Vignesh Agency vs Government of Andhra Pradesh

M. Satyanarayana Murthy, J.—All these writ petitions are filed by M/s. Vignesh Agency, M/s. Renuka Agencies & M/s. Supreme Overseas Traders challenging the collection of tax and penalty on the spot by respondents 2 and 3. Since the common question involved in all these three writ petitions, we are of the considered view that it is expedient to dispose of these three writ petitions by common order.

W.P. No. 26345 of 2013

This writ petition is filed seeking a direction particularly in the nature of Writ of Mandamus declaring the action of respondents 2 and 3 in issuing proceedings Nos. 30, 31 and 32/2013-14, dated 18.06.2013, levying the penalty without being preceded by notice, the notice issued on 17.06.2013 for collecting tax of Rs. 19,18,371/- and penalty of Rs. 38,36,742/- on interstate purchase of human hair for export purpose from Tirumala Tirupati Devasthanams, Tirupati (for short ''TTD'') covered by invoice No. 51151 and delivery order in ROC No. A1/14/GM(A)/MRKT/TPT/2013, dated 14.06.2013, as illegal without authority of law, without jurisdiction and ultra virus to the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (for short ''AP VAT Act, 2005'') and the Circular issued vide Circular No. L-II (2)/154/2004 in contravention of the guidelines of the Full Bench decision of this Court and for refund of tax penalty collected with interest at the rate of 18% per annum.

W.P. No. 26374 of 2013

This writ petition is filed seeking a direction particularly in the nature of Writ of Mandamus declaring the action of respondents 2 and 3 in issuing proceedings No. 28/2013-14, dated 18.06.2013, levying the penalty without being preceded by notice, the notice issued on 17.06.2013 for collecting tax of Rs. 11,55,587/- and penalty of Rs. 27,11,174/- on interstate purchase of human hair for export purpose from Tirumala Tirupati Devasthanams, Tirupati (for short ''TTD'') covered by invoice No. 51152 and delivery order in ROC No. A1/14/GM(A)/MRKT/TPT/2013, dated 14.06.2013, as illegal without authority of law, without jurisdiction and ultra virus to the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (for short ''AP VAT Act, 2005'') and the Circular issued vide Circular No. L-II (2)/154/2004 in contravention of the guidelines of the Full Bench decision of this Court and for refund of tax penalty collected with interest at the rate of 18% per annum.

W.P. No. 21929 of 2013

This writ petition is filed seeking a direction particularly in the nature of Writ of Mandamus declaring the action of the 3rd respondent in detaining the vehicles bearing Nos. TN 04 AH 5353, TN 02 B 8277 and TN 04 AB 5353 containing human hair of the 2nd variety purchased in E-Auction by the petitioner from the 4th respondent taken delivery on 14.06.2013 at Tirupathi and imposing tax and penalty under AP VAT Act, 2005 vide order, dated 15.06.2013, amounting to Rs. 1,01,36,543/-, as illegal, arbitrary and unconstitutional and to issue consequential direction to the respondents 1 to 3 to refund the amount to the petitioner.

The grounds on which the relief of Writ of Mandamus is claimed in these three writ petitions are one and the same. Therefore to avoid repetition, the contentions raised in all the writ petitions are mentioned hereunder:

The petitioners in these three writ petitions are the registered VAT dealers under Tamil Nadu Value Added Tax Act, 2006 and in pursuance of offer made by TTD, they participated in the auction and purchased human hair of different quantity. The writ petitioner in W.P. No. 26345 of 2013 purchased 25 bags of human hair weighing 20 kgs. Each, found transporting in the vehicle bearing No. AP 29 BE 6752 on 14.06.2013 at about 10.00 P.M., whereas the writ petitioner in W.P. No. 26374 of 2013 purchased human hair of 20 bags, 20 kgs each, found transporting in a vehicle bearing No. AP 03 X 7336 on 14.06.2003 and the writ petitioner in W.P. No. 21929 of 2013 purchased human hair weighing 1499.35 kgs, found transporting in the goods vehicle bearing No. TN 02 B 8277 on 14.06.2013 at about 8.20 P.M. The vehicles were intercepted by Deputy Commercial Tax Officer - III, Tirupathi - II Circle and on verification it is noticed that the dealers/writ petitioners purchased human hair from TTD and transporting the same from Tirupathi after taking delivery from Marketing Office of TTD at Tirupathi and the goods, i.e. human hair, is taxable and they are under movement from Tirupathi to Tamilnadu State. The dealers/writ petitioners are required to possess the following documents while moving the goods from Andhra Pradesh State to the other State, as per the provisions enshrined under Section 45(2)(b) and 48 read with Rule 55 of AP VAT Act, and Rules, 2005

(1) Bill of sale or delivery note or tax invoice

(2) Way bill in Form X or Form 600

(3) Goods vehicle record/Trip sheet/Log book

But the dealers/writ petitioners transporting the goods without possessing the above documents, from Tirupathi to Chennai, the goods are under the coverage of unspecified and irrelevant documents that too with a single Form ''JJ delivery note'' for three vehicles despite issuing separate and different documents for each goods vehicle.

Therefore, the export sale for export purpose accompanying the document of contract with foreign buyer which is lying in the name of the consignor itself, if the transactions were to be for the purpose of export it would have been under the coverage of foreign buyers purchase order. But the dealers/writ petitioners in utter violation of Section 45(2)(b) and Rule 55 of AP VAT Act, