 before the 4th respondent and paid tax @ 1% on the
turnover.
(c) Thereafter, the 3rd respondent conducted audit of
petitioner's accounts and found that the petitioner has made one
purchase of paint on 06.06.2015 worth of Rs.54,000/- from Sri
7
Anantha Padmanabha Enterprises, Hyderabad vide Waybill
No.361506064318672, dated 06.06.2015, but failed to obtain VAT
registration and accordingly assessed the petitioner treating him as
VAT dealer for the period from October, 2014 to August, 2016 U/s
17(5)(b) r/w Rule 5(2) of AP VAT Act and its rules and raised
demand of Rs.8,94,082/- levying tax @ 14.5%. The 3rd respondent
has given credit of the TOT tax of Rs.66,967/- paid by the
petitioner and arrived at net tax due at Rs.8,27,315/- in the
assessment order in Form VAT 305 vide A.O.No.127838, dated
04.08.2018.
(d) Aggrieved, the petitioner filed appeal before the 2nd
respondent but the appeal was dismissed vide order dated
22.10.2020 holding that the petitioner is liable to obtain VAT
registration in terms of Section 17(5) of AP VAT Act.
(e) The contention of the petitioner that Section 17(5)(b) is
ultra vires to Section 17(3)(7) is an untenable contention for the
reason that there is no bar to apply the provisions of Section 17(5)
of the AP VAT Act even for a single purchase transaction made
from outside the State. Therefore, the petitioner is liable to be
8
registered as VAT dealer and since he has not done so, the 3rd
respondent was right in treating the petitioner as VAT dealer and
assessing him as such.
(f) The contention of the petitioner that for the non-
compliance of the provisions of Section 17(5)(b) only 25% penalty
is attracted in terms of Section 49(2) of AP VAT Act is
unsustainable. Since the petitioner purchased from outside the
State, he is liable to pay tax as VAT dealer and no set off of tax
paid on inter-state purchase was allowed when the sale is affected
in the State of Andhra Pradesh. He is liable to pay penalty at 100%.
The petitioner is not entitled to input tax credit also because he was
not a VAT dealer but only TOT dealer.
(g) The contention of the petitioner that the Assessment
Order dated 04.08.2018 is barred by limitation U/s 21(4) for the tax
period from April, 2013 to July, 2014 is not correct since the
petitioner failed to comply with the provisions of Section 17(5) of
the VAT Act and failed to migrate as a VAT dealer from TOT
dealer and not disclosed the VAT sales turnover. The provisions of
9
Section 21(5) apply to the present case. Hence the writ petition is
not maintainable and the same may be dismissed.
4. Heard Sri P. Girish Kumar, learned counsel for the petitioner
and learned Advocate General representing respondents.
5. Learned counsel for the petitioner firstly argued that for a
stray act of purchase of goods from outside the State in the
circumstances narrated by the petitioner, the 3rd respondent cannot
legally compel him to obtain VAT registration and assess him as
VAT dealer. Section 17(5)(b) contains only the plural words
"purchases or sales" but not "purchase or sale". Learned counsel
would alternatively argue that for the single transaction as
aforesaid, at the best he can be treated as a casual trader U/s 2(7) of
the AP VAT Act and can be assessed to tax on that single item U/s
4(6) of the APVAT Act but not as a VAT dealer for all the
transactions from the date of purchase of single item from outside
State.
Secondly, challenging the imposition of 100% of penalty by
the 3rd respondent, learned counsel would argue that even assuming
10
that the petitioner was required to obtain registration as VAT dealer
on account of a single transaction of purchase from outside the
State, the maximum penalty that can be imposed U/s 49(2) of the
AP VAT Act is 25% on the amount of tax due but not 100% and
hence the penalty of 100% imposed is illegal.
Thirdly he argued that the assessment made by the 3rd
respondent covering the period April, 2013 to July, 2014 is barred
by limitation U/s 21(4) of the AP VAT Act.
Nextly he argued that Section 17(5)(b) of the AP VAT Act
without reference to the quantum of the turnover is ultra vires to
sub-section (3) & (7) of Section 17 as well as charging Section 4(2)
of the AP VAT Act and is therefore liable to be struck down.
6. Per contra, while supporting the impugned assessment order
and the appellate order confirming the assessment, learned
Advocate General would submit that Section 17(5)(b) being an
exception to Section 17(2)(3)(4), it cannot be said that the said
provision is inconsistent with the other sub-sections. Learned
Advocate General argued that Section 17(2) to (4) would operate
11
when the dealer makes business of purchase and sale of goods
within the State and falls within sub-sections (2) (3) or (4).
However, if the dealer purchases or sales goods during the course
of interstate trade or commerce, he will come within the ambit of
Section 17(5) of the Act and he will be required to be registered as
VAT dealer, but not as TOT dealer. He would argue that there is
no mutual inconsistency between Sections 17(2)(3) and (4) on one
hand and Section 17(5) on the other. Both would operate in two
difference spheres. Sub-sections (2), (3) and (4) would operate
when the dealer is doing intra-state business of purchasing and
selling goods within the State, whereas the latter provision i.e.,
Section 17(5) comes into play when the dealer imports goods from
outside the territory of India or if he is doing interstate trade or
commerce by purchasing or selling goods outside the State and in
that regard the taxable turnover has no significance. The touchstone
will be only whether he is doing business of purchase and sale of
goods within the State or outside the State. Learned Advocate
General would emphasize that even a single instance of sale or
purchase from outside the State will be sufficient to treat such
12
dealer as a VAT dealer for assessment purpose. He would thus
parore, when there is no dichotomy or inconsistency between
Section 17(2) (3) (4) & (7) on one hand and Section 17(5) on the
other, it would be preposterous to argue that Section 17(5), which is
only an exception to the earlier provisions, is inconsistent with
other provisions and liable to be struck down. On the aspect of the
construction of different provisions of the statute, learned Advocate
General relied upon on Padma Ben Banushali v. Yogendra
Rathore1. So far as the argument of the petitioner that the
assessment for the period April 2013 to July 2014 is time barred,
learned Advocate General would submit that since the petitioner
wilfully evaded payment of tax and also failed to obtain registration
as VAT dealer, 3rd respondent can seek aid of Section 21(5) and
assess the entire period from 2013 to 2016. He thus prayed to
dismiss the writ petition.
