M/S Sravanthi Interiors vs The Commercial Tax Officer, And 3 Others
2024 Latest Caselaw 214 Tel

Telangana High Court

M/S Sravanthi Interiors vs The Commercial Tax Officer, And 3 Others on 12 January, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy

          HONOURABLE SRI JUSTICE P.SAM KOSHY
                            &
      HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY


                 WRIT PETITION NO. 3341 OF 2020

ORDER:

(Per Hon'ble Sri Justice Laxmi Narayana Alishetty)

This writ petition has been filed by the petitioner seeking

the following relief:

"....to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 2nd respondent in levying tax at 14.5% under Section 4(7)(a) of TVAT Act 2005 on the disputed turnover through the impugned order dated 21.11.2019 for the assessment years 2013-14 to 2017-18 under TGVAT Act 2005 as illegal, arbitrary, high handed, without authority of law and jurisdiction, contrary to the provisions of the Act and in violation of principles of natural justice and set aside the same."

2. Heard Mr.Bhaskar Reddy Vemi Reddy, learned counsel

for the petitioner and learned Standing Counsel for Commercial

Taxes, appearing on behalf of the respondents.

3. The brief facts, leading to file the present Writ Petition are

that the petitioner is a proprietary concern carrying business in

execution of civil contacts and is an assessee on the rolls of the

respondent No.1 herein. During the assessment years 2013-14 PSK,J & LNA, J

to 2017-18, the petitioner had executed certain civil works in

the capacity of sub-contractor to the main contractors/builders,

who have opted to pay tax under composition by filing Form

VAT 250 in terms of Section 4(7)(b) of TGVAT Act, 2005 read

with Rule 17(2) of TGVAT Rules 2005. It is contended that the

petitioner being the sub-contractor, was exempted in respect of

the turnover of works contract executed by it as sub-

contractors to the main contractors and accordingly, claimed

exemption and paid tax on the balance turnover wherever the

liability was on the petitioner. The petitioner had also claimed

exemption on the turnover of pure labour works since the

turnover towards labour works were exempted as there was no

involvement of transfer of property in goods by way of normal

sale/deemed sale and the liability is only on the turnover of

sale/deemed sale of goods.

4. It is contended that respondent No.2 had issued notice to

the petitioner in Form VAT 304 directing to produce the books

of accounts for the period 2013-14 to 2017-18 for the purpose

of audit. The petitioner furnished the information through email

dated 22.05.2019. The respondent No.2 thereafter had issued

notice in Form VAT 305A dated 29.05.2019 proposing to levy

tax to a tune of Rs.1,01,26,353/- on the ground that there is PSK,J & LNA, J

variation of turnover in respect of the assessment period in

dispute by comparing the turnovers with the profit and loss

accounts of the petitioner and Form 26 AS.

5. The petitioner submitted his reply through email dated

07.08.2019 by explaining that out of the total receipts, major

portion of the turnover is labour component. The petitioner also

has furnished breakup in respect of each work it has executed

as sub contractor. However, the petitioner did not respond

promptly by producing relevant evidence i.e., as agreement

copies with the main contractors and copies of Form 250 filed

by the main contractors in support of its claim. Since the

petitioner did not respond within the prescribed time,

respondent No.2 passed the impugned order confirming the levy

and raised the impugned demand.

6. The petitioner had contended that there was no

suppression of turnover as such and the difference of turnovers

was due to the inclusion of the receipts of labour contracts by

respondent No.2. Further that the delay in responding to the

show cause notice was only due to financial and domestic

problems.

PSK,J & LNA, J

7. It is also contended that though the petitioner had all the

documents, the same could not be filed as the deponent was not

in station for some time; that the assessment order was served

on the watchman and the petitioner came to know about the

same very late as the petitioner was undertaking a work at

Bangalore. As such he could not approach Appellate Authority

within stipulated time and therefore, the time limit of 30 days

for filing appeal had lapsed. As there is no power to condone the

delay beyond the limitation prescribed under Section 31 got

amended in the year 2017, the petitioner has no other

alternative remedy under the provisions of the TGVAT Act 2005.

8. Respondents have filed counter affidavit inter alia

contended that the present writ petition is not maintainable in

the light of the judgment of the Hon'ble Supreme Court in the

case of Assistant Commissioner (ST), LTU, Kakinada and

others Vs. Glaxo Smith Kline Consumer Health Care Ltd., 1

since the writ petition has been filed after expiry of the

limitation period for appeal provided under Section 31 under

the TVAT Act, 2005.

