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2022 DIGILAW 1087 (AP)

CNC and Company v. Commercial Tax Officer

2022-10-20

A.V.RAVINDRA BABU, C.PRAVEEN KUMAR

body2022
ORDER : C. Praveen Kumar, J. 1. The present Writ Petition came to be filed seeking issuance of Writ of Mandamus to declare the action of the first Respondent in issuing Endorsement Proceedings, dated 26.08.2019, rejecting the refund of excess tax of Rs. 19,10,799/- due to the Petitioner as per the Assessment Proceedings, dated 25.10.2014, for tax period 2010-11 and 2011-12 under the Andhra Pradesh Value Added Tax Act, 2005, as arbitrary, contrary to the provisions of the Act and in violation of principles of natural justice and consequently to direct the Respondents to refund the excess tax due to the Petitioner, as per the Assessment Proceedings. 2. (i) The Petitioner herein is a Proprietorship concern, engaged in business of Works Contract. The Head Office of the Petitioner is in Dindigul, State of Tamilnadu. The Petitioner was a registered dealer on the rolls of first Respondent, both under the Central Sales Tax Act, 1956 and under the Andhra Pradesh Value Added Tax Act, 2005 [‘VAT Act’], with its local Office at Naidupeta Mandal, Nellore District. 3. The Petitioner is said to have executed civil contract works, as per the Work Order, dated 03.04.2010, to the Contractee, namely, Loyal Textile Mills Limited, at Menakur Village, Naidupeta Mandal, Nellore District. 4. While things stood thus, pursuant to the authorization given by Deputy Commissioner, Nellore, the first Respondent i.e., The Commercial Tax Officer, Gudur, inspected the business premises of the Petitioner at Menakur Village on 29.08.2012 and, thereafter, completed the assessment vide Proceedings, dated 25.10.2014, for the tax periods referred to above. 5. The first Respondent herein is said to have passed Assessment Order, dated 25.10.2014, holding that the Petitioner is having an excess credit of Rs.19,10,799/-, which came to be passed after verification of the records up to the audit period of 31.03.2012. A Notice of Assessment in FORM 305A was issued and served on the dealer. On receipt of the notice, the dealer submitted a letter, accepting the proposal and requested the concerned to pass orders. Thereafter, the second Respondent in exercise of suo muto revisional powers under Section 32(2) of the VAT Act, proposed to revise the assessment proceedings passed by the first Respondent and a show-cause notice, dated 30.04.2018, was issued. The Petitioner is said to have filed objections, dated 13.06.2018. Thereafter, the second Respondent in exercise of suo muto revisional powers under Section 32(2) of the VAT Act, proposed to revise the assessment proceedings passed by the first Respondent and a show-cause notice, dated 30.04.2018, was issued. The Petitioner is said to have filed objections, dated 13.06.2018. Thereafter, the second Respondent fixed the date of personal hearing, vide notice, dated 18.06.2018, and heard the Petitioner on 17.07.2018. He also issued another notice, dated 20.03.2019, stating that under Section 13(3) of the VAT Act, when the Petitioner has claimed ITC, he should not have been in possession of valid tax invoices for the material supplied, on cost recovery basis. 6. In response to the same, the Petitioner sent a letter, dated 08.03.2019, in which, he explained the reasons that the material was supplied to the Petitioner on cost basis and the same is inclusive of tax. Thus, the value of the material along with the tax component was deducted from the total receivable amount due to the Petitioner from the Contractee, hence, requested to exclude the tax component from the disputed turnover and allow the benefit of input tax credit. But, for the reasons best known, the Order was not communicated to the Petitioner. Hence, the Petitioner claims to have met personally and explained the case in detail before the second Respondent. But, in-spite of the same, the Petitioner did not receive any communication till date. 7. On 03.08.2019, the Petitioner made a request to the first Respondent seeking refund of Rs.19,07,799/-. At that point of time, an Endorsement, dated 26.08.2019, came to be issued, wherein the request of the Petitioner, for refund, came to be rejected. The same is subject matter of challenge in the present Writ Petition. 8. (i) Sri. Shaik Jeelani Basha, learned Counsel for the Petitioner, mainly submits that, the action of the first Respondent in not refunding the due amount and rejecting the claim in a summary manner is bad in law. (ii) The learned Counsel would contend that, the first Respondent was totally in error in holding that, for the tax period 01.04.2012 to 31.12.2016, there was no assessment, for which the Petitioner shall not be penalized, in this manner. (ii) The learned Counsel would contend that, the first Respondent was totally in error in holding that, for the tax period 01.04.2012 to 31.12.2016, there was no assessment, for which the Petitioner shall not be penalized, in this manner. He also found fault with the observations in the Order to the affect that, as per Section 21(4) of the VAT Act, the Assessing Authority can conduct a detailed scrutiny of the accounts on any VAT dealer or TOT dealer and where any assessment, as a result of such scrutiny becomes necessary, such assessment shall be made within a period of four years. According to him, the Assessing Authority has no power to conduct the VAT audit for the tax period 01.04.2012 to 31.03.2015 to certify the excess tax credit. For all the aforesaid reasons and, more particularly, having regard to the fact that the Assessing Authority in its initial order, dated 25.10.2014, found that there was excess amount to the credit of the Petitioner, pleads that a direction may be given for refund of the amount. 