7. The points for consideration in this writ petition are:
(1) Whether Section 17(5)(b) without reference to quantum of
turnover is ultra vires to Section 17(2)(3)(4)(7) as well as charging
Section 4(2) of AP VAT Act and liable to be struck down?
1
(2006) 12 SCC 138
13
(2) If point No.1 is held negatively, still whether the petitioner is
to be assessed as ToT dealer only for his single transaction of
purchase of goods from outside the State and for that single
transaction the petitioner shall be assessed to tax as a casual trader
under relevant provisions of the AP VAT Act?
(3) Whether the assessment for the period April, 2013 to July
2014 is barred by limitation under Section 21(4) of the AP VAT
Act?
(4) If point No.1 is held negatively, whether penalty can be
imposed at 25% only on the tax due as per Section 49 of AP VAT
Act?
(5) Whether the writ petition is not maintainable due to
availability of alternative, efficacious remedy of appeal?
8. Point No.1: The crux of the issue lies in the interpretation of
Section 17(5)(b) of the AP VAT Act. This Act is a consolidated
law for levying Value Added Tax on sale or purchase of goods in
the State of Andhra Pradesh. For the purpose of present case, the
dealers can be divided into two categories i.e., (i) VAT dealers and
(ii) TOT dealers. Under Section 2(43) of the AP VAT Act, a VAT
dealer means a dealer who is registered for Value Added Tax
(VAT), whereas, under Section 2(41) a Turn Over Tax dealer or
TOT dealer is a dealer who is registered or liable to be registered
for TOT.
14
(a) Then, Section 4 which is a charging Section draws
distinction between the two dealers in the context of their tax
liability. As per Section 4(1), every VAT dealer shall be liable to
pay tax on every sale of goods in the State (emphasis supplied) at
the rates specified in the schedules. Whereas under Section 4(2), a
dealer who is registered or liable to be registered for TOT or whose
taxable turnover in a period of 12 consecutive months exceeds
Rs.5,00,000/- but does not exceed Rs.40,00,000/-, shall pay tax
@1% on the taxable turnover.
(b) Apart from above, under Section 13 of the Act, a VAT
dealer shall be entitled to Input Tax Credit (ITC) for the tax paid in
respect of all the purchases of taxable goods made by him during
the tax period, if such goods are for the use in his business.
However under Section 10 of the AP VAT Act, ITC facility is not
extended to a TOT dealer and he shall not be eligible to issue a tax
invoice.
The above is the basic distinction between a VAT dealer and
a TOT dealer.
15
9. Then Section 17 deals with the requirement of registration of
a dealer.
17. Registration of Dealers:
(1) Every dealer other than a casual trader shall be liable to be
registered in accordance with the provisions of the Act.
(2) Every dealer commencing business and whose estimated
taxable turnover for twelve consecutive months is more than
Rs.40,00,000/- (Rupees forty lakhs only) shall be liable to be
registered as a VAT dealer before the commencement of
business.
(3) Every dealer whose taxable turnover in the preceding three
months exceeds Rs.10,00,000/- (Rupees ten lakhs only) or in the
twelve preceding months exceeds Rs.40,00,000/- (Rupees forty
lakhs only), shall be liable to be registered as a VAT dealer.
(4) Every dealer whose taxable turnover during the period from
1st January, 2004 to 31st December, 2004 is more than
Rs.40,00,000/- (Rupees forty lakhs only), shall be liable to be
registered as a VAT dealer.
(5) Notwithstanding anything contained in sub-sections (2), (3)
and (4), the following classes of dealers shall be liable to be
registered as VAT dealers irrespective of their taxable turnover
namely:-
(a) every dealer importing goods in the course of business
from outside the territory of India;
(b) every dealer registered or liable to be registered under the
Central Sales Tax Act 1956, or any dealer making purchases or
sales in the course of inter-state trade or commerce or
16
dispatches any goods to a place outside the State otherwise than
by way of sale;
(c) every dealer residing outside the State but carrying on
business within the State and not having any permanent place of
business;
(d) every dealer liable to pay tax on goods listed in Schedule
VI.
(e) every commission agent, broker, delcredere agent,
auctioneer or any other mercantile agent by whatever name
called, who carries on the business of buying, selling, supplying
or distributing goods on behalf of any non-resident principal;
(f) every dealer availing sales tax deferment or sales tax
holiday;
(g) every dealer executing works contract exceeding
Rs.5,00,000/- (Rupees five lakhs only) for the State
Government or local authority or every dealer opting to pay tax
by way of composition on works contract;
(h) every dealer liable to pay tax under sub-section (9) of
section 4 of the Act;
(6) xxxx
(7) xxxx
(8) xxxx
(9) xxxx
(10) xxxx
(11) xxxx
(a) As per Section 17(2), every dealer who is commencing
the business and whose estimated taxable turnover for 12
17
consecutive months will be more than Rs.40,00,000/- shall be
registered as a VAT dealer before commencement of the business.
So under Section 17(2), a dealer who commences business can, on
the estimate that his taxable turnover for the coming 12 consecutive
months will exceed Rs.40,00,000/-, register as VAT dealer. It is an
anticipatory registration.