(2020) 19 SCC 681 PSK,J & LNA, J

9. It is contended that assessment orders were passed in

accordance with law in form VAT 305 dated 21.11.2019 and

said orders sent to the addresses available in the office record

by way of RPAD on 21.11.2019 under Rule 64 of the TVAT

Rules. However, the same were returned with an endorsement

"Addressee Left - Returned". It is further contended that

statutory limitation period for filing an appeal under amended

Section 31 of the TVAT Act is 30 days from the date of receipt of

the assessment order i.e., on 22.11.2019. However, the

petitioner filed present writ petition on 27.01.2020. Therefore,

the petition is liable to be dismissed on this ground alone in the

light of the judgment of the Hon'ble Supreme Court stated

supra.

10. It is contended that the petitioner is a VAT dealer and he

was engaged in the business of Works Contract/Painting

contracts and had been filing monthly return in Form VAT-200

disclosing the turnovers. Pursuance to the authorization issued

by the Additional Commissioner (ST) Enforcement Wing, vide

proceedings dated 24.04.2019, respondent No.2 issued notice in

Form VAT 304, dated 25.04.2019. The petitioner was informed

that audit of their books of accounts in connection with its

business would be taken up on 29.04.2019 and requested the PSK,J & LNA, J

petitioner to keep them ready for perusal of respondent No.2.

The petitioner had submitted copies of profit and loss accounts

and balance sheet for the financial years 2012-13 to 2017-18

and Form 26-AS on 22.05.2019 through email and the same

were verified. On verification, it was found that there was

difference of Rs.5,62,01,023/- in turnover between the

turnovers reported in the monthly return and the turnover

arrived at basing on the profit and loss account and Form 26-

AS. Further, the petitioner did not produce any documentary

evidence for exemption claimed through the monthly returns

and therefore, the petitioner was eligible to tax of

Rs.6,98,36,955/-.

11. The matter reported to the Additional Commissioner (ST)

Enforcement Wing, O/o. Commissioner (ST), Hyderabad and

permission was accorded to respondent No.2 to finalize the

assessments of the petitioner for the above financial years, vide

proceedings dated 27.05.2019. Accordingly, respondent No.2

issued show cause notice in form VAT 305-A dated 29.05.2018

proposing assessment under Section 21(3) of the TVAT Act r/w

Rule 25(5) r/w Section 4(7)(a) r/w Rule 17(1)(g) of the TVAT Act,

2005 and TSVAT Rules, 2005 and raised tax demand of

Rs.1,01,26,356/-. The petitioner was also requested to produce PSK,J & LNA, J

all necessary documents in support of claim of exemption and

to file objections, if any, within seven days from the date of

receipt of the show cause notice. However, the petitioner did not

respond, therefore, respondent No.2 has issued notice dated

11.06.2019 granting further time and also afforded the

opportunity of personal hearing.

12. The petitioner filed letter dated 15.06.2019 stating that it

was facing some financial problems and requested for one

month time for submitting objections and books of accounts.

The petitioner was granted seven days time through notice

dated 28.06.2019, however, the petitioner did not file objections

nor submitted any explanation. Further, respondent No.2

granted another three days time to the petitioner, however, the

petitioner sent email dated 07.08.2019 seeking two weeks time

stating that he was staying at Vijayawada and he would come to

Hyderabad in a week and attach details of certain turnovers.

13. It is further contended that the petitioner did not produce

any proof in support of the turnovers shown in the attachment.

The petitioner was requested to produce all the documents

within seven days through email dated 08.08.2019 of the

second respondent. The petitioner again sought one week time PSK,J & LNA, J

to produce documentary evidence through its letter dated

13.09.2019 and at the same time petitioner filed Form 560,

dated 13.09.2019 authorizing Sri M.Lokesh Prasad, Accountant

of its firm to receive sign any return/document/statements and

to receive notices, orders etc; It is further stated that despite

granting time, the petitioner did not cooperate with respondent

No.2 in producing documentary evidence in support of its claim

of exemption to finalize the assessment. In the attachment

enclosed to the email dated 07.08.2019, the petitioner stated

that their gross receipts in relation to works contract/painting

contract about 40%, 60% and 70% were towards labour

component, however, no evidence to this effect were filed before

respondent No.2.

14. It is also contended that as the petitioner was trying to

postpone or avoid assessment proceedings taken up by

respondent No.2 by seeking extension on various occasions

without submitting documentary evidence despite granting

adequate opportunities. Finally, respondent No.2 had passed

assessment orders for the assessment years 2013-14 to 2017-

18 in Form VAT 305 dated 21.11.2019. It is also contended that

as per the provisions of Section 16 of the TVAT Act, the burden

is on petitioner to prove that its purchases or sales are not PSK,J & LNA, J

liable to tax or liable to tax at the reduced rates with the

documentary evidence. Assessment order was sent to all the

addresses of the petitioner including the authorized

representative Mr.Lokesh Prasad, by RPAD.

