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2022 DIGILAW 1093 (AP)

Triveni Homes v. Deputy Commercial Tax Officer I

2022-10-20

A.V.RAVINDRA BABU, C.PRAVEEN KUMAR

body2022
ORDER : (C. Praveen Kumar, J.) 1. Assailing the Order, passed by the first Respondent, dated 22.01.2022, relating to tax periods 2015-16 and 2016-17 under the Andhra Pradesh Value Added Tax Act, 2005, the present Writ Petition is filed. 2. The facts, in issue, are as under : (i) The Petitioner herein was a registered dealer under the Andhra Pradesh Value Added Tax Act, 2005 [“VAT Act”], on the rolls of 2nd Respondent herein [The Commercial Tax Officer, Anantapuram Circle-II], doing business in execution of Works Contracts as a Builder. It is said that, the Petitioner was paying tax regularly and so also filing monthly returns. (ii) The Petitioner is said to have opted for a Composition Scheme under Section 4(7)(d) of the VAT Act, by filing Form VAT 250 and, accordingly, submitted returns and paid taxes under the said Scheme on the entire receipts towards works contracts, without claiming any Input Tax Credit. (iii) It is averred in the affidavit filed in support of the Writ Petition that, for the tax periods 2014-15 to 2017-18, the first Respondent, on an authorization given by Deputy Commissioner (CT), Anantapuramu District, conducted audit on the Petitioner and on further authorization from the Deputy Commissioner (CT), passed Assessment Order, dated 06.05.2019, assessing the Petitioner to pay tax at the rate of Rs.19,55,785/-. (iv) Aggrieved by the same, the Petitioner preferred an Appeal under Section 31 of the VAT Act, vide Appeal No.16/2019-20 (ATP), before the Appellate Deputy Commissioner (CT), Tirupathi. On 22.10.2020, the said Appeal was disposed of setting aside the Assessment Order passed by the first Respondent and consequently remanded the matter to the concerned Assessing Authority. Challenging the same, the present Writ Petition came to be filed mainly on two grounds; firstly the Order passed by the first Respondent was without jurisdiction as he is not the Officer having territorial jurisdiction over the dealer, and secondly - though the Appellate Authority gave a positive finding stating that the Assessing Authority has levied tax on the material purchased by the Appellant by adding profit, which is wrong on his part, still on remand, the Assessing Authority passed the Order without taking into consideration the findings given by the Appellate Authority while remanding the matter back, which would amount to double taxation. 3. (i) Sri. 3. (i) Sri. G. Narendra Chetty, learned Counsel appearing for the Petitioner, mainly submits that, the first Respondent is not having any authority to assess the case of the Petitioner, as the second Respondent is the Officer having territorial jurisdiction to assess the case of the Petitioner. He further submits that, the Order of remand clearly indicate that the matter was directed to be heard by the ‘concerned Assessing Authority’ and that the first Respondent is not the ‘concerned Assessing Authority’. He took us through Rule 59(1) of the A.P. VAT Rules, 2005, [‘VAT Rules’] to show that the first Respondent has no jurisdiction to pass the impugned assessment. (ii) The learned Counsel also submits that, a reading of the Remand Order would clearly indicate that the Assessing Authority while passing the impugned order did not take into consideration the findings given therein and erred in imposing VAT, on purchase of the goods utilized in the execution of said Works Contracts by adding estimated G.P. thereon and arriving at estimated sale value, which would be double taxation on the same goods. 4. (i) The same is opposed by Sri. T.C.D. Sekhar, learned Government Pleader for Commercial Tax, appearing for Respondents, stating that the proper remedy for the Petitioner would be to prefer an appeal against the Order impugned instead of filing a Writ Petition. According to him, in the earlier round of litigation, the Petitioner filed an Appeal and, that being so, there is no reason why the Petitioner failed to prefer an appeal against the impugned Order. (ii) He further submits that, the date of option for Composition was with effect from 10.06.2015 and the material purchased was prior to Composition Scheme, which is liable to tax. He further submits that, initially the assessment was done by the Deputy Commercial Tax Officer – I, Anantapuramu Circle-II, and on remand, the very same Officer has assessed the case of the Petitioner, in terms of the Order of Remand and, as such, it cannot be said that there was any illegality. He also took us through Rule 59 of the VAT Rules, to contend that, there is no illegality in the Order. In view of the above, he would submit that the Order under challenge requires no interference. 