(b) Then Section 17(3) says that every dealer whose
actual taxable turnover in the preceding 3 months exceeds
Rs.10,00,000/- or in the 12 preceding months exceeds
Rs.40,00,000/-, shall be liable to be registered as VAT dealer.
Thus, registration under Section 17(3) is based on actual taxable
turnover.
(c) Under section 17(4), every dealer whose taxable
turnover during the period from 01.01.2004 to 31.12.2004 is more
than Rs.40,00,000/-, he shall be liable to be registered as VAT
dealer. This sub-section deals with the status of a dealer before the
commencement of the AP VAT Act. As per Section (1)(3) of the
AP VAT Act, Section 17 came into force w.e.f. 31.01.2005.
Section 17(4) says that in the preceding calendar year, if the taxable
18
turnover of a dealer exceeded Rs.40,00,000/-, he shall be liable to
be registered as VAT dealer.
(d) Then Section 17(5) is in the form of an exception to
sub-sections (2) (3) & (4). Inter alia, it lays down that
notwithstanding anything contained in Sub Sections (2)(3) and (4),
the classes of dealers enumerated in clauses (a) to (h) shall be liable
to be registered as VAT dealers irrespective of their taxable
turnover (emphasis applied). The dealers enumerated in clause (b)
is germane for our purpose because admittedly petitioner does not
fall within the categories of (a), (c), (d), (e), (f), (g) and (h).
(e) Clause (b) says that every dealer registered or liable to be
registered under the Central Sale Tax Act, 1956 or any dealer
making purchases or sales in the course of interstate trade or
commerce or dispatches any goods to a place outside the State
otherwise than by way of sale shall be registered as VAT dealer.
Thus, in essence, if a dealer makes purchases or sales in the course
of interstate trade or commerce, then irrespective of his taxable
turnover, he shall be liable to be registered as a VAT dealer.
19
10. As stated supra, the petitioner impugns Section 17(5)(b) on
the ground that the said provision deprives a dealer his privilege of
being a TOT dealer, the moment he conducts the interstate trade or
commerce, irrespective of his annual taxable turnover being less
than Rs.40,00,000/- and thereby Section 17(5) directly contravenes
Sub Sections (2) to (4) & (7) and makes them otiose. The petitioner
thus claims that Section 17(5)(b) being ultra vires to Sub Sections
(2)(3)(4) and (7) shall be set aside.
11. We find no much force in the above contention. A close
scrutiny of Section 17(5) would show, as argued by learned
Advocate General, it is in the nature of an exception to Sub
Sections (2) to (4). It must be reminded that a "proviso" or "an
exception" is a legislative device in the hands of statute framers to
except some class of persons, things, situations from out of the
operation of an enactment. An exception or proviso sometimes will
be employed after a general section so as to restrict the operative
sphere of the said general enactment. Thus an exception as a
legislative device is adopted only to exclude a part from the whole,
which but for the exclusion, continues to be a part of it.
20
(a) In S. Sundaram Pillai v. V.R. Pattabiraman2 the Apex
Court made a survey of decisions on the aspect of interpretation of
proviso / exception. It is mentioned that:
"36. While interpreting a proviso care must be taken that it is used
to remove special cases from the general enactment and provide for
them separately.
37. In short, generally speaking, a proviso is intended to limit the
enacted provision so as to except something which would have
otherwise been within it or in some measure to modify the enacting
clause. Sometimes a proviso may be embedded in the main
provision and becomes an integral part of it so as to amount to a
substantive provision itself.
38. Apart from the authorities referred to above, this Court has in a
long course of decisions explained and adumbrated the various
shades, aspects and elements of a proviso. In State of Rajasthan v.
Leela Jain (1965) 1 SCR 267, the following observations were
made:
"So far as a general principle of construction of a proviso is
concerned, it has been broadly stated that the function of a proviso is
to limit the main part of the section and carve out something which
but for the proviso would have been within the operative part.
39. In the case of Sales Tax Officer, Circle I, Jabalpur v. Hanuman
Prasad MANU/SC/0226/1966 : [1967]1SCR831 , Bhargava, J.
observed thus:
AIR 1985 SC 582 = MANU/SC/0387/1985
"It is well-recognised that a proviso is added to a
principal clause primarily with the object of taking out
of the scope of that principal clause what is included in
it and what the legislature desires should be excluded.
42. In Hiralal Rattanlal etc. v. State of U.P. and Anr. etc.
MANU/SC/0553/1972 : [1973]2SCR502 this Court made the
following observations:
"Ordinarily, a proviso to a section is intended to take out a
part of the main section for special treatment. It is not
expected to enlarge the scope of the main section. But cases
have arisen in which this Court has held that despite the fact
that a provision is called proviso, it is really a separate
provision and the so-called proviso has substantially altered
the main section."
The Apex Court ultimately summed up the different purposes
of proviso as follows:
"1) qualifying or excepting certain provisions from the main
enactment;
2) it may entirely change the very concept of the intendment of the
enactment by insisting on certain mandatory conditions to be
fulfilled in order to make the enactment workable;
3) it may be so embedded in the Act itself as to become an integral
part of the enactment and thus acquire the tenor and colour of the
substantive enactment itself; and
4) it may be used merely to act as an optional addenda to the
enactment with the sole object of explaining the real intendment of
the statutory provision."
(b) In Union of India v. Sanjay Kumar Jain3 the Apex
Court observed that the normal function of a proviso is to except
something out of the enactment or to qualify something enacted
therein which, but for the proviso would be within the purview of
the enactment.
12. With the above jurisprudence when 17(5) is looked into, the
said provision states that the dealers enumerated in Clause (a) to (h)
shall be liable to be registered as VAT dealers irrespective of their
taxable turnover and notwithstanding anything contained in Sub
Sections (2), (3) and (4). As stated supra, we are concerned with
17(5)(b). It has now to be seen whether there is any apparent
conflict or inconsistency between 17(5)(b) and sub-sections
(2)(3)(4) & (7) and if so, how the conflict has to be resolved by
applying the rule of construction.