15. It is further contended that the petitioner got an effective

alternative remedy of appeal under Section 31 of the TVAT Act,

2005 and instead of availing the same, it has filed the present

writ petition that too after expiry of time limit of 30 days for

filing statutory appeal. It is also contended that the petitioner

did not file Form 250 in terms of Section 4(7)(b) read with Rule

17(2) of TVAT Rules so as to assess under the composition

scheme. Therefore, the writ petition is liable to be dismissed.

16. Learned counsel for the petitioner would submit that the

petitioner, who is sub contractor to main contractors, opted to

pay tax under composition by filing Form VAT 250 in terms of

Section 4(7)(b) of TGVAT Act, 2005 r/w Rule 17(2) of TGVAT

Rules, 2005. It is contended that non response to the show-

cause notice and non production of records and file objections

within stipulated time was neither willful but only due to

difficulties faced by the petitioner. It is further contended that

respondent No.2 erred in inclusion of the receipts of labour PSK,J & LNA, J

contracts and even otherwise levy of tax at 14.5% without any

authority. It is also contended that the petitioner has an option

to approach the Appellate Deputy Commissioner, however,

since, it has the onerous condition of pre deposit of 12.5% and

no Appellate Authority would grant any stay at the first appeal

stage, therefore going before the Appellate Authority would be

an empty formality and would result in multiplicity of

proceedings.

17. It is finally contended that entire demand is artificial in

nature and as the petitioner is not in a position to deposit any

money due to its financial position, the petitioner may be

granted one opportunity enabling it to produce relevant

documents before respondent No.2 for fresh consideration.

18. Per contra, learned Standing Counsel for the respondent

would submit that the petitioner did not file Form 250 in terms

of Section 4(7)(b) r/w Rule 17(2) of TVAT Rules so as to assess

turnover of the petitioner under the composition scheme. He

further contended that despite granting opportunities to the

petitioner, he neither responded to the show-cause notice nor

produced any documents, evidence in support of claim of

exemption and only tried to bargain time. It is also contended PSK,J & LNA, J

that in the light of the judgment of the Hon'ble Supreme Court

in the case of the Assistant Commissioner (supra), the writ

petition is liable to be rejected.

19. He further contended that the notices, assessment orders

were sent through RPAD, it is one of the regular modes of

service under Rule 64 of the TVAT Rules. Further, the

respondents have sent additional notices and assessment

orders to the authorized representative Mr.Lokesh Prasad,

accountant of petitioner firm. As such, there is no merit in the

contention of the petitioner with regard to non-service of notices

and assessment order.

20. Learned Standing Counsel for the respondents further

contended that there is clear default on the part of the petitioner

and the petitioner failed to file the appeal before the Appellate

Authority within the stipulated time and approached this Court

after lapse of appeal period. Therefore, the petitioner is not

entitled to any relief and dispensation of appeal provision under

Section 31 of the TVAT Act, 2005 would render the legislature

scheme and its intention redundant. He finally contended that it

is a fit case for relegation to the Appellate Authority in terms of PSK,J & LNA, J

latest judgment of the Hon'ble Apex Court in the Civil Appeal

No.5121 of 2021 dated 03.09.2021.

21. Having considered the rival contentions and also the

material placed on record, it is evident that there is delay,

latches on the part of the petitioner in responding to the show-

cause notice as well as producing documents, evidence before

the Authority in support of its claim for exemption from tax. It is

also evident that the show-cause notice, assessment orders

were sent to all the addresses of the petitioner including the

authorized representative, accountant Mr.Lokesh Prasad, by

RPAD, which is proper service under Rule 64 of the TVAT Rules.

22. Admittedly, the petitioner did not avail remedy of filing

appeal before the Appellate Authority under Section 31 of the

TVAT Act, 2005 and further, the present writ petition is filed

beyond statutory appeal period. The Hon'ble Supreme Court in

the Assistant Commissioner's case (supra) held that since the

statutory period specified for filing of appeal had expired long

back in August 2017 itself and the appeal came to be filed by

the respondent only on 24.09.2018, without substantiating the

plea about inability to file appeal within the prescribed time, no

indulgence could be shown to the respondent at all.

PSK,J & LNA, J

23. In the above decision, the Hon'ble Apex Court also

referred to Full Bench decision rendered by the High Court of

Andhra Pradesh in Electronics Corporation of India v. Union

of India 2, wherein it was held that "In a given case, the

assessee may approach the High Court before the statutory

period of appeal expires to challenge the assessment order by

way of writ petition on the ground that the same is without

jurisdiction or passed in excess of jurisdiction -- by overstepping

or crossing the limits of jurisdiction including in flagrant disregard

of law and rules of procedure or in violation of principles of

natural justice, where no procedure is specified. The High Court

may accede to such a challenge and can also non-suit the

petitioner on the ground that alternative efficacious remedy is

available and that be invoked by the writ petitioner. However, if

the writ petitioner chooses to approach the High Court after

expiry of the maximum limitation period of 60 days prescribed

under Section 31 of the 2005 Act, the High Court cannot

disregard the statutory period for redressal of the grievance and

entertain the writ petition of such a party as a matter of course.

