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2025 DIGILAW 373 (AP)

Y. Koteswara Rao v. State Of A. P.

2025-02-28

K.MANMADHA RAO

body2025
ORDER : This Writ Petition is filed under Article 226 of the Constitution of India for the following relief: “….to issue Order or orders direction or directions Writ or Writs nature of Writ of Mandamus declaring the action of the respondents in not paying/reimbursing VAT paid by the petitioner during the period 20.08.2009, 20.09.2010 and 20.10.2011 to the supply of diets to inpatients and duty doctor in the 3 to 5 respondent hospitals as per the Sec 15 of the AP VAT Act 2005 Govt Memo No 25827/M1/20051 dt 22.12.2005 and Memo No 9790/M1/20061 dated 23.05.2006 and time to time instruction issued by Health Medical and Family Welfare M1 Department Govt of AP and violative of Article 14 and 21 of the Constitution of India and consequently direct the respondents to pay/ reimburse amount of Rs.39,11,769/- which was paid by the petitioner towards VAT for the supplies of diet supplied to inpatients and duty doctor in the 3 to 5 respondents Hospitals for the period 20.08.2009 to 20.10.2011 and pass …” 2. Brief facts of the case are that the petitioner is a diet contractor who had supplied the diet to in-patients and duty doctors in the state of Andhra Pradesh and Telangana. During the period 2008-2009 to 2010-2011 even though the petitioner supplied diet to the Respondents No.3 to 5 hospitals due to ignorance and oversight neither he paid the VAT nor have the hospital authorities complied with the payment of VAT. As such, the vigilance department conducted enquiry about the supplies made by the petitioner to various hospitals and obtained records and report from the concerned hospitals and accordingly instructed the commercial tax department to assess the tax liability for the petitioner for the relevant period. The commercial tax department on 02.01.2014 assessed the Petitioner’s VAT liability for the period of 2008-09 to 2010-2011 vide Notice of Assessment of Value Added Tax from VAT 305A, dt.27.11.2013 at Rs.58,90,709/- and also levied a penalty of Rs.15,76,025/- for nonpayment of VAT within time, the total demand is Rs.74,66,734/- towards food supplies for the hospitals during that period. After payment of entire demanded VAT tax and penalty as the petitioner has entitled for re-imbursement of the amount, he made several representations to the concerned hospital authorities for re-imbursement of VAT Tax paid by him for the supplies made by him. After payment of entire demanded VAT tax and penalty as the petitioner has entitled for re-imbursement of the amount, he made several representations to the concerned hospital authorities for re-imbursement of VAT Tax paid by him for the supplies made by him. Even though the superintendent of the concerned hospitals have sought for release of necessary budgets duly affirming that the petitioner has not claimed and the hospitals have not reimbursed the VAT tax to him. In spite of that there is no payment till today.As such the petitioner filed the present writ petition. 3. The 2 nd Respondent has filed counter contended that the petitioner has participated in the diet tender for supply of diet to the in-patients with abide conditions at Para No. (V) (7) of G.O.Ms.No.539 Health, Medical & Family Welfare (M1) Department, Dated: 08.11.1993 that the final payment of diet supplies will be made on production of a certificate by the contractor obtained from Income Tax authorities confirming that all income tax was paid by him up to the end of the previous accounts year. The same conditions apply to sales tax also. It is stated that 1st respondent issued Govt Memo No. 25827/M1/2005 Dt:22-12-2005 and Memo No. 9790/M1/2006-1 Dt:23-05- 2006 clarified that the there is no provision to deduct the tax on direct supplies of goods under APVAT Act, 2005 and the deductions if any made on diet charges, shall be refunded. The petitioner never registered with Commercial Tax Department until 24-04-2011 and the question of paying any tax and/or claiming any deductions doesn't arise for want of registration with Commercial Tax Department. Thus, the Petitioner cannot rely on the said Govt Memo No.25827/M1/2005 Dt:22-12-2005 and Memo No. 9790/M1/2006-1 Dated:23-05-2006. It is further stated that the 1st Respondent has issued directions vide Memo No.9790/M1/2006-1,HM&FW(M1)Dept., dated:23.05.2006 to all the Head of the Departments under control of the Health Medical & Family Welfare Department are instructed that the APGST Act. 1957 has been repealed by APVAT Act, 2005, which was