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2020 DIGILAW 459 (TS)

Infosys Limited v. Deputy Commissioner St Stuiii

2020-06-10

K.LAKSHMAN, M.S.RAMACHANDRA RAO

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JUDGMENT M.S.Ramachandra Rao, J. - This Writ Petition is filed by the petitioner questioning the Assessment Order dt.31.03.2020 passed by the 1st respondent which was received by the petitioner on 01.05.2020 by e-mail, and a signed copy of which was received by it on 21.05.2020 by post. 2. The petitioner is a Company engaged in the sale of Software and provision of IT services. 3. It is a registered dealer on the rolls of the 1st respondent under the provisions of the Telangana VAT Act and also the Central Sales Tax Act, 1996 (for short the CST Act ). It filed its returns under the VAT Act and CST Act reporting the turnovers and paying applicable tax thereon. 4. Petitioner contends that for the year 2015-16 under the CST Act, the petitioner reported the turnovers; that the exports are not liable to tax under the CST Act; and that the inter-State sales of software is shown as Rs.39,47,93,331/- and tax at 5% was paid thereon. 5. The 1st respondent took up the assessment of the petitioner for the year 2015-16. 6. The petitioner by letter dt.19.03.2019 filed the details of the turnover of CST, export and exempted sales for the year. The petitioner states that it also filed the sample invoice copies of the exempted and export turnover. 7. The 1st respondent issued a show cause notice by email on 13.06.2019 adopting the turnovers which represent the highest figure between the CST returns/waybills and the TINXSYS records for the year 2015-16. 8. Petitioner contends that the 1st respondent adopted the gross turnover as Rs.9475,63,11,243/- and proposed to levy tax at 14.5% on the entire turnover without considering the exemptions claimed towards direct exports, branch transfer and CST collections under the CST Act. 9. The petitioner by letter dt.28.06.2019 drew the attention of the 1st respondent to the details submitted on 19.03.2019. 10. The petitioner received hearing notice from the 1st respondent on 07.03.2020 along with an annexure containing details of the turnover considered for assessment. The petitioner once again on 11.03.2020 replied to the notice referring to the turnovers statement filed on 19.03.2019. 11. The petitioner was informed over phone to appear for personal hearing. The petitioner gave a mail on 30.03.2020 that it is not able to file online response due to technical glitches. The screenshot of the same was also filed with the mail. 12. 11. The petitioner was informed over phone to appear for personal hearing. The petitioner gave a mail on 30.03.2020 that it is not able to file online response due to technical glitches. The screenshot of the same was also filed with the mail. 12. The petitioner once again made request orally on phone on 31.03.2020 to postpone the personal hearing due to lockdown announced by the Government of Telangana and Government of India due to outbreak of COVID-19. 13. The petitioner gave another email also on 13.04.2020 that it is unable to attend personal hearing due to nationwide lockdown and that the online response also could not be submitted due to technical glitch on the portal. The petitioner requested the 1st respondent to take up personal hearing after normalcy is restored. 14. But the impugned order dt.31.03.2020 was passed by the 1st respondent and it was served on the petitioner on the same day. Contentions of Counsel for petitioner 15. Counsel for the petitioner contended that in the impugned order, the export turnover is considered at Rs.9429.00 crore and given exemption, but the turnover for September, 2015 was not considered by the 1st respondent. He also contended that inter-State turnover was wrongly taken as Rs.41,24,45,939/- instead of Rs.39,47,93,331/- and though the entire turnover is liable to tax at 5% as sale of software and reported accordingly, the 1st respondent assessed the turnover to tax at 14.5%. According to the counsel for the petitioner, there is an artificial liability due to higher rate of tax in a sum of Rs.4,00,64,995/-; turnover of Rs.5.27 crore was not reported in the returns as it represents branch transfers to other States in respect of promotional items like T-shirts, employee gifts etc.; though there is no sale to any other person, the levy is imposed alleging absence of documentary evidence; and CST collections of Rs.1.97 crore was admitted by the 1st respondent to be exempted turnover. 16. Counsel for the petitioner also contended that the petitioner was advised to file rectification application to correct the errors in the assessment and it did file such a letter on 07.05.2020 but the 1st respondent did not take any action thereon. 