AIR 2004 SC 4139 = MANU/SC/0604/2004
In the above context, in Padma Ben Banushali's case (1
supra), cited by Advocate General, the Apex Court while resolving
the alleged conflict between Section 47 and Order XXI Rule 2
CPC, evolved following principles of construction.
"14. This rule of construction which is also spoken of as
"ex visceribus actus" helps in avoiding any inconsistency either
within a section or between two different sections or provisions
of the same statute.
15. On a conspectus of the case-law indicated above, the
following principles are clearly discernible:
(1) It is the duty of the courts to avoid a head-on clash
between two sections of the Act and to construe the provisions
which appear to be in conflict with each other in such a manner
as to harmonise them.
(2) The provisions of one section of a statute cannot be
used to defeat the other provisions unless the court, in spite of
its efforts, finds it impossible to effect reconciliation between
them.
(3) It has to be borne in mind by all the courts all the
time that when there are two conflicting provisions in an Act,
which cannot be reconciled with each other, they should be so
interpreted that, if possible, effect should be given to both. This
is the essence of the rule of 'harmonious construction'.
(4) The courts have also to keep in mind that an
interpretation which reduces one of the provisions as a "dead
letter" or "useless lumber" is not harmonious construction.
(5) To harmonise is not to destroy any statutory
provision or to render it otiose."
With the aid of above principles, when Section 17 is
comprehensively studied, it does not appear that 17(5)(b) has totally
negated the operation of Sub Sections (2)(3)(4) and (7), rather it has
limited their operation by carving out an exception. In other words,
Sub Sections (2)(3)(4) and (7) are still operable so long as they do
not fall within the groove of exception. Therefore, the petitioner
cannot contend that Section 17(5)(b) has taken away the right
conferred under Sub Sections (2)(3)(4) and (7). We find no conflict
or inconsistency between sub-section (5) and other sub-sections and
therefore, vires of Section 17(5) cannot be questioned. This point is
answered accordingly.
13. POINT No.2: As it is held in the preceding point that
Section 17(5)(b) is valid and not inconsistent with other provisions,
the alternative argument of the petitioner is that still he does not fall
within the mischief of Section 17(5)(b) and hence he shall be
treated as TOT dealer. As per Section 17(5)(b), if a dealer falls
within one of the following three categories, he shall be liable to be
registered as VAT dealer. They are:
(i) a dealer registered or liable to be registered under CST Act,
1956 or
(ii) any dealer making purchases or sales in the course of inter-
state trade or commerce or
(iii) dispatches any goods to a place outside the State otherwise
than by way of sale
(a) First category is concerned, it has to be seen whether
petitioner is liable to be registered under CST Act, 1956. Section 7
of CST Act, 1956 lays down, every dealer liable to pay tax under
the said Act shall make an application for registration. Then
Section 6 explains the person who is liable to pay tax under the
CST Act. The said Section says that every dealer shall be liable to
pay tax under the said Act on all Sales of goods other than
electrical energy effected by him in the course of inter-state trade
or commerce during any year on and from the date so notified. The
cumulative effect of Section 6 and 7 is that a dealer who effects
sale of goods during the course of inter-state trade or commerce
shall be liable to be registered. In the instant case the petitioner
admittedly made a single purchase of paints from a dealer from
Hyderabad but he did not effect sale of goods in the course of inter-
state trade or commerce. Therefore, the petitioner is not liable to be
registered as dealer under CST Act, 1956 and consequently he will
not fall within the first category.
(b) Third category is concerned, it is nobody's case that the
petitioner dispatches goods to a place outside the State otherwise
than by way of a sale. So the petitioner can be safely excluded
from this category also.
14. Second category is concerned, the contention of the
petitioner is that since he was involved in only a stray or single
transaction of purchase from outside the State, he will not come
under the second category because in Section 17(5)(b) the words
"purchases or sales" are only employed but not "purchase or sale".
Per contra, learned Advocate General would argue that even for
such a single transaction the petitioner is liable to be registered as
VAT dealer.
15. The above rival contentions involve the interpretation of tax
statutes. A tax is imposed for public purpose for raising general
revenue of the State. As per Article 366(28) of the Constitution of
India, the term "taxation" includes the imposition of any tax or
impost, whether general or local or special and the tax shall be
construed accordingly. The term "impost" means a compulsory
levy. Since imposition of tax involves a compulsory levy or
exaction of money by Government, the same is not permissible
except by or under the authority of a statutory provision.
In Hindustan Times v. State of U.P.4, the Apex Court
observed thus:
"In any event, the State cannot make any
compulsory exaction from any citizen unless there exists a
specific provision of law operating in the field. In relation
to a compulsory payment, it is well-settled, there is no
room for any intendment.
That is why Article 265 of the Constitution of India provides that
no tax shall be levied or collected except by authority of law. As
the fiscal statutes involve exaction of money by the State from the
subjects, the judicial pronouncements exhorted that they require
strict construction.
(i) In Tenant v. Smith (1892 AC 150) Lord Halsbury and Lord
Simonds observed that the subject is not to be taxed without clear
words for that purpose and also that every act of Parliament must
be read according to the natural construction of its words.
