Ramanadh Poultry Farms, Peddakaparthy Village and Others vs ACTO, CTCP, Metlakunta and Another

P. Venkatarama Reddi, ACJ

The prayer in these writ petitions is to issue an appropriate writ or order declaring the levy and collection of tax by the 1st respondent at the check posts on the goods (poultry feed ingredients) brought under valid documents as illegal and against Section 38 of the A.P. General Sales Tax Act (for short "the Act") and consequently to direct the 1st respondent to refund the taxes illegally collected.

The petitioners are doing poultry business. It is their case that the supplements or ingredients needed for poultry feed are purchased from registered dealers outside the State of Andhra Pradesh and the said goods are brought to their poultry farms in the course of inter-State purchase. It is also their case that such consignments are supported by valid documents such as way bills. The petitioners submit that the ingredients so purchased are meant for use in poultry feed for the purpose of captive consumption. The collection of tax on the goods so purchased at the check post as if there was a taxable sale within the State is being assailed in these writ petitions.

The contention of the petitioners is that the goods are fully accounted for and there cannot be summary demand and collection of tax at the check post without even recording a finding that taxable event had taken place or that there was an attempt to evade the payment of tax.

In the counter-affidavit filed in one of the writ petitions i.e.. Writ Petition No.10715 of 1998, it is stated that the poultry-farm owners are purchasing the poultry feed and its ingredients from outside the State ostensibly for captive consumption but they are disposing it of clandestinely. In order to check this trend leading to evasion of tax, it is stated that the tax is being collected at the check-post to safeguard the revenue and whatever tax is collected is being remitted to the assessing officer concerned.

We find force in the contention of the petitioners that so long as the consignments of poultry feed or ingredients of poultry feed that are being transported from outside the State are covered by genuine documents evidencing the inter-State sale and purchase, the check-post officials have no jurisdiction to collect the tax in advance as if the sale had taken place. It is a different matter if the check-post officer, on a perusal of the relevant documents, comes to the conclusion that the documents are spurious or that the consignment of goods is not supported by the requisite documents evidencing bona fide purchase from a registered dealer. Even in such a case, the check-post official is expected to record the reasons and arrive at a finding on the basis of a summary enquiry as per the relevant provisions contained in Section 29 of the Act read with Rules 46 and 47 of the APGST Rules. We make it clear that tax collection at the check-post cannot be resorted to on the presumption that the goods are likely to be sold clandestinely and the tax will be evaded by the petitioners. If the poultry feed or| poultry feed ingredients are sold clandestinely and the taxable turn over is suppressed by the dealers, the Sales-tax authorities are not powerless to take necessary steps to make best judgment assessment and to levy penalties. But, an anticipatory collection of tax on the presumption that the dealers are likely to resort to clandestine sales at a later point of time is not warranted under the provisions of the Act.

We, therefore, dispose of these writ petitions substantially reiterating the interim order passed in these cases. Accordingly, we direct that the officer-in charge of check-post shall not collect any tax on the poultry feed or the ingredients of poultry feed brought from outside the State of Andhra Pradesh if the petitioners'' representative or driver in-charge of the vehicle produces the relevant documents in support of the inter-State purchase from registered dealers. In case the check-post officer is not satisfied with the proof or that there are no requisite documents a reasoned order should be passed by him keeping in view the clarification given above and be served on the petitioners'' representative or driver in-charge of the vehicle without any delay. This is, however, subject to the condition that the petitioners produce the proof of registration as dealers. We consider it necessary to incorporate this direction for the reason that in the absence of registration, it would be difficult to keep track of the transactions of the dealer''s concerned. As regards the tax already collected, it is open to the petitioners to file applications for refund before the concerned Assessing Officer. Such applications for refund shall be disposed of expeditiously and it is open to the department to make the adjustment of tax refundable against the taxes if any due from the petitioners.

With these directions, the writ petitions are disposed of. No costs.