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2020 DIGILAW 727 (TS)

I Kon Associates v. State Of Telangana

2020-10-08

M.S.RAMACHANDRA RAO, T.AMARNATH GOUD

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JUDGMENT M.S.Ramachandra Rao, J. - Heard the learned counsel for the petitioner and Sri J.Anil Kumar, learned Special Counsel for Commercial Taxes for the respondents. 2. In this Writ Petition, the petitioner assails the Assessment Order No.32931 dt.20.03.2020 passed by the 3rd respondent for the tax period 2014-15 to 2017-18 (up to June, 2017). 3. The petitioner is a partnership firm and a registered dealer on the rolls of the 3rd respondent under the provisions of the T.S. VAT Act, 2005. The petitioner is engaged in the business of purchase and sale of agricultural implements and HDPE woven sacks. 4. The 3rd respondent audited the books of accounts of the petitioner partnership firm on the authorization issued by the 2nd respondent for the above tax period. 5. Thereafter, the 3rd respondent issued a show-cause notice dt.16.12.2019 proposing to (i) levy tax by adding an estimated turnover of 25% to the allowable sales turnover reported by the petitioner, (ii) to disallow the exemption claim made by the petitioner on the sale of agricultural implements on the ground that the petitioner did not furnish documentary evidence, and (iii) to disallow input tax credit for want of production of purchase bills alleging that there is a variation between the turnover reported and the books of accounts. This show-cause notice was served on the petitioner on 19.12.2019. 6. The petitioner contends that it filed all details and statements at the time of assessment though it could not file a reply to the show-cause notice. 7. On 20.03.2020, the impugned Order was passed confirming the show-cause notice and raising a demand of VAT of Rs.1,28,54,593/- on the ground that the petitioner did not reply to the show-cause notice with documentary evidence. 8. The learned counsel for the petitioner contended that the estimation of turnover by the 3rd respondent is arbitrary and unjustified since the petitioner was maintaining statutory books of accounts duly disclosing the sales turnover and the petitioner had purchased goods from local VAT registered dealers covered by tax invoices on which input tax credit was claimed by the petitioner. He also contended that the petitioner accounted for all the sales in the books of accounts and paid the tax correctly and that the addition of turnover by the 3rd respondent is not correct and justified. He also contended that the petitioner accounted for all the sales in the books of accounts and paid the tax correctly and that the addition of turnover by the 3rd respondent is not correct and justified. It is also contended that the impugned Assessment Order was passed without giving a reasonable opportunity to the petitioner to submit detailed objections to the allegations made in the show-cause notice. The petitioner claimed that on account of Corona Virus pandemic, staff were not attending regularly in March, 2020 and proper reply with documentary evidence could not be submitted to the 3rd respondent before passing of the impugned Order. According to him, no tax could have been levied on agricultural implements which are exempt from tax. 9. Sri J.Anil Kumar, learned Special Counsel for Commercial Taxes appearing for the respondents stated that the petitioner ought to have filed a response to the show-cause notice and because of failure of the petitioner to do so, the assessment was made on best judgment basis. 10. The learned Standing Counsel did not dispute that the petitioner had filed details of the sales during the financial year 2014-15, 2015-16, 2016-17 and 2017-18 up to June, 2017 before the 3rd respondent. But there is no consideration of the same in the impugned Order. 11. It was incumbent on the 3rd respondent to consider the said material placed before him by the petitioner before passing the impugned Order. 12. Merely because the petitioner did not file written objections to the show-cause notice, the 3rd respondent could not have ignored the material placed by the petitioner before the 3rd respondent while passing the impugned Order. 13. Therefore, the Writ Petition is allowed subject to the petitioner depositing 12.5% of the tax determined pursuant to the impugned Assessment Order No.32931 dt.20.03.2020 before the 3rd respondent within a period of two (2) weeks from the date of receipt of a copy of this order; the impugned Assessment Order No.32931 dt.20.03.2020 passed by the 3rd respondent is set aside; the petitioner is granted two (2) weeks time from date of receipt of a copy of this order to file written objections along with supporting material before the 3rd respondent; the 3rd respondent is directed to provide a personal hearing to the petitioner; and then pass a reasoned order in accordance with law and communicate it to the petitioner. No costs. 14. No costs. 14. Pending miscellaneous petitions, if any, in this Writ Petition shall stand closed.