Doing so would be in the teeth of the principle underlying the

dictum of a three-Judge Bench of this Court in ONGC [ONGC v.

PSK,J & LNA, J

Gujarat Energy Transmission Corpn. Ltd., (2017) 5 SCC 42 :

(2017) 3 SCC (Civ) 47] In other words, the fact that the High Court

has wide powers, does not mean that it would issue a writ which

may be inconsistent with the legislative intent regarding the

dispensation explicitly prescribed under Section 31 of the 2005

Act. That would render the legislative scheme and intention

behind the stated provision otiose."

24. However, the three-Judge Bench decision of Hon'ble Apex

Court in ITC Ltd. V. Union of India 3, permitted the petitioner

therein to resort to remedy of statutory appeal and directed the

appellate authority to decide the appeal on merits considering

the difficulty expressed by the petitioner therein that the

statutory remedy of appeal had now become time-barred during

the pendency of the proceedings before the High court. It is

further observed that High Court permitted the petitioner to

avail the remedy of statutory appeal on the basis of concession

given by the counsel appearing for the revenue as noted in para

2 (1) of the order, which read thus:

"2. The High Court has dismissed the writ petition filed by the petitioner on the ground that there is an adequate alternative remedy by way of an appeal under Section 35 of the Central

2018 SCC Online Hyd 21 PSK,J & LNA, J

Excise Act. The learned counsel for the petitioner submits that the petitioner will face certain difficulties in pursuing this remedy:

(1) This remedy may not be any longer available to it because the appeal has to be filed within a period of three months from the date of the assessment order and delay can be condoned only to the extent of three more months by the Collector under Section 35 of the Act. It is pointed out that the petitioner did not file an appeal because the Collector (Appeal) at Madras had taken a view in a similar matter that an appeal was not maintainable. That apart, the petitioner in view of the huge demand involved filed a writ petition and so did not file an appeal. In the circumstances of the case, we are of the opinion that the ends of justice will be met if we permit the petitioner to file a belated appeal within one month from today with an application for condonation of delay, whereon the appeal may be entertained. The learned counsel for the Revenue has stated before us that the Revenue will not object to the entertainment of the appeal on the ground that it is barred by time. In view of this direction and concession, the petitioner will have an effective alternative remedy by way of an appeal. (emphasis supplied)

In that case, it appears that the writ petition was filed within statutory period and legal remedy was being pursued in good faith by the assessee (appellant)."

25. It is relevant to note that learned counsel for the

petitioner prayed this Court to remit the matter to Appellate

Authority and grant an opportunity to the petitioner to produce

documents, evidence in support of its contentions. It is also

relevant to note the contention of the respondent at paragraph

(1998) 8 SCC 610 PSK,J & LNA, J

No.18 of the counter, wherein it is contended that the present

case is fit case for relegation to the Appellate Authority in terms

of the judgment of the Hon'ble Supreme Court in Civil Appeal

No.5121 of 2021, dated 03.09.2021, as the issue involved in the

present matter relates to production of documentary evidence,

which is purely question of fact, not involving any law.

26. Whether the petitioner is entitled for exemption as

contended by the petitioner or it is liable to tax, has to be

adjudicated by the assessing officer by duly examining,

scrutinizing material and evidence placed by the petitioner. This

Court under Article 226 of the Constitution of India cannot

undertake such exercise. Therefore, without going into the

merits of the case, in the considered opinion of this Bench, the

writ can be disposed of by remanding back the matter to the

Appellate Authority for adjudication to meet the ends of justice.

27. In the light of the above discussions and peculiar facts

and circumstances, the impugned order dated 21.11.2019 for

the assessment years 2013-14 to 2017-18 is set aside and the

matter is remitted to Appellate Authority for fresh adjudication.

The petitioner shall appear before the authority within a period

of one month from the date of receipt of a copy of this order PSK,J & LNA, J

along with all the materials relied upon by it in support of its

contentions. The Appellate Authority shall adjudicate the matter

by duly affording an opportunity of hearing to the petitioner and

decide the issue in accordance with law within a period of three

[03] months from the date of receipt of a copy of this order.

28. Accordingly, the Writ Petition is disposed of. There shall

be no order as to costs. Pending miscellaneous applications if

any shall stand closed.

____________________________________ P.SAM KOSHY, J

____________________________________ LAXMI NARAYANA ALISHETTY, J

Date:12.01.2024 Dua/kkm