9. A counter came to be filed by the first Respondent disputing the averments made in the affidavit filed in support of the Writ Petition. In reply to paragraph No. 5, it is stated that, the Deputy Commissioner, has issued a notice of personal hearing dated 18.06.2018 and also final notice, dated 20.03.2019, to which the Petitioner filed his replies and also appeared personally and explained the case in detail. After receiving the reply from the Petitioner, the Deputy Commissioner, Nellore, dropped the revision proceedings. It would be appropriate to extract the same, which is as under: “The Deputy Commissioner (CT), Nellore, has issued Notice of personal hearing, dated 18.06.2018 and also final notice, dated 20.03.2019, to the Petitioner. In response to the Notices, the Petitioner filed their replies on 13.06.2018, dt. 11.02.2019 and dt. 08.03.2019 and also appeared personally and explained the details of the case. After receiving the sufficient reply from the Petitioner, the Deputy Commissioner (CT), Nellore, has dropped the revision proceedings.” 10. Insofar as the averments in paragraph No. 6 are concerned, it is stated that, the Commercial Tax Officer, Nellore, has finalized the VAT audit for the tax period from 2010-11 to 2011-12 on 25.10.2014, by declaring an excess credit of Rs.19,07,999/-. But, however, the Petitioner has not approached the first Respondent for processing the refund. Insofar as the averments in paragraph No. 6 are concerned, it is stated that, the Commercial Tax Officer, Nellore, has finalized the VAT audit for the tax period from 2010-11 to 2011-12 on 25.10.2014, by declaring an excess credit of Rs.19,07,999/-. But, however, the Petitioner has not approached the first Respondent for processing the refund. In-stead, he filed a letter, dated 09.03.2018, stating that, he has shifted the local Office to head Office in the State of Tamilnadu, as the work in Andhra Pradesh, has been completed and the registration was also cancelled on 02.01.2017. The first Respondent is unable to come to a conclusion as to whether the Petitioner is having excess credit or tax liability as on 02.01.2017. In view of the above, it is pleaded that, question of refund of the entire amount cannot be ordered till assessment for the period 01.04.2012 to 02.01.2017, is done. 11. From a perusal of the averments, in the counter, it is clear that, in the Order of the Assessing Authority, dated 25.10.2014, it has been held that the Petitioner is having excess credit to a tune of Rs.19,10,799/-. But the Deputy Commissioner, suo-motu took up the case invoking power under Section 32(2) of the VAT Act. After perusing the reply submitted by the Petitioner and after hearing the Petitioner, the Deputy Commissioner has dropped the revision proceedings. Therefore, the Order of the Assessing Authority holding that there is a excess credit to a tune of Rs.19,10,799/-, has become final. 12. At this stage, it is to be noted that, the registration of the Petitioner came to be cancelled on 02.01.2017. In the month of March, 2018, the Petitioner addressed a letter to the first Respondent stating that, he has shifted the local Office to head Office in Tamilnadu, as the work in Andhra Pradesh is completed. 13. It is the case of the Petitioner that, no work was done from 31.03.2012 till the date of cancellation of registration on 02.01.2017. It appears that, no returns were also filed during that period. While the argument of Sri. Y.N. Vivekananda, learned Government Pleader for Commercial Tax, is that, without assessing the Petitioner under VAT Act for the tax period 01.04.2012, it would be difficult for the authorities to refund the entire Rs.19,10,799/-, which cannot be brushed aside, at this stage. 14. It appears that, no returns were also filed during that period. While the argument of Sri. Y.N. Vivekananda, learned Government Pleader for Commercial Tax, is that, without assessing the Petitioner under VAT Act for the tax period 01.04.2012, it would be difficult for the authorities to refund the entire Rs.19,10,799/-, which cannot be brushed aside, at this stage. 14. Having regard to the above, the first Respondent herein is directed forthwith to issue notice to the Petitioner for assessing the case of the Petitioner, if permissible under law, for the period 01.04.2012 till date of cancellation, and if the authority is of the view that there is still time left for passing assessment Orders, in which event, the same may be done within the time prescribed, after giving an opportunity of personal hearing to the Petitioner. If nothing happens within the time prescribed or if no orders are passed within the period of limitation prescribed for passing assessment order, the Respondents are directed to return the excess credit of Rs.19,07,999/- to the Petitioner, in accordance with the procedure established by law. 15. With the above direction, the Writ Petition is disposed of. No order as to costs. 16. As a sequel, interlocutory applications, if any, pending shall stand closed.