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Judgment
M.S. Ramachandra Rao, J.—Since common issues of law and fact arise in these writ petitions, they are being disposed of together. Heard Sri M.V.J.K. Kumar, counsel for the petitioner and Sri Venkatadri, Special Government Pleader for Commercial Taxes in both cases.
With the consent of both sides, the writ petitions are being disposed of at the stage of admission.
The petitioner in both the cases is M/s. Sterling and Wilson Limited, which is an assessee on the rolls of the third respondent under both the Andhra Pradesh Value Added Tax Act, 2005 and the Central Sales Tax Act, 1956. It is engaged in executing electrical works contracts within the State of Andhra Pradesh.
The petitioner filed monthly returns in form VAT 200 before the third respondent disclosing its contractual receipts/turnover as required under the Act.
For the assessment periods April, 2009-July, 2009 and August, 2009-March, 2010 such monthly returns were filed disclosing the turnovers relating to the execution of electrical works executed by it for various contractees situated in the vicinity of Hyderabad and also turnovers with regard to the inter-State sales, AMC service charges received and installations and erection charges, SEZ sales.
For the period, April, 2009-July, 2009, in its returns the petitioner claimed exemption with regard to SEZ sales made by it amounting to Rs. 2,94,20,169, AMC charges coming to Rs. 76,16,954, installation and erection charges coming to Rs. 1,89,40,254 and inter-State sales of Rs. 3,60,252. It also disclosed purchases from outside the State of Andhra Pradesh as also within the State of Andhra Pradesh amounting to Rs. 15,36,14,118. The purchase of the goods used for executing the works for the SEZ units effected locally as well as from outside the State were shown separately which work out to Rs. 1,07,80,454.
Similarly, for the period August, 2009-March, 2010, in its returns, the petitioner claimed exemption with regard to SEZ sales made by it coming to a turnover of Rs. 4,44,22,616, AMC charges coming to Rs. 2,04,53,493, installation and erection charges coming to Rs. 9,80,04,640, high sea sales of Rs. 56,95,060 and transit sales of Rs. 5,35,32,616. It also disclosed purchases from outside the State of Andhra Pradesh as also within the State of Andhra Pradesh, which come to Rs. 28,44,46,179. The purchases of the goods used for executing the works for SEZ units effected locally as well as from outside the State were shown separately which come to Rs. 40,06,328.
The petitioner did not claim any input-tax credit with regard to execution of its works to the SEZ units. It was paying taxes both at four percent as also 12.5 percent and 14.5 percent., respectively, as it was not under the composition scheme and was also submitting TDS certificates received from the respective contractees.
For the tax period April, 2009-July, 2009, the first respondent had issued an authorization dated July 20, 2009, to the second respondent and the latter conducted a VAT audit and transactions of the business relating to a revised assessment order passed by him in form VAT 305 dated July 6, 2009 issued pursuant to remand directions of the Appellate Deputy Commissioner in an order of appeal. The audit was initiated on July 21, 2009 and was completed on September 16, 2009. The petitioner was requested to produce the books of accounts and the petitioner produced all the records for the periods from 2008-09, 2009-10 (up to July 31, 2009), 2010-11 (up to December, 2010) and also filed a letter dated September 16, 2009 disclosing the details and amounts therein. The second respondent passed an order in form VAT 312 dated October 1, 2009 accepting the turnovers furnished by the petitioner with reference to the books of accounts, the returns filed therein and also the statements dated September 16, 2009 filed by the petitioner granting exemption for the above tax period with reference to inter-State sales, SEZ sales. He held that labour charges (installation and erection charges), service tax collections and AMC receipts are not liable to tax under the A.P. VAT Act, 2005 and confirmed the levy of four percent, 12.5 percent and 14.5 percent, respectively and also on inter-State sales.