5. In reply, Sri. He also took us through Rule 59 of the VAT Rules, to contend that, there is no illegality in the Order. In view of the above, he would submit that the Order under challenge requires no interference. 5. In reply, Sri. G. Narendra Chetty, learned Counsel appearing for the Petitioner, would submit that, though some of the material was purchased earlier to 2015, but the same was used for construction of building and after completion of the same, it was sold by paying tax. Therefore, the finding given by the Assessing Authority that material purchased prior to Composition Scheme is liable to be taxed, is incorrect. 6. The point that arises for consideration is:- (i) Whether the first Respondent was right in passing the Assessment Order? (ii) Whether the Assessing Authority was justified in giving the same findings, which were set-aside by the Appellate Authority? 7. In order to appreciate the same, it would be useful to refer to few provisions of law. 8. Clause (a) of Section 4(7)(d) of VAT Act states that, “every dealer executing works contracts shall pay tax on the value of goods at the time of incorporation of such goods in the works executed at the rates applicable to the goods under the Act.’ Provided that where accounts are not maintained to determine the correct value of goods at the time of incorporation, such dealer shall pay tax at the rate specified in Schedule-V on the total consideration received or receivable subject to such deductions as may be prescribed.” 9. Section 4(7)(d) of VAT Act, contemplates that, “every dealer engaged in construction and selling of residential apartments, houses, buildings or commercial complexes may, in lieu of the amount of tax payable by him under clause (a) opt to pay tax by way of composition at the rate of 5% of twenty five percent (25%) of the consideration received or receivable or the market value fixed thereof for the purpose of stamp duty whichever is higher subject to such conditions as may be prescribed.” 10. At this stage, it would be appropriate to refer to Rules 17(4)(b) and 17(4)(e) of the VAT Rules, which are as under:- “Rule 17(4)(b) – where a dealer executes a contract for construction and selling of residential apartments, houses or commercial complexes and opts to pay tax by way of composition, before the commencement of execution of work, the VAT dealer shall notify the prescribed authority on Form VAT-250 of his intention to avail composition for all works specified in Clause (a) above, undertaken by him. Rule 17(4)(e) – “the VAT dealer executing the contract mentioned in clause (a) of this sub-rule, shall calculate the tax due at the rate of 5% of the 25% of the total consideration or the market value fixed for the purpose of the Stamp Duty, whichever is higher, and shall enter such details in Form VAT-200, filed for the month in which the sale of such property is concluded and registered. The tax due shall be paid with the return in Form VAT-200 and the particulars of payment of tax made directly or through the sub-registrar shall be reported in the relevant columns in Form VAT-200.” 11. A reading of the above would make it clear that, before the commencement of execution of work, the VAT dealer shall notify the prescribed authority in Form VAT-250 of his intention to avail composition for all the works specified in Clause (a), undertaken by him. He shall also calculate the tax due and shall enter such details in Form VAT-200, filed for the month in which the sale of such property is concluded and registered. 12. It is an undisputed fact that, the dealer opted for Composition Scheme and filed Form VAT 250 on 10.06.2015, wherein, the dealer opted for payment of tax by way of composition, for the full value of the contract of Rs.4,35,00,000/-. The dealer commenced its activity of contract by purchasing the goods to a tune of Rs.94,16,538/- for the purpose of construction and development activities at his apartments and by selling the apartments to a tune of Rs.10,00,000/-. Having regard to the filing of Form VAT 250 and opted for Composition Scheme by filing VAT 250, the Petitioner would come under the purview of Section 4(7)(d) and Rule 17(4) of VAT Act. 13. Having regard to the filing of Form VAT 250 and opted for Composition Scheme by filing VAT 250, the Petitioner would come under the purview of Section 4(7)(d) and