17. 16. Counsel for the petitioner also contended that the petitioner was advised to file rectification application to correct the errors in the assessment and it did file such a letter on 07.05.2020 but the 1st respondent did not take any action thereon. 17. More importantly, counsel for the petitioner contended that the impugned Assessment order was passed on the last day when the limitation to make such assessment was to expire i.e 31.3.2020; and that if the 1st respondent taken up assessment much earlier having received documents in March, 2019 itself and issued show-cause notice in June, 2019, the petitioner would have had a reasonable opportunity to make its submissions. Contentions of the respondents 18. Sri J.Anil Kumar, Special Counsel for Commercial Taxes contended that the petitioner was given reasonable opportunity by the 1st respondent and in any event the petitioner has a remedy of appeal under the CGST Act which the petitioner ought to avail. Consideration by the Court 19. From the contentions of the counsel for the petitioner and the material placed on record, it is apparent that the impugned order dt.31.03.2020 was passed by the 1st respondent on the very last day for making such assessment i.e., 31.03.2020 for the period April, 2015 to March, 2016. 20. Though the 1st respondent had initiated the process through a show-cause notice on 13.06.2019, and the petitioner had responded thereto on 28.06.2019, but the 1st respondent fixed the first date of hearing as 07.03.2020 to which the petitioner replied on 11.03.2020. Thereafter, on 30.03.2020, the petitioner informed the 1st respondent that online response could not be given due to technical glitches and even made a request orally on telephone on 31.03.2020 to postpone the personal hearing due to lockdown announced by the Government of Telangana and Government of India due to outbreak of COVID-19. 21. Standing counsel appearing for the 1st respondent does not dispute that there was lockdown announced by the Government of Telangana as well as the Government of India which was lifted partially only in May, 2020 and it would not have been possible for the petitioner s Representative to attend the personal hearing to explain its stand on 16.03.2020. 22. 21. Standing counsel appearing for the 1st respondent does not dispute that there was lockdown announced by the Government of Telangana as well as the Government of India which was lifted partially only in May, 2020 and it would not have been possible for the petitioner s Representative to attend the personal hearing to explain its stand on 16.03.2020. 22. The petitioner s Representative could not be blamed for not attending the personal hearing given by the 1st respondent due to such lockdown, more particularly when the online response also could not be submitted due to technical glitches on the portal of the 1st respondent. 23. However, since the time fixed for making the assessment was to expire on 31.03.2020, without providing a personal hearing as sought by the petitioner on the phone on 31.03.2020, the impugned order was passed. 24. According to the counsel for the petitioner, several errors were also committed by the 1st respondent in the impugned order of Assessment passed on 31.03.2020. 25. It appears that on account of lack of time in view of the impending lapsing of limitation for making the assessment, not only was the petitioner denied proper opportunity to personally represent its case before the 1st respondent but also errors might have crept into the order of the 1st respondent passed on 31.03.2020. 26. In these circumstances, we hold that proper opportunity was denied to the petitioner to represent its case and there has been violation of principles of natural justice inasmuch as personal hearings were fixed on 16.03.2020 for the first time during lockdown period disabling the petitioner and causing serious prejudice to the petitioner. 27. Therefore, the existence of alternative remedy of appeal available to the petitioner to challenge the impugned order of Assessment dt.31.03.2020 cannot be a bar for the petitioner to avail the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. 28. Accordingly, the Writ Petition is allowed; the impugned order of Assessment A.O.No.53433 dt. 31.03.2020 by the 1st respondent is set aside; and the matter is remitted back to the 1st respondent to consider the matter afresh after giving personal hearing to the petitioner and to decide within a period of two (2) months from the date of receipt of a copy of this order. 29. Pending miscellaneous petitions, if any, in this Writ Petition shall stand closed. No costs.