(ii) In A.V.Fernandez v, The State of Kerala5, the Apex Court
referred the judgment in Inland Revenue Commissioners v. Duke
MANU/SC/0903/2002 = AIR 2003 SC 250
of Westminister [(1936) A.C. 24], wherein Lord Russell of
Killowen observed thus:
"I confess that I view with disfavour the doctrine that
in taxation cases the subject is to be taxed if in accordance with
a Court's view of what it considers the substance of the
transaction, the Court thinks that the case falls within the
contemplation or spirit of the statute. The subject is not taxable
by inference or by analogy, but only by the plain words of a
statute applicable to the facts and circumstances of his case"
The Apex Court in the above judgment ultimately held thus
"29. It is no doubt true that in construing fiscal statutes
and in determining the liability of a subject to tax one must
have regard to the strict letter of the law and not merely to the
spirit of the statute or the substance of the law. If the Revenue
satisfies the Court that the case falls strictly within the
provisions of the law, the subject can be taxed. If, on the other
hand, the case is not covered within the four corners of the
provisions of the taxing statute, no tax can be imposed by
inference or by analogy or by trying to probe into the intentions
of the legislature and by considering what was the substance of
the matter."
(iii) In Kanai Lal Sur v. Paramnidhi Sadhukhan6, the
Apex Court observed thus:
AIR 1957 SC 657
MANU/SC/0097/1957 = AIR 1957 SC 907
7. xxxxx.. However, in applying these observations to
the provisions of any statute, it must always be borne in mind
that the first and primary rule of construction is that the
intention of the Legislature must be found in the words used by
the Legislature itself. If the words used are capable of one
construction only then it would not be open to the courts to
adopt any other hypothetical construction on the ground that
such hypothetical construction is more consistent with the
alleged object and policy of the Act. The words used in the
material provisions of the statute must be interpreted in their
plain grammatical meaning and it is only when such words are
capable of two constructions that the question of giving effect to
the policy or object of the Act can legitimately arise. When the
material words are capable of two constructions, one of which is
likely to defeat or impair the policy of the Act whilst
the other construction is likely to assist the achievement of the
said policy, then the courts would prefer to adopt the latter
construction. It is only in such cases that it becomes relevant to
consider the mischief and defect which the Act purports to
remedy and correct.xxxxx"
(iv) In Commissioner of Income Tax, Patiala v. Shahzada
Nand & Sons7, the Apex Court referred the judgment in Cape
Brandy Syndicate v. Inland Revenue Commissioner [(1921)
1 K.B. 64], wherein Rowlatt, Judge observed:
MANU/SC/0113/1966 = AIR 1966 SC 1342
"In a Taxing Act one has to look merely at what is
clearly said. There is no room for any intendment. There is no
equity about a tax. There is no presumption as to a tax. Nothing
is to be read in, nothing is to be implied. One can only look
fairly at the language used."
Ultimately the Apex Court held thus:
"12. To this may be added a rider: in a case of
reasonable doubt, the construction most beneficial to the subject
is to be adopted. But even so, the fundamental rule of
construction is the same for all statutes, whether fiscal or
otherwise. "The underlying principle is that the meaning and
intention of a statute must be collected from the plain and
unambiguous expression used therein rather than from any
notions which may be entertained by the court as to what is just
or expedient."
(v) In J.K.Steel Limited v. Union of India8, the Apex Court while
interpreting certain terms in Central Excises and Salt Act, 1944
referred to judgment in C.A. Abraham v. I.T.O, Kottayam
[MANU/SC/0124/1960 = (1961) 41 ITR 25 (SC) wherein it was
observed:
"In interpreting a fiscal statute the Court cannot proceed
to make good deficiencies if there may be any; the court must
interpret the statute as it stands and in case of doubt in a manner
favourable to the tax payer"
MANU/SC/0283/1968 = AIR 1970 SC 1173
The Apex Court also referred its own judgment in
Commissioner of Income Tax v. Karamchand Premchand
Ltd, Ahmedabad [MANU/SC/0186/1960 = (1960) 40 ITR
106 (SC) wherein it was observed that if there is any
ambiguity of language in a fiscal statute, the benefit of that
ambiguity must be given to the assessee
(vi) In Member-secretary, Andhra Pradesh State Board for
Prevention and Control of Water Pollution v. Andhra Pradesh
Rayons Ltd.9, the Apex Court observed:
"6. It has to be borne in mind that this Act with which
we are concerned is an Act imposing liability for cess. The Act
is fiscal in nature. The Act must, therefore, be strictly construed
in order to find out whether a liability is fastened on a particular
industry. The subject is not to be taxed without clear words for
that purpose; and also that every Act of Parliament must be read
according to its natural construction of words. See the
observations in Re Micklethwait [1885] 11 Ex 452. Also see the
observations in Tenant v. Smith [1892] AC 150, and Lord
Halsbury's observations at page 154. See also the observations
of Lord Simonds in St. Aubyn v. AC [1951] 2 All E.R. 473.
Justice Rowlatt of England said a long time ago, that in a taxing
Act one has to look merely at what is clearly said. There is no
room for any intendment. There is no equity about a tax. There
is no presumption as to tax. Nothing is to be read in, nothing is
to be implied. One has to look fairly at the language used. See
MANU/SC/0279/1988 = AIR 1989 SC 611
the observations in Cape Brandy Syndicate v. IRC [1921] 1 KB
64. This Court has also reiterated the same view in Gursahai
Saigal v. C.I.T. Punjab MANU/SC/0190/1962 : [1963] 1 ITR
48(SC) ; C.I.T. Madras v. V. MR. P. Firm, Muar
MANU/SC/0143/1964 : [1965] 56 ITR 67(SC) and Controller
of Estate Duty Gujarat v. Kantilal Trikamlal : [1976] 10 ITR
92(SC) .
7. The question as to what is covered must be found out
from the language according to its natural meaning fairly and
squarely read. See the observations in IRC v. Duke of
Westminster [1936] AC 1, and of this Court in AV Fernandez v.
The State of Kerala MANU/SC/0093/1957 : [1957] 1 SCR 837 .
Justice Krishna Iyer of this Court in Martand Dairy & Farm v.
Union of India MANU/SC/0452/1975 : [1975] Supp. SCR 265
has observed that taxing consideration may stem from
administrative experience and other factors of life and not
artistic visualization or neat logic and so the literal, though
pedestrian, interpretation must prevail."