brought into operation w.e.f. 01.04.2005. They are also informed that as there is no provision or instructions to deduct the tax on the direct supplies of goods under APVAT Act, 2005 w.e.f. 01.04.2005, the deductions, if any made on Diet Charges shall be refunded. In the present case, the petitioner didn't pay any tax much less VAT to any of the respondents. They are also informed that as there is no provision or instructions to deduct the tax on the direct supplies of goods under APVAT Act, 2005 w.e.f. 01.04.2005, the deductions, if any made on Diet Charges shall be refunded. In the present case, the petitioner didn't pay any tax much less VAT to any of the respondents. The petitioner paid an amount of Rs 74,66,734/- to the Commercial Tax Department by virtue of the Assessment orders passed by the Assistant Commissioner, Commercial Tax Department. Thus, the petitioner ought to have challenged the said Assessment orders, Assistant Commissioner, Commercial Tax Department Dt:02-01-2014. It is also evident that the Commercial Tax officer, Krishnalanka Circle, Vijayawada issued a Clearance Certificate Dt: 26-12-2016 and the same is valid for a period of 12 months. The petitioner cannot wake up from a deep slumber and file the present writ petition in the year 2019 and seek relief of recover of VAT by relying on Govt Memo No.25827/M1/2005 Dt:22-12-2005 and Memo No. 9790/M1/2006-1 Dt:23-05-2006. In accordance to the clearance certificate of Commercial Tax Department Government of A.P. dated:26.12.2016 which is submitted by the petitioner states that, the petitioner paid tax dues along with penalties for the year 2008-2009 to 2010-2011.It is further stated that for the period 2008-2011, only TDS (Tax Deducted at Source) was deducted from the petitioner's payments, and this TDS was credited to the petitioner's TAN account. Crucially, they assert that no VAT was deducted by the government. They are providing documentation of these payments. During the relevant period, the Petitioner supplied diets to the Government General Hospitals in Kakinada and Vijayawada only, and not Guntur. The proceedings dated23.01.2019, of the then Superintendent, were issued without proper verification of the rules and are not legally or factually sound. The petitioner, therefore, cannot rely on them. 4. Heard Sri P. Kameswara Rao, learned counsel appearing for the petitioner and learned Government Pleader for Medal Health & FW appearing for the respondents. 5. On hearing, learned counsel for the petitioner argued that the petitioner is entitled to the reimbursement for the VAT paid as per Section 15 of the AP VAT Act, 2005, food suppliers to Government hospitals are entitled to VAT reimbursement after paying the tax. 5. On hearing, learned counsel for the petitioner argued that the petitioner is entitled to the reimbursement for the VAT paid as per Section 15 of the AP VAT Act, 2005, food suppliers to Government hospitals are entitled to VAT reimbursement after paying the tax. He submits that the 1st Respondent has issued directions vide Memo No. 25827/M1/2005-1, HM&FW (M1) dept., dated: 22.12.2005 to all the Head of the Departments under control of the Health Medical & Family Welfare Department to make a provision towards reimbursement of VAT to be paid on diet charges for the year 2006-2007 as clarified by the Commissioner, Commercial Tax Department vide Govt. Memo No. 25827/M1/2005-1, Health, Medical & Family Welfare (M1) Dept., Dated: 22.12.2005. Accordingly the Diet charges of all Government Hospitals are reimbursed for the year 2006-2007. Further, the Government in G.O.Ms.No. 35, Revenue (Ct.II) department, Dated: 12.01.2010 has increased A.P. VAT to 14.05% while claiming the bill, 1% of the Diet Bill to be recovered from the Diet contractor towards Income Tax. The Petitioner's case falls under similar, as he did not pay VAT or claim reimbursement for the period 2008-2011. The Petitioner also paid the assessed amount of Rs.74,66,734/- for the period 2009 to 2011, communicated the same to concerned officials dt.09.12.2016 and 21.12.2016 and received a clearance certificate from the Commercial Tax Department stating that he is eligible for reimbursement. 