Suchir India Developers (P) Limited vs Commercial Tax Officer, Jubilee Hills Circle and Others

Ramesh Ranganathan, J.—Heard Sri S. Dwarakanath, learned counsel for the petitioner, and Sri M. Govinda Reddy, learned Special Standing Counsel for Commercial Taxes (Telangana), and at their request the Writ Petition is being disposed of at the stage of admission. The proceedings under challenge in this Writ Petition is the assessment order dated 26.05.2014 passed by the first respondent denying the petitioner the benefit of input tax credit. Against the assessment order dated 05.03.2009, passed by the second respondent, the petitioner preferred an appeal to the Appellate Deputy Commissioner, in so far as supplies of cement and steel by them to their sub-contractor was sought to be taxed under the Andhra Pradesh Value Added Tax Act, 2005 (for brevity, ''the Act''). Before the appellate authority, the petitioner contended that, even if the said transaction was held to be a sale, they were eligible to claim 100% input tax credit; as the transaction did not amount to sale, they had not declared the value, of cement and steel supplied, as their sales turnover; they did not claim input tax credit, on the corresponding purchases of cement and steel, since a VAT dealer, who has opted for composition under Section 4(7)(d) of the Act, is not eligible; and, even if the transaction is treated as a sale and tax is levied on the value of cement and steel supplied by them, they should be allowed input tax credit as prescribed under Section 13(1) of the Act. The appellate authority noted the contention urged on behalf of the revenue that the appellant did not disclose the purchase transaction in VAT-200 returns, the limitation period of six months had expired, and therefore they were not eligible for input tax credit. The appellate authority held that supplies of cement and steel, by the petitioner to their sub-contractor, amounted to a sale; the petitioner had neither treated the corresponding supplies, made to their sub-contractor, as a sale transaction nor had they disclosed the same in the VAT-200 returns, since they were paying tax under Section 4(7)(d) of the Act; when the supplies made by the petitioner to the sub-contractor was not treated as a sale, equity and justice demanded that that they be allowed input tax credit to the extent they were eligible, more so as there was no explicit bar under the Act to allow input tax credit; and from the details of purchases and the sample copies of tax invoices furnished by them, it was noticed that the petitioner had purchased cement and steel from other registered dealers. The appellate authority was of the view that ends of justice would be met if the matter was remanded back to the assessing authority who should cause verification of the purchase invoices and re-compute the tax liability to the petitioner, after allowing input tax credit on the goods that were supplied to the sub-contractor on a cost recovery basis, to the extent the petitioner was eligible for input tax benefit in accordance with the provisions of law as also bearing in mind the observations made in this regard. The assessment order was set aside, and the matter remanded to the original authority.

The first respondent issued show cause notice dated 14.08.2013 holding that, as the petitioner did not claim input tax credit either in VAT-200 or in VAT-213 returns every month, and had not discharged their obligation of claiming input tax in the Form VAT 200 returns, such input tax credit could not be allowed indirectly through an assessment order. Based on the show cause notice dated 14.08.2013, the assessment order was passed on 26.05.2014. It is evident, from the petitioner''s letter dated 25.02.2014, that they had furnished purchase details dealer-wise. The order of the Appellate Deputy Commissioner obligated the assessing authority to give the petitioner the benefit of input tax credit after examining their tax invoices. It was, therefore, not open to the assessing authority, on the matter being remanded to him, to pass an assessment order contrary to the specific directions of the appellate authority.

Sri M. Govinda Reddy, learned Special Standing Counsel for Commercial Taxes, would contend that the order of the appellate authority is contrary to law. If that be so, it was for a higher authority to revise the order of the Appellate Deputy Commissioner. As long as the order of the appellate authority remained in force, it was not open to the first respondent, on the matter being remanded to him by the appellate authority, to take a view contrary thereto. The impugned order of the first respondent dated 26.05.2014 is set aside. It is made clear that this order shall not preclude the first respondent to pass an order afresh in accordance with the directions of the Appellate Deputy Commissioner; or for any officer, higher in rank than the third respondent, to revise the order of the appellate authority in accordance with law. The Writ Petition stands disposed of accordingly. The miscellaneous petitions pending, if any, shall also stand disposed of. There shall be no order as to costs.