Rule 17(4) of VAT Act. 13. The claim of the Petitioner in the Appeal before the Deputy Commissioner Tax Officer, is that, there is no scope for levy of tax on goods, but tax is liable on gross construction received or receivable on sale of apartment, as per rate of tax prescribed under Rule 17(4) of VAT Act. Having regard to the plea taken and taking into consideration the provisions of law and the goods purchased for construction being prior to filing of VAT 250, which was being assessed to tax @ 3,08,994/-, the Appellate Authority passed the following Order: “From the above it is clear that, part period of assessment was barred by time limitation, the assessing authority has levied a tax on material purchased by the appellant by adding profit, this is totally wrong on the part of the assessing authority. The appellant is a builder doing business in construction of apartments, when the appellant opted for composition scheme and not claimed ITC, then the Assessing Authority has to levy tax, under Rule 17(4) of the Act. If the builder not opted for composition and not filed VAT-250 form and also not maintained books of accounts properly then the assessing authority has to levy tax @ 14.5% on the Gross Amount received minus (-) 30% standard deduction. Without verifying the records properly the assessing authority levied tax on purchases also which is against the spirit of APVAT Act. Hence, the orders of the assessing authority is set aside and remanded. On overall perusal of the appeal, I opine that it is just and proper on my part to set aside the impugned orders of the assessing authority and remit back the appeal to the concerned assessing authority with a direction to go through the above mentioned judgment, verify the books of accounts mainly sale considerations received by the appellant, Form 250 filed by the appellant and IT statements after affording proper opportunity to the appellant then pass orders as deemed fit as per the provisions of APVAT Act and Rules.” 14. On remand, after taking into consideration the arguments advanced with regard to levy of tax etc., and the provisions of VAT Act, the Assessing Authority passed the following Order: “On the keen observations of dealers contentions, the above contentions are not tenable because the dealer failed to establish the purchases relating to before filing of VAT 250 period and purchases made out of state which are not reflected in returns and books of accounts are incorporated while executing work order. Hence the proposed tax of Rs.6,00,326.00 in VAT 305A dt. 06.10.2021 is confirmed.” 15. As stated earlier, two questions are to be answered, namely, (i) whether the first Respondent was right in assessing the case of the Petitioner on remand, and (ii) whether the findings given by the Appellate Authority were right in view of the findings of the Appellate Deputy Commissioner? 16. Insofar as assessment by the first Respondent, namely, the Deputy Commercial Tax Officer – I, Office of the Commercial Tax Officer, Anantapuramu Circle-II, is concerned, it is to be noted that, even in the earlier round of litigation i.e., even before the matter was remanded, the very same authority has assessed the case of the Petitioner, vide Order, dated 06.05.2019. At that point of time, the Petitioner never raised any objection with regard to the jurisdiction of the said authority in passing the said Order. Even before the Appellate Authority, the jurisdiction of the Assessing Authority was not questioned. Having subjected itself to the jurisdiction of the first Respondent, it may not be proper for the Petitioner to question the jurisdiction in the second round of litigation. 17. Be that as it may, a reading of Rule 59(1) would indicate that, against any Order passed by the Appellate Authorities and Revision Authorities under Sections 31, 32, 33, 34 and 35 of the VAT Act, the Assistant Commissioner, Commercial Tax Officer or the Deputy Commercial Tax Officer, as the case may be, having territorial jurisdiction over the dealer, is competent to pass the order, irrespective of the fact whether the original Order under Appeal or Revision has been passed by him or not. It would be appropriate to extract Rule 59(1), which is as under : (1) Powers (2) Authority (3) Sec./Rule (vii) Proceedings to be issued in consequence to the orders, passed by different Appellate and Revision Authorities under Sections 31, 32, 33, 34 and 35 of the APVAT Act. Assistant Commissioner, Commercial Tax Officer or the Deputy Commercial Tax Officer, as the case may be, having territorial jurisdiction over the dealer, irrespective of the fact whether the original order under Appeal or Revision has been passed by him or not. Section 37 and Rules 43 and 49. 