(vii) In Saraswathi Sugar Mills v. Haryana State Board10, the
Apex Court was considering the issue whether the industries
manufacturing sugar from sugarcane are covered by entry 15 of
Schedule I to the Water (Prevention and Control of Pollution) Cess
Act, 1977 (for short, 'the Cess Act'). Entry 15 of Schedule 1 reads
"processing of animal or vegetable products industry". Referring
AIR 1992 SC 224 = MANU/SC/0052/1992
the several decisions, the Apex Court held the sugar industries
would not come under the term 'vegetable products industry". It
observed thus:
"24. Construction of words and the meaning to be given
for such words shall normally depend on the nature, scope and
purpose of the statute in which it is occurring and to the fitness
of the matter to the statute. The meaning given to the same
word occurring in a social security measure or a regulating
enactment may not be apposite or appropriate when the
same word is interpreted with reference to a taxing
statute (emphasis supplied). The Cess Act is a fiscal
enactment. In the context in which the word 'vegetable' is used
in Entry 15 'vegetable product' means product of or made of or
out of vegetable. 'Vegetables' as understood in common
parlance are not products of manufacture unless we say that
agriculture is an industry for certain purposes and vegetables are
products of that industry. In order to bring an industry within
any of the entries in Schedule I it has to be seen what is the end
product produced by that industry. Sugar cane is not a vegetable
though it may be an agricultural product. If the botanic meaning
of vegetable as referring to any and every kind of plant life is to
be given then some of the industries listed in Schedule I like
Paper Industry and Textile Industry and even chemical industry
which are covered by other entries could also be brought within
Entry 15. The word vegetable in the context does not attract the
botanic meaning. The sugar manufacturing industry do not,
therefore, come within Entry 15 of Schedule I of the Cess Act."
(viii) In Commissioner of Wealth Tax, Gujarat-III,
Ahmedabad v. Ellis Bridge, Gymkhana11, the Apex Court
observed thus:
"5. The rule of construction of a charging section is that
before taxing any person, it must be shown that he falls within
the ambit of the charging section by clear words used in the
section. No one can be taxed by implication. A charging section
has to be construed strictly. If a person has not been brought
within the ambit of the charging section by clear words, he
cannot be taxed at all."
(ix) In The Federation of Andhra Pradesh Chambers of
Commerce & Industry v. State of Andhra Pradesh12, the Apex
Court had an occasion to examine the correctness of the
interpretation made by a Bench of Five judges of the Andhra
Pradesh High Court of the clause "where the land is used for any
industrial purpose" in section 3 of the A.P. Non-agricultural
Lands Assessment Act, 1963 (the Act, 1963). The five judges
Bench of A.P. High Court while concurring with the view of three
Judges Bench which was referred to them, opined that the word
"used" in section 3 of the Act, 1963 has to be interpreted in a wider
sense to mean not only "actually used" but also "meant to be used"
or "set apart for being used". The larger Bench observed that if the
MANU/SC/0844/1998 = (1998) 1 SCC 384
MANU/SC/0483/2000 = AIR 2000 SC 2905
word used has to be given the limited meaning as "actually used" it
will not be in tune with the intendment of the legislature. The said
decision was challenged before the Hon'ble Apex Court. After
discussing the principles of construction of taxing statutes, the
Apex Court disagreed with the judgment of five judges Bench and
held thus:
"9. We are in no doubt whatever, therefore, that it is
only land which is actually in use for an industrial purpose as
defined in the said Act that can be assessed to non-agricultural
assessment at the rate specified for land used for industrial
purposes. The wider meaning given to the word 'used' in the
judgment under challenge is untenable. Having regard to the
fact that the said Act is a taxing statute, no court is justified in
imputing to the legislature an intention that it has not clearly
expressed in the language it has employed."
(x) In Commissioner of Income Tax v. Kasturi & Sons Ltd.13,
the Apex Court was engaged in interpreting the words "money
payable" used in Section 41(2) of the Income Tax Act. The facts
were that the respondent before Apex Court was the public limited
company engaged in publishing the newspaper 'The Hindu'. It
purchased a dacota aircraft for speedier transport and delivery of its
MANU/SC/1605/1999 = AIR 1999 SC 1275
newspapers. The publishing company insured its aircraft with
British Aviation Insurance Limited, Calcutta for sum of
Rs.4,00,000/-. As per terms of the insurance contract, in the event
of loss or damage in an accident to the aircraft, the insurance
company was given an option to pay or replace or make good the
accidental loss or damage to the aircraft. The respondents aircraft
met with an accident on 25.12.1967 and became a total wreck. The
insurer exercised its option in terms of the policy and purchased a
similar aircraft for Rs.Rs.3,50,000/- and handed over to the
respondents in the place of damaged one. Thereafter, the Income
Tax Officer applying Section 41(2) of the Act worked out the profit
of the respondent by deducting the written down value of the
damaged aircraft from the value of the new aircraft and imposed
tax on the differential value. As per section 41(2), any building,
machinery, plant or furniture owned and used for the business of
the assessee is sold, discarded, demolished or destroyed and the
moneys payable in respect of the said asset together with the scrap
value if exceeds the written down value the differential amount
shall be chargeable to income tax as the income of the business or
profession. The respondent contended that the phrase "money
payable" in 41(2) would apply only when money is received but
not for the replacement of the asset. The revenue sought to
interpret the phrase "money payable" as "money's worth". The
Apex Court did not appreciate the interpretation of revenue. It held
thus:
"18. Thus, there is no doubt that on the exercise of the
option by the insurer over which the insured has no sway, the
contract should be considered only as a contract for
reinstatement and not as a contract for money. There is no
question of any `money payable' under the contract. There is a
fallacy in the contention that the money became payable on the
occurrence of the accident and the exercise of the option
thereafter by the insurer would not alter the nature of the
contract. The contract itself gives the right to the insurer to
exercise the option and the legal effect of such exercise is to
make the contract one for reinstatement only from the inception.
