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2020 DIGILAW 585 (TS)

Feno Plast Limited v. Commercial Tax Officer

2020-07-30

M.S.RAMACHANDRA RAO, T.AMARNATH GOUD

body2020
JUDGMENT M.S. Ramachandra Rao, J. - In this Writ Petition the petitioner assails the Revision Order in CCT.RAF.No.LIII(2), 320/2019 dt.30.03.2020 passed by the 3rd respondent. 2. The petitioner is a registered dealer under the provisions of the Central Sales Tax Act, 1956 and is an assessee on the rolls of the 1st respondent. 3. It is engaged in the business of manufacture and sale of PVC rexin cloth, cellular sheets, PVC Film, etc. 4. For the assessment year 2012-13, the 1st respondent finally assessed the petitioner under the Central Sales Tax on 31.03.2016 levying tax on inter-State sales on rexin cloth, Tarpauline cloth and PVC cloth under Section 8(2) of the Central Sales Tax Act read with Entry-86 in the IV Schedule of the Telangana VAT, 2005, rejecting the contention of the petitioner that the above products should be classified as "cotton connected fabrics/ man-made fabrics" covered by G.O.Ms.No.2328, Revenue Department dt.13.12.1957. 5. Subsequently, by separate proceedings dt.07.09.2016, the 1st respondent revised his earlier order dt.31.03.2016 wherein he has considered certain declaration forms and allowed concessional rate of tax. 6. Aggrieved by the said Assessment Order, the petitioner preferred appeal before the 2nd respondent raising the same contention which had been put forth by the petitioner before the assessing authority. It contended that the inter-State sales of cotton fabrics are exempt from tax by virtue of the above G.O. issued by the Government of Andhra Pradesh in exercise of its powers conferred on them under Section 8(5) of the Central Sales Tax Act, and that the said G.O. had not been rescinded so far. 7. Accepting the contentions of petitioner, the 2nd respondent remanded the matter vide Appeal Order No.S/27/2016-17/CST dt.24.03.2017 to the assessing authority and directed the assessing authority to allow exemption on the turnover relating to inter-State sales of rexin cloth in terms of the said G.O. as it had not been rescinded so far. 8. The 1st respondent gave effect to the Appeal Order in revised proceedings dt.24.03.2018 duly allowing exemption on the inter-State sales of rexin cloth in terms of the above G.O. 9. The 3rd respondent however issued a show-cause notice dt.09.08.2019 proposing revision of the above orders passed by the assessing authority as well as the appellate authority by invoking powers under Section 32(2) of the Telangana VAT Act, 2005 read with Section 9(2) of the Central Sales Tax Act, 1956. The 3rd respondent however issued a show-cause notice dt.09.08.2019 proposing revision of the above orders passed by the assessing authority as well as the appellate authority by invoking powers under Section 32(2) of the Telangana VAT Act, 2005 read with Section 9(2) of the Central Sales Tax Act, 1956. The 3rd respondent was of the opinion that the rexin cloth is taxable at 5% since it is specifically mentioned in Entry-86 of the IV Schedule to the Telangana VAT Act, 2005 and that the 2nd respondent had erred in directing the 1st respondent to allow exemption on the inter-State sales of rexin cloth. He also observed that the 2nd respondent had erred in not considering the ruling rendered by the Advance Ruling Authority in the petitioner's own case vide proceedings in ARCOM/54/2013 dt.28.01.2015 holding that rexin / PVC cloth manufactured by the petitioner would fall under Entry 86 in IV Schedule and was liable to tax at the rate of 5% and which ruling was binding on the authorities of the Department under Section 67 of the Telangana VAT Act. The 3rd respondent also proposed to levy tax in respect of difference of turnover on export sales taking into account the exemption of turnover granted under the VAT Act and the turnover considered under the Central Sales Tax Act. 10. According to the petitioner, there is no difference of turnover as alleged, and the turnover mentioned in the VAT order was a mistake, and the petitioner also did not notice it since the entire turnover was exempted under the VAT Act in reference to export sales. 11. According to the petitioner, the show-cause notices issued by the 3rd respondent relate to two Assessment Orders 2011-12 and 2012- 13, and both were posted on the same dates for filing objections and for personal hearing, but the petitioner could file objections only in respect of Assessment Order 2011-12 and could avail personal hearing on 13.01.2020 but could not respond in respect of the other Assessment year 2012-13 because of a communication gap. 12. The 3rd respondent however confirmed the proposed revisions for both the years by separate orders dt.18.01.2020 and 30.03.2020. 13. 12. The 3rd respondent however confirmed the proposed revisions for both the years by separate orders dt.18.01.2020 and 30.03.2020. 