6. Learned counsel further submitted that the 2 nd Respondent has requested the 3rd, 4th Respondents & the Superintendent, Govt. Fever Hospital, Guntur vide Lr.Rc. No.7756/SP/2017, Dated: 18.05.2017 to send detailed remarks on the representation of the petitioner dated: 18.05.2017 for the reimbursement of the VAT during the period from 2008-09 to 2010-11 towards supply of diet to the Govt. General Hospital, Kakinada, Govt. General Hospital, Vijayawada and Govt. Fever Hospital, Guntur with relevant copies for taking necessary action in the matter. Accordingly, the 3rd Respondent addressed a letter to the 2nd Respondent with a request to sanction additional budget to pay the VAT charges to the petitioner for the year 2008-09 to 2010- 11 towards supply of diet. Accordingly, the 3rd Respondent was informed that the taxes have to be paid by the contractor i.e., the petitioner as per clause 5.4(i) of the agreement vide Govt. Memo.No.1251402/H2/2018-1, HM&FW (H.2) Dept., Dated: 15.11.2018. Accordingly, the 3rd Respondent was informed that the taxes have to be paid by the contractor i.e., the petitioner as per clause 5.4(i) of the agreement vide Govt. Memo.No.1251402/H2/2018-1, HM&FW (H.2) Dept., Dated: 15.11.2018. He further submits that the Superintendent in teaching Hospitals under the control of DME are being called for the information vide this Office Lr.Rc.No.3287/SP/2019, Dated: 14.05.2019 regarding the payment of VAT towards diet supply during the period from 2008-09 to 2010-11.He submits that the 2nd Respondent categorically admitted that the petitioner is entitled and eligible for the refund of Taxes including Sales Tax on production of certificate by the contractor i.e., petitioner on payment of such Tax. 7. Per contra, learned Government Pleader for the Respondents argued that that no VAT amount was withheld from the Petitioner's payments until April 2011, when the Petitioner registered for VAT by pointing out the registration. He submitted that the entire assessed amount was paid back to the commercial tax officer. The counsel further asserts that the 3rd, 4th and 6 th Respondents have never collected VAT from the Petitioner. Because of this, a notice was issued to the petitioner, which the petitioner agreed with and paid. 8. In reply, learned counsel for the Petitioner argued that Director of Medical Education is obligated to refund the VAT paid. The Petitioner acknowledged paying the assessed amount to the commercial tax officer. Further contended that while the hospitals named might be different, the core issue of the VAT refund remains the same. 9. The orders passed by the Assistant Commissioner, Commercial Tax Department categorically held that The contents raised by the dealer is verified as per the provisions of APVAT Act 2005 and Section21(4) and 21(5) read as under, "21(4) the authority prescribed may, based on any information available or on any other basis, conduct a detail scrutiny of the acountsof any VAT dealer or TOT dealer and where any assessment as a result of such scrutiny becomes necessary such assessment shall be made with in a period of four years from the end of the period for which the assessment is to be made". "21(5) where any wilful evasion of tax has been committed by a dealer, an assessment shall be made to the best of his judgement by the authorization prescribed with in a period of six years of date of filling of return or the first retum relating to such offence". In the present case the dealer has did the business from 2008-09 onwards and not registered himself and not paid the taxes to the department. Therefore the dealer has wilfully evaded the tax and therefore the assessment is being made under Section 21(5). The dealer stated that "the Health Department nowhere it was mention about the VAT tax and the entire food was supplied on subsidy rates and further stated that it is a government scheme he VAT might not have put in the provisions tenders and they were advised to take VAT registration w.e.f. 01.04.2011 and the Health Department is agreed to pay tax @14.5% separately on TDS shall be deducted on our bills". The above objections is no relevance with the payment of tax on the business they made. The responsibility of taking registration and payment of tax is lies with the dealer only but not with others. 10. It is not in dispute that neither the petitioner nor the respondents had paid the Sales Tax or VAT for the period of supply of diet by the petitioner by that the authorities under A.P. VAT assessed the tax liability, the same was admitted by the 2nd Respondent and subsequently the Tax was been paid by the petitioner to the concerned authorities dt. 21.12.2016. Thus, there is no dispute with regard to the Tax liability of the respondents for the supply of diet and subsequent payment of the same by the petitioner. Thereby the respondents have to reimburse the same as they availed the service which is assessed by them self. 11. The contention of the learned counsel for the petitioner is that the