It is analogous to the `doctrine of relation back'. Such exercise
of option could only be after the occurrence of the accident and
not at any time earlier. Consequently, the expression `moneys
payable' in Section 41(2) will not apply in this case.
19. We are unable to accept the contention that the
word `money' should be interpreted as `money's
worth' (emphasis supplied). The reasons given by us earlier
are sufficient and we need not add to them."
(xi) Recently, in Commissioner of Customs (Import), Mumbai
v. Dilip Kumar and Company14, the Six Judge Bench of the Apex
MANU/SC/0789/2018 = AIR 2018 SC 3606
Court made a classic exposition of how to interpret the tax statutes
and tax exemption provisions and notifications. It held thus:
"41. After thoroughly examining the various precedents
some of which were cited before us and after giving our anxious
consideration, we would be more than justified to conclude and
also compelled to hold that every taxing statute including,
charging, computation and exemption clause 9at the threshold
stage) should be interpreted strictly. Further, in case of
ambiguity in a charging provision, the benefit must necessarily
go in favour of subject / assessee, but the same is not true for an
exemption notification wherein the benefit of ambiguity must be
strictly interpreted in favour of the Revenue / State."
16. The principles laid down in the above thicket of decisions
can be summed up thus:
(i) Imposition of tax since involve exaction of money by the
State from the subjects, it cannot be done without the sanction of
law.
(ii) Tax statutes shall require strict interpretation having
regard to the strict letter of the law but not its spirit or substance.
(iii) When the language of the provisions of the statute is
plain and unambiguous, such clear, natural and plain grammatical
meaning should be assigned and the interpretation shall not be
based on intendment, inference, implication, analogy or hypothesis.
(iv) A taxing statute including charging, computation and
exemption clauses at the threshold should be interpreted strictly and
in case of ambiguity in a charging provision, the benefit must be
given in favour of assessee. An exemption provision or notification
is concerned, the burden is on assessee to prove that his case comes
within the parameters of exemption clause or notification. In case
of ambiguity, the benefit of such ambiguity must be given in favour
of revenue.
17. With the above jurimetrical jurisprudence, when Section
17(5)(b) is scrutinized, therein, the phrase "purchases or sales" is
used but not the phrase "purchase or sale". In our considered view,
the aforesaid plural terminology used by the framers gives a plain
and a natural meaning without leaving scope to any ambiguity. If
their intendment was to make the dealer apply for VAT registration
on even a single purchase or sale, the framers would have
employed suitable terminology in Section 17 5(b) viz., "any dealer
making even a single purchase or sale in the course of inter-state
trade or commerce". That is not the case here.
(a) We have also examined the meaning of the phrase, "in
the course of inter-state trade or commerce" to know whether the
interpretation of plural words as singular words as sought for by
learned Advocate General is possible. For this purpose we
examined Section 3 of CST Act, 1956 which explain the concept of
inter-state trade or commerce. Section 3 of the CST Act, 1956 says
that a sale or purchase of goods shall be deemed to take place in the
course of inter-state trade or commerce if the sale or purchase (a)
occasions the movement of goods from one State to another or (b)
is effected by a transfer of documents of title to the goods during
their movement from one State to another. It is true that in Section
3 the singular words "sale" or "purchase" has been used. It implies
that a single sale or purchase causing movement of goods from one
State to another will be sufficient to denote the transaction as
during the course of inter-state trade or commerce. However, the
purpose in using the singular words in the said Act is well
discernible. For the purpose of imposing inter-state sales tax on all
sales under Section 6 of the CST Act, every sale or purchase is
regarded as inter-state trade or commerce. So, the employment of
singular words in Section 3 is only with reference to Section 6 of
the CST Act, 1956 and confine to said Act only. However, it must
be noted, in spite of having this knowledge, still, the framers of AP
VAT Act, 2005, have deliberately used the plural nouns viz.,
"purchases or sales" in Section 17(5)(b). Therefore, in our honest
view, the aforesaid plural nouns cannot be said to have imbibed the
singular nouns also.
18. We are also not oblivious of provisions of AP General
Clauses Act, 1897 in this context. Section 3 (35) of the said Act
defines the term "number" as words in singular shall include the
plural and the words in the plural shall include the singular. It is
true that if this definition is employed in Section 17(5)(b), then the
plural words "purchases or sales" can also be taken to mean as
"purchase or sale". However, as per Section 3 of A.P. General
Clauses Act, the definitions enumerated in that section can be
employed in the Acts enacted in the State of Andhra Pradesh after
commencement of this Act, unless there is something repugnancy
in the subject or context of those Acts. Thus it is needless to
emphasize, in the event of any repugnancy in the subject or context
of a given enactment, the definitions mentioned in A.P. General
Clauses Act cannot be employed in that enactment. Therefore, it
has to be seen whether any repugnancy will occur in the subject or
context of Section 17(5)(b), if Section 3(35) of A.P. General
Clauses Act is applied.
19. We have already discussed and held that the legislature has
purposefully and deliberately employed the words "purchases or
sales" in Section 17(5)(b), meaning thereby, it is only when a
dealer involved in more than one purchase or sale during the course
of inter-state trade or commerce, he shall be liable to be registered
as a VAT dealer. When applied Section 3(35) of A.P. General
Clauses Act, the plural nouns "purchases or sales" have also to be
treated as "purchase or sale", which meaning will be repugnant to
the context of Section 17(5)(b). Therefore, the said definition
cannot be imported to Section 17(5)(b).