13. It is contended by the counsel for petitioner that the Advance Ruling followed by the 3rd respondent had been disputed by the petitioner before the Tribunal under the VAT Act, and therefore, the said Advance Ruling was not in operation and was not binding on the authorities. According to the petitioner, so long as the said Appeal is not decided the ruling of the Advance Ruling Authority cannot be enforced and that it operates as a 'Stay' automatically. The petitioner relied upon the decision of the High Court of Andhra Pradesh in Ms. RAK Ceramics (India) Pvt. Ltd. vs. The Assistant Commissioner of Commercial Taxes - VI, Enforcement Wing, Hyderabad, and others, 57 A.P.S.T.J. 53 in this regard. 14. According to the petitioner, it informed the 3rd respondent through e-mail dt.29.03.2020 in response to a hearing notice issued by the 3rd respondent that its office had been under a total closure due the lockdown declared by the Government on account of COVID-19 pandemic and it could not receive any documents or statements or information, and to postpone hearing of the matter by (15) days till restoration of normalcy, but the 3rd respondent did not even advert to it, and straightaway passed the impugned order dt.30.03.2020 without giving any reasons. 15. The counsel for petitioner also placed strong reliance on the decision of the Supreme Court in Reliance Trading Company Kerala vs. State of Kerala,2011 15 SCC 762 and contended that in a similar situation in the State of Kerala in relation to cotton based tarpauline, the Supreme Court had held that when there are two taxing Entries the principle that the Specific Entry would have to be given priority as compared to the General Entry would have no application, and counsel for the petitioner contended that where the goods had been granted a special exemption as in the instant case under the G.O. No.2328 (referred to above) dt.13.12.1957, the assessee is entitled to the benefit of the said special exemption. 16. The counsel also placed reliance on an un-reported decision of this Court dt.12.08.2014 in T.R.C.No.186/1998 taking a similar view and contended that this decision also was not considered by the 3rd respondent. 17. 16. The counsel also placed reliance on an un-reported decision of this Court dt.12.08.2014 in T.R.C.No.186/1998 taking a similar view and contended that this decision also was not considered by the 3rd respondent. 17. A reading of the impugned revisional order passed by the 3rd respondent indicates that there is no reference in the said order to the request made by the petitioner on 29.03.2020 through e-mail for grant of time to attend the personal hearing for the year 2012-13. Admittedly, at that point of time, there was a lockdown declared by the Central Government and the State Government which was in force and naturally the petitioner would be disabled from attending the personal hearing before the 3rd respondent. The 3rd respondent, therefore, ought to have adjourned the mater. 18. But, apparently, since the limitation was going to expire for making Revision by 30.03.2020, the impugned Assessment Order was passed by the 3rd respondent. 19. A striking feature of the impugned order is that there are no reasons contained in it and it simply stated that the Revision show-cause notice dt.09.08.2019 is confirmed. There is no reference to the above decisions relied upon by the petitioner at all. 20. Sri J. Anil Kumar, learned Special Counsel for Commercial Taxes, appearing for respondents, is unable to explain why the impugned revisional order passed by the 3rd respondent contains no reasons and he frankly admitted that in view of the limitation getting expired for Revision by 30.03.2020, the 3rd respondent passed the revisional order without affording a personal hearing to the petitioner though the petitioner requested for the same on 29.03.2020 through email. 21. Having regard to the above circumstances, we are of the opinion that the matter requires re-examination by the 3rd respondent and that the petitioner has to be afforded a personal hearing by the 3rd respondent and the decisions relied upon by the petitioner referred to above as well as others referred to in the Writ Petition affidavit require consideration by the 3rd respondent. 22. Accordingly, the Writ Petition is allowed. The impugned revisional order dt.30.03.2020 passed by the 3rd respondent as well as the consequential order dt.31.03.2020 passed by the 5th respondent are both set aside. The matter is remanded to the 3rd respondent to pass a fresh revisional order. 23. 22. Accordingly, the Writ Petition is allowed. The impugned revisional order dt.30.03.2020 passed by the 3rd respondent as well as the consequential order dt.31.03.2020 passed by the 5th respondent are both set aside. The matter is remanded to the 3rd respondent to pass a fresh revisional order. 23. The petitioner is granted four (04) weeks' time to file its objections along with supporting material before the 3rd respondent opposing the proposed revision by the 3rd respondent; the 3rd respondent shall provide personal hearing to the petitioner; the 3rd respondent shall also consider the decisions in Reliance Trading Company (2 supra) and the order dt.12.08.2014 in T.R.C.No.186 of 1998 and other decisions cited by the petitioner, and then pass a reasoned order in accordance with law and communicate it to the petitioner. 24. Accordingly, the Writ Petition is allowed as above. No order as to costs. 25. As a sequel, miscellaneous petitions pending if any in this Writ Petition, shall stand closed.