For the tax period August, 2009-March, 2010, the first respondent had issued an authorization to the second respondent to conduct a VAT audit. The second respondent requested the petitioner to produce the books of accounts and in response thereto, the petitioner produced all the records for the periods 2008-09, 2009-10, 2010-11 (up to December, 2010) and also filed a letter in the form a statement. Taking into account the said material, the second respondent passed an order dated March 28, 2011 in form VAT 312 accepting the turnover furnished by the petitioner with reference to the books of accounts, the returns filed and also the statement filed by the petitioner granting exemption with reference to inter-State sales and SEZ sales. He held that labour charges (installation and erection charges), AMC charges and high sea sales are not liable to tax under the A.P. VAT Act, 2005 and confirmed the levy at four percent, 12.5 percent and 14.5 percent, respectively, and also on inter-State sales.
The first respondent was of the view that the orders dated October 1, 2009 and March 28, 2011, respectively passed by the second respondent with respect to the tax periods April, 2009-July, 2009 and August, 2009-March, 2010 were prejudicial to the interests of the Revenue and he issued show-cause notices dated December 7, 2011 separately for both periods proposing to revise the orders of the second respondent.
For the tax periods April, 2009-July, 2009 he proposed to withdraw the exemption granted towards labour charges, service tax collected on the ground that the petitioner had not furnished the opening and closing stocks particulars to arrive at the value of the goods at the time of execution of works contracts. He also proposed to reject the exemption towards inter-State sales on the ground that no evidence was filed in support of the said exemption. He proposed to assess the gross receipts to Rs. 23,55,13,205 from which labour at 25 percent applying rule 17(1)(g) read with section 4(7)(a) was calculated arriving at an amount of Rs. 5,88,78,301 and an amount of Rs. 17,66,34,904 was proposed to be taxed at 12.5 percent. The petitioner was called upon to file objections within 15 days from the date of receipt of the show-cause notice which was received on December 21, 2011.
For the tax period August, 2009-March, 2010, he proposed to withdraw exemption towards labour charges of Rs. 8,88,89,221, service tax collected amounting to Rs. 91,16,419, C. S. T. sales of Rs. 3,60,252, transit sales turnover of Rs. 2,78,12,462 and high sea sales (sales in the course of import) of Rs. 56,95,060 on the ground that no evidence is filed in support of the exemption with regard to inter-State sales. With regard to transit sales, he proposed to withdraw the exemption on the ground that the said concept does not apply to tailor-made goods as the property in them and the attendant risk will remain with the assessee till the completion of the work. He also proposed to withdraw the exemption to SEZ sales, high sea sales and service tax collections on the ground that the petitioner had not maintained opening stock and closing stock details to arrive at the value of incorporation. He proposed to assess the gross receipts to Rs. 71,52,25,754 from which labour at 25 percent applying rule 17(1)(g) read with section 4(7)(a) was calculated arriving at an amount of Rs. 17,36,92,816 and an amount of Rs. 52,10,78,447 was proposed to be taxed at 12.5 percent and 14.5 percent., respectively. The petitioner was called upon to file its objections within 15 days from the date of receipt of the said show-cause notice which was received on December 13, 2011.
On January 28, 2012, the petitioner filed a letter requesting the first respondent to grant time of one month for submitting all the records in support of its claims for exemption as the records were sent to its head office at Mumbai for the purpose of statutory audit. In the said letter, the petitioner also brought to the notice of the first respondent that all the records were produced before the Assistant Commissioner (CT), the second respondent herein at the time of audit and form part of the record and stated that after verifying all the records only, the latter had passed the order in form VAT 312 stating that there were no irregularities noticed.
The first respondent sent another letter dated January 5, 2012, requesting the petitioner to file its objections. The petitioner appeared in person before the first respondent and requested further time for producing the records as the same are to be received from its head office in Mumbai.
Another notice dated April 19, 2012, was issued by the first respondent directing the petitioner to file its objections before May 3, 2012 and also providing a personal hearing on that date during office hours.
The Manager (Accounts) of the petitioner allegedly appeared before the first respondent on May 3, 2012, explained in detail about the nature of transactions with reference to the books of accounts maintained and sought further time to produce any other material if required.
Thereafter, the fist respondent passed separate impugned orders dated May 31, 2012 for each of the above periods recording that for its notices dated January 5, 2012 and April 19, 2012 directing the petitioner to furnish details with documentary evidence within the stipulated time, the petitioner did not respond and therefore he is confirming the revision as proposed in the show-cause notices issued by him.
Challenging the same, the present writ petitions are filed by the petitioner.
The petitioner contends that the statement in the impugned orders that the petitioner had not responded to the notices dated January 5, 2012 and April 19, 2012 issued by the first respondent is not correct; that on May 3, 2012, the petitioners Manager (Accounts) personally appeared before the first respondent and explained the stand of the petitioner opposing the revision; that the said orders are passed without application of mind, verification of records, assessment filed and therefore unsustainable.
Counter-affidavit is filed by the first respondent reiterating that the petitioner did not appear in person in response to the notices dated January 5, 2012 and April 19, 2012, that the Manager (Accounts) of the petitioner did not appear on May 3, 2012 of any date prior to the passing of the impugned order and therefore, he had no option but to pass the orders ex parte. It is also contended that there was no response from the petitioner to a prior notice dated July 14, 2011 issued by the first respondent to produce bill-wise details for the sale and job work done by it along with annual reports which was served on the petitioner on July 21, 2011.
The petitioner filed a reply affidavit specifically pointing out that it had submitted a reply dated July 27, 2011 to the first respondent to his show-cause notice dated July 14, 2011 stating that all details sought were already submitted by the petitioner while conducting of the audit; that no variations were noticed; that once again he is enclosing (i) statement showing details of contract receipts for the year 2008-09 and 2009-10, (ii) form VAT 312 dated October 1, 2009 along with the statement for the audit completed for the period from April, 2008-July, 2009 and (iii) form VAT 312 dated March 28, 2011 along with the statements for the Audit completed for the period from August, 2009-December, 2010. The petitioner also filed copy of the covering letter dated July 27, 2011 addressed by it to the first respondent which bears the seal of the office of the first respondent dated August 17, 2011 in support of its above contention.
After taking note of the same, the Special Government Pleader on December 3, 2012 undertook to file an additional affidavit on behalf of the respondents to the averments in the above reply affidavit of the petitioner.
This court on December 10, 2012 also passed an order stating that in the counter filed by him, the first respondent did not advert to the fact of the petitioner filing a letter dated July 27, 2011 on August 17, 2011 in the office of the first respondent along with the enclosures/material on the basis of which the petitioner claimed immunity from exercise of the revisional power; that it constitutes withholding of relevant facts from the court; that such conduct will be viewed seriously, if it is true; and directed the first respondent to file an additional counter-affidavit adverting to the letter dated July 27, 2011, purportedly received by the first respondent office on August 17, 2011.
Thereafter, an additional counter dated December 16, 2012 was filed by the first respondent stating that there were "unintentional mistakes" in the earlier counter filed by him in these cases; that the reply dated July 27, 2011 of the petitioner in response to his notice dated July 14, 2011 was indeed received by his office on August 17, 2011; that by oversight, it was not noticed by him; that it was neither wilful nor wanton. He offered unconditional apology in not bringing the said fact to the notice of the court.
In our opinion, it was the duty of the first respondent to consider all the material adduced by the petitioner in support of its case that it is immune from the exercise of revisional powers. The, first respondent had been negligent and failed to properly discharge his duty, in having ignored the material filed on August 17, 2011 by the petitioner along with the letter dated July 27, 2011.
In view of the fact that the impugned orders dated May 31, 2012 relating to the tax periods April, 2009-July, 2009 and August, 2009-March, 2010 were passed by the first respondent without noticing and adverting to the material filed by the petitioner before him on August 17, 2011 vide the letter dated July 27, 2011 with enclosures, both the impugned orders for the above tax periods are set aside. The matter is remitted to the first respondent, who shall now afford a personal hearing to the petitioner/its authorized representative, consider all the material filed by the petitioner in support of its case that it is immune from the exercise of revisional power and thereafter pass orders afresh. The petitioner is also given liberty to file any further material in support of its case. Accordingly, both the writ petitions are allowed to the above extent at the stage of admission with costs, of Rs. 1,000 (rupees one thousand only) in each of the writ petitions, payable to the respective petitioners within four weeks from the date of receipt of a copy of this order.
Memorandum of costs W.P. Nos. 32601 and 32882 of 2012