18. From the above, it is clear that, against an Order passed by the Appellate or the Revision Authorities under Sections 31, 32, 33, 34 and 35 of the VAT Act, the first Respondent, who is a Deputy Commercial Tax Officer - I, having territorial jurisdiction of the dealer, can assess the case of the Petitioner. 19. It is also to be noted here that, the Order of the Appellate Authority would indicate that the matter is remanded to the concerned Assessing Authority. By this, it does not mean that it has to be assessed by a territorial Assessing Authority, as urged by the learned Counsel for the Petitioner, namely, the second Respondent. The word used in the remand order is “concerned Assessing Authority”. 20. It is to be noted here that, prior to remand, the case of the Petitioner was assessed by the first Respondent against which an Appeal came to be preferred before the Appellate Deputy Commissioner. Therefore, using of the word “concerned Assessing Authority” would only mean the authority, who has assessed the case of the dealer/Petitioner, which would be the first Respondent herein. 21. But, the grievance of the Petitioner is that, the first Respondent is not the territorial Assessing Authority of the Petitioner and that it the second Respondent, who has to assess the case of the Petitioner and pass appropriate orders. In other words, the case of the Petitioner is that, it is the second Respondent, who is the territorial Assessing Authority of the Petitioner and, as such, the first Respondent could not have passed the Assessment Order. 22. It may be true that the second Respondent is the territorial Assessing Authority, but it is not in dispute that the first Respondent is having territorial jurisdiction over the dealer. The G.O.Ms. 22. It may be true that the second Respondent is the territorial Assessing Authority, but it is not in dispute that the first Respondent is having territorial jurisdiction over the dealer. The G.O.Ms. No. 503, dated 08.05.2009, which came into effect from 01.05.2009, which is referred to in the affidavit filed in support of the Writ Petition, would show that, if the Deputy Commercial Tax Officer is having territorial jurisdiction over the dealer, he can deal with the case of the dealer irrespective of the fact whether the original order under Appeal or Revision order has been passed by him or not. Therefore, the argument of the learned Counsel for the Petitioner that, it is only the second Respondent, who has got the power to assess the case of the dealer/Petitioner, may not be correct. Apart from that, as urged by the learned Government Pleader for Commercial Taxes, no prejudice is caused to the Petitioner whether it is assessed by the second Respondent or first Respondent or by Assistant Commissioner or by Commercial Tax Officer, since an Appeal against the Order passed by any of the authorities would only lie before the appellate authority and, there is no inter-se appeal to the Officer referred to in the above G.O. 23. Having regard to the above, the argument of the learned Counsel for the Petitioner that the first Respondent has assessed the case of the Petitioner without having territorial jurisdiction, cannot be accepted, when it is a fact that the Petitioner also falls within the territorial jurisdiction of the first Respondent. 24. The second issue is, as to whether the findings given by the Assessing Authority vis-à-vis finding given by the Appellate Authority are correct? 25. In order to appreciate the same, it is to be noted here that the Petitioner herein has filed VAT-250 opting to pay tax by way of Composition Scheme under Form No.201506106094, dated 10.06.2015. In the earlier round of litigation, the Assessing Authority gave a finding that the appellant [Petitioner] has commenced the activity of contract by purchasing the goods valued @ Rs.94,16,538/- and sold apartments at the rate of Rs.10,00,000/-. He assessed both the purchase and sale to tax under Section 4(7)(a) read with Rule 17(1)(d) of VAT Act and Rules 2005 and arrived at Rs.10,00,370/- towards tax dues for the period not covered by VAT-250. 26. He assessed both the purchase and sale to tax under Section 4(7)(a) read with Rule 17(1)(d) of VAT Act and Rules 2005 and arrived at Rs.10,00,370/- towards tax dues for the period not covered by VAT-250. 