Jitender Roller Flour Mills vs Assistant Commissioner (CT) LTU,

Goda Raghuram, J.—Heard Sri Bhaskar Reddy Vemireddy, learned counsel for the petitioners and Sri P. Balaji Varma, learned Special Standing Counsel for Commercial Taxes, for the respondent. These writ petitions assail revised assessment orders passed by the Assistant Commissioner, Commercial Taxes, Charminar Division, Hyderabad, in purported exercise of powers u/s 14(4) of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the 1957 Act").

The facts in W. P. No. 18564 of 2006 are representative of the facts in issue arising in other writ petitions as well.

W.P. No. 18564 of 2006: The revised assessment order dated August 3, 2006 passed by the respondent under the provisions of the Central Sales Tax Act, 1956 (for short, "the 1956 Act") for the assessment year 2002-03 is in question. The petitioner is a registered dealer under the provisions of the 1957 Act and 1956 Act as well. It is a partnership firm carrying on business in manufacture and sale of atta, maida, ravva, etc. The petitioner reported for the assessment year in question a net turnover of Rs. 9,19,288 through monthly returns and submitted an audit report along with audited balance sheets disclosing export sales turnover of Rs. 19,90,581 and consignment sales of Rs. 5,39,72,328 constituting sales claimed to be the transfers to its branches and agents in other States. The petitioner claimed exemption on the above turnover of export sales and consignment sales.

The respondent completed and passed the order of assessment dated July 9, 2004, on a gross and net turnover of Rs. 5,68,82,197 and Rs. 9,19,288, granting exemption on turnover of Rs. 5,59,62,909. Tax at 10 per cent imposed on inter-State sales turnover of Rs. 5,90,694 was levied on the ground that the petitioner did not produce declarations in form C. The petitioner subsequently obtained form C for a turnover of Rs. 2,72,982 and filed the same before the respondent seeking acceptance and sought reduction of the rate of tax, exercising power under rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 (for short, "the Rules"). Eventually, the respondent allowed the concessional rate of tax on the turnover covered by C forms subsequently produced by the petitioner. Revised proceedings were issued on March 7, 2006. There was a balance demand of Rs. 429, which was paid.

While so, the respondent issued a notice dated March 31, 2006, proposing revision of the assessment order dated July 9, 2004 on the ground that exemption on a turnover of Rs. 4,85,74,467 was granted on defective F forms (since F forms submitted by the petitioner covered consignment sales periods in excess of one calendar month, contrary to the stipulation of rule 12(5) of the Rules) and proposed levy of tax at 10 per cent treating the transaction as inter-State sales not covered by C declarations.

The petitioner filed its representation seeking further time for filing proper F forms. Despite time having been granted, the petitioner could not furnish rectified F forms. Therefore, by the impugned order dated August 3, 2006, the respondent passed a revised assessment order stating that since verification of the F forms revealed that the F forms offered covered transactions pertaining to more than one calendar month in contravention of rule 12(5) of the Rules, the exemption allowed on the specified turnover is withdrawn. Consequently, a balance tax liability of Rs. 48,46,938 was determined and a revised demand notice was issued in consonance with the revised assessment.

Sri Bhaskar Reddy Vemireddy, the learned counsel for the writ petitioners, relies on the judgment of this court in Girdharlal and Company Vs. State of Andhra Pradesh, to urge that the provisions of section 14(4) of the 1957 Act cannot be invoked. Where there was necessary material available on record before the assessing authority while passing the initial order of assessment, but the said authority failed to advert to the relevant aspects due to lack of diligence, it would not afford a justifiable ground, to the assessing authority or his successor to exercise power u/s 14(4), is the contention.

In Girdharlal and Company Vs. State of Andhra Pradesh, this court relied on the view taken earlier by a Division Bench in State of Andhra Pradesh Vs. Kedia Vanaspati (P) Ltd., wherein it was held that where before the assessing authority the record did not contain the relevant material and such material comes to the notice of the authority from other sources after the assessment then it would afford a justifiable ground to exercise power under that section. This court clarified that for exercise of power u/s 14(4) reliance should be made not on the material on record but on the material de hors the record which came to the notice of the assessing authority subsequent to the assessment. Very categorically this court held that non-application of mind by the assessing authority to the material on record at the time of assessment is not a justifiable ground to invoke power u/s 14(4) of the 1957 Act. In the facts and circumstances of the case and since the petitioner had filed the F forms for periods in excess of one calendar month and these F forms were before the assessing authority when he passed the initial order dated July 9, 2004 and were accepted for granting exemption from the turnover treating them as consignment sales it is a case of lack of diligence on the part of the assessing authority, not liable to be corrected u/s 14(4) of the 1957 Act, in the light of the law declared in Girdharlal and Company Vs. State of Andhra Pradesh, For the aforesaid reasons and since the facts in W. P. No. 18564 of 2006 are representative of the facts in the other writ petitions as well and revised assessment orders were issued in purported exercise of powers u/s 14(4) of the 1957 Act, we declare the revised assessment orders impugned in these writ petitions as unsustainable. They are accordingly quashed. The writ petitions are allowed as above, but in the circumstances no costs.