part of the amount of Rs. Thereby the respondents have to reimburse the same as they availed the service which is assessed by them self. 11. The contention of the learned counsel for the petitioner is that the part of the amount of Rs. 5,73,421/-, which was paid by the petitioner on 21.12.2016 pertaining to the State of Telangana, has been unpaid, and at that juncture, the petitioner filed W.P.No. 4386 of 2019 before the Telangana High Court and Hon'ble Division Bench of Telangana High Court, after due adjudication, allowed the said Writ petition with costs of Rs.10,000/- to be paid by the 1 st respondent to the petitioner and the respondents were also directed to refund the sum of Rs.8,67,074/- to the petitioner with interest @ 9% per annuam from 02.01.2014 to till the date of payment of the said amount by the respondents which shall be done within three weeks. The same was implemented by the Telangana State Government vide proceedings Rc.No.2104/ENG/2020 dated: 18.01.2023. It is also observed that the petitioner was paid VAT for the supplied during the above period to the 3rd Respondent Hospital for an amount of Rs. 25,12,116/- to the 4th Respondent Hospital; an amount of Rs.11,73,734/- and Implead respondent/ 6th Respondent i.e., Government Fever Hospital, Guntur, an amount of Rs.2,25,919/- total amount of Rs. 39,11,769/- respectively. 12. As per contention of Respondent that as per the Memo dt.11.08.2010 "the contractor should have taken all the factors into consideration" ignoring the fact that the respondents made deductions of diet charges withholding the VAT in payment of bills. 13. It is pertinent to submit that respondents Memo dt. 23.05.2006 clearly states that w.e.f., 01.04.2005, "the deductions, if any made on diet charges shall be refunded." Thereby the petitioner is entitled to the refund of the VAT paid by the petitioner for the Diet supply of 3rd, 4th and 6th Respondents. On a perusal of the material, the petitioner has filed the Bills paid by the respondents for the year 2008 to 2011 which crystal clear that they deducted the VAT/Sales Tax @ 12% and now they are under statutory obligation to refund the same to the petitioner. 14. In reply to the counter filed by the 2 nd Respondent, the petitioner emphasized that both parties agree that neither paid VAT/Sales Tax initially, but the tax liability was assessed, and the petitioner subsequently paid it in 2016. 14. In reply to the counter filed by the 2 nd Respondent, the petitioner emphasized that both parties agree that neither paid VAT/Sales Tax initially, but the tax liability was assessed, and the petitioner subsequently paid it in 2016. The Petitioner further noted that a portion of the paid amount related to Telangana, a separate writ petition vide W.P.No. 4386 of 2019 was filed in the Telangana High Court, which was successful. 15. Learned counsel for the petitioner further refutes the respondent's argument based on a memo dated 11.08.2010. He argued that the respondents did deduct amounts towards VAT/Sales Tax from diet charges, contrary to what the Respondent claims. The memo dated 23.05.2006, stating that such deductions should be refunded. The petitioner submitted the bills from 2008-2011, which they claim clearly show 12% VAT/Sales Tax deductions, thus proving the respondents' obligation to refund the amount. He further argued that the Respondents cannot deny their statutory responsibility. 16. Upon perusing the material on record and on hearing the submissions of both the learned counsels, this Court is of the opinion that, the factum of payment of VAT and penalty by the petitioner from 2008 to 2011 on account of the Diet supplies made by the petitioner to the respondents No.3 to 5 is proved by the said clearance certificate and no material is placed by the respondents to dispute the same. Further, on a perusal of the bills paid by the respondents, which were filed as material papers, would clearly shows that the respondents deducted the VAT/Sales Tax @ 12% and now they are under statutory obligation to refund the same to the petitioner. Therefore, in view of the above discussion, this Court deems fit to allow the present writ petition. 17. Accordingly, the Writ Petition is allowed directing the respondents to pay/reimburse the amount of Rs.39,11,769/- to the petitioner with interest @ 9% per annum from 02.01.2014 till the date of payment of the said amount by the respondents which shall be done within three (03) weeks from the date of receipt of a copy of this order. No costs. 18. As a sequel, all the pending miscellaneous applications shall stand closed.