(a) In Dulichand Lakshminarayan v. The Commissioner
of Income Tax, Nagpur15 the Supreme Court engaged with the
question whether two or more individual partnership firms can
constitute into a separate partnership firm and seek for registration
U/s 26(A) of Income Tax Act. In this context, the Apex Court
considered Section 4 of the Indian Partnership Act, 1932 which
reads thus:
"4. Definition of "partnership", "partner", "firm" and "firm
name":- "Partnership" is the relation between persons who have
AIR 1956 SC 354 = MANU/SC/0037/1956
agreed to share the profits of a business carried on by all or any of
them acting for all.
Persons who have entered into partnership with one another are
called individually "partners" and collectively "a firm", and the
name under which their business is carried on is called the "firm
name".
Having found that no definition is provided for "person" in
the Partnership Act, the Apex Court considered the possibility of
employing the definition of "person" given in Section 3(42) of
General Clauses Act which reads thus:
"(42) "person" shall include any company or association or body
of individuals, whether incorporated or not;"
(b) Having found that if the definition of "person" as is
mentioned in Section 3(42) is employed in Section 4 of Partnership
Act, it would amount to giving scope to the unincorporated
association or body of persons like a firm can enter into partnership
which is against the Partnership Law, the Apex Court held that
Partnership Firms cannot form into another partnership firm.
20. Thus Point No.2 is concerned, the petitioner shall be treated
as a TOT dealer only irrespective of his involvement in a single
transaction of purchase from outside the State. The said single
transaction of purchase is concerned, the same is liable to be taxed
under Section 6 of the CST Act, 1956 but not under the provisions
of AP VAT Act, 2005 for the reason that as per Section 5 of AP
VAT Act, the said Act has no application to impose tax on sale or
purchase of any goods which took place outside the State. The
petitioner cannot be treated as casual trader also for the reason that
U/s 2(7) of AP VAT Act a casual trader is a person who carries on
occasional transactions of a business nature involving buying,
selling or distribution of goods in the State, whether as petitioner
made a single purchase from outside the State. This point is
answered accordingly.
21. POINT No.3: According to the petitioner the impugned
Assessment for the period April, 2013 to July, 2014 is barred by
limitation under Section 21(4) of AP VAT Act since the assessment
for the aforesaid period exceeded four years. We are unable to
accept the said plea for the reason that for the aforesaid period, the
petitioner has wilfully underdeclared his sales turnover and evaded
payment of the tax to a tune of Rs.3,030/-. Therefore, following
Section 21(5) of the AP VAT Act the 3rd respondent has rightly
levied the tax. It is relevant at this juncture to mention that for the
subsequent period also, for any undervaluation of sales and
consequent evasion of tax, the petitioner will be liable to pay tax at
1% as a TOT dealer but not 14.5% as a VAT dealer in view of
findings in points supra.
22. POINT No.4: The contention of the petitioner is that even
assuming that he is liable to be registered as VAT dealer and pay
tax accordingly, however, he shall not be liable to pay penalty of
100% on the tax due but in terms of Section 49 of AP VAT Act, he
shall be liable to pay penalty of 25% only. We find this argument
has no force. We have already held that the petitioner shall be
treated as TOT dealer only but not as VAT dealer. As such, he
need not pay tax as a VAT dealer. Consequently, Section 49 of the
Act which deals with penalty for failure to registration does not
apply to the instant case. On the other hand, the petitioner for his
act of undervaluing the tax as a TOT dealer, shall be liable to pay
penalty as per Section 53 of AP VAT Act. This point is answered
accordingly.
23. POINT No.5: This point is concerned, the argument of
learned Advocate General is that in view of availability of
alternative and efficacious remedy of appeal, writ is not
maintainable. We are unable to accept this argument. In Whirlpool
Corporation v. Registrar of Trade Marks, Mumbai 16 the Apex
Court held that the alternative remedy will not operate as a bar in
the contingencies namely where the writ petition has been filed for
the enforcement of fundamental rights or where there has been a
violation of principle of natural justice or where the order or
proceedings are wholly without jurisdiction or the vires of an Act is
challenged. In the instant case the petitioner challenged the validity
of Section 17(5)(b) of AP VAT Act. As such the writ is
maintainable.
24. Thus on a conspectus of facts and law, the writ petition is
allowed and the impugned Assessment Order dated 04.08.2018
AIR 1999 SC 22 = MANU/SC/0664/1998
penalty proceedings dated 23.11.2018 and Appellate Order dated
22.10.2020 are hereby set aside with the following findings and
directions:
(i) Section 17(5)(b) of AP VAT Act is a valid provision and
not inconsistent with other provisions.
(ii) The petitioner who is a TOT dealer, for his single
transaction of purchase of goods from outside the State, shall not be
required to be registered as a VAT dealer.
(iii) The assessment made by the 3rd respondent for the
relevant period mentioned in the impugned Assessment Order dated
04.08.2018 is not barred by limitation. However, the Assessment
Order is liable to be set aside as the 3rd respondent, for the
underdeclaration of sales from July, 2015 to August, 2016 imposed
tax @ 14.5% wrongly treating the petitioner as a VAT dealer. Due
to the underdeclaration of sales for the relevant period, the
petitioner is liable to pay penalty as per Section 53 of the AP VAT
Act.
(iv) The 3rd respondent shall pass a fresh Assessment Order
for the relevant period treating the petitioner as a TOT dealer in the
light of above findings. No costs.
As a sequel, interlocutory applications pending, if any, shall
stand closed.
__________________________
U. DURGA PRASAD RAO, J
__________________________
T. MALLIKARJUNA RAO, J
15 .02.2023
mva/krk/nnn
THE HON'BLE SRI JUSTICE U. DURGA PRASAD RAO
AND
THE HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO
Writ Petition No.629 of 2021
15th February, 2023
mva/krk/nnn