26. Having regard to the above, it was held that the methodology adopted for levy of tax by both the purchase and sale is incorrect. Taking into consideration the arguments advanced and the legal position and having regard to the explanation submitted by the Petitioner, the Appellate Deputy Commissioner at Tirupathi, held as under: “From the above it is clear that, part period of assessment was barred by time limitation, the assessing authority has levied a tax on material purchased by the appellant by adding profit, this is totally wrong on the part of the assessing authority. The appellant is a builder doing business in construction of apartments, when the appellant opted for composition scheme and not claimed ITC, then the Assessing Authority has to levy tax, under Rule 17(4) of the Act. If the builder not opted for composition and not filed VAT-250 form and also not maintained books of accounts properly then the assessing authority has to levy tax @ 14.5% on the Gross Amount received minus (-) 30% standard deduction. Without verifying the records properly the assessing authority levied tax on purchases also which is against the spirit of APVAT Act. Hence, the orders of the assessing authority is set aside and remanded. On overall perusal of the appeal, I opine that it is just and proper on my part to set aside the impugned orders of the assessing authority and remit back the appeal to the concerned assessing authority with a direction to go through the above mentioned judgment, verify the books of accounts mainly sale considerations received by the appellant, Form 250 filed by the appellant and IT statements after affording proper opportunity to the appellant then pass orders as deemed fit as per the provisions of APVAT Act and Rules.” 27. A reading of the above Order makes it clear that, the purchases made prior to declaration of VAT 250 and the sale made [apartments], the Appellate Authority found that the method adopted in levying tax is totally incorrect. A reading of the above Order makes it clear that, the purchases made prior to declaration of VAT 250 and the sale made [apartments], the Appellate Authority found that the method adopted in levying tax is totally incorrect. The Appellate Authority categorically held that, when the Petitioner has opted for Composition Scheme and not claimed ITC, then the Assessing Authority has to levy tax under Rule 17(4) of the VAT Act. Having said so, the Appellate Authority further said that the Assessing Authority, without verifying the records properly, levied tax on purchases also, which is against the spirit of VAT Act and, accordingly, remanded the matter back. 28. On remand, the Assessing Authority confirmed the Order passed by him earlier. The operative portion of the Order, reads as under: “On the keen observations of dealers contentions, the above contentions are not tenable because the dealer failed to establish the purchases relating to before filing of VAT 250 period and purchases made out of state which are not reflected in returns and books of accounts are incorporated while executing work order. Hence the proposed tax of Rs.6,00,326.00 in VAT 305A dt. 06.10.2021 is confirmed.” 29. From the Order passed above, it is very clear that the Assessing Authority has once again levied tax on the purchases made before filing of VAT 250 period, though tax was paid on them at the time of sale of the apartments, which, as urged by the learned Counsel for the Petitioner, prima facie, may amount to double taxation. 30. It may be true that the Appellate Authority, who passed the Order and the Officer who passed impugned order in the present Writ Petition may be Officers of the same rank, but once an Order came to be passed in an appeal, the Assessing Authority ought to have followed the ratio laid down therein in-stead of arriving at a conclusion, which is similar to the one arrived at in the earlier round. 31. Accordingly, the Writ Petition is allowed in part. The argument that the first Respondent has no power to assess the case of the Petitioner is rejected, but, however, on the second issue, the matter is remanded back to the first Respondent to deal with the same in accordance with law by taking into consideration the observations made by the Appellate Authority. No order as to costs. 32. The argument that the first Respondent has no power to assess the case of the Petitioner is rejected, but, however, on the second issue, the matter is remanded back to the first Respondent to deal with the same in accordance with law by taking into consideration the observations made by the Appellate Authority. No order as to costs. 32. As a sequel, interlocutory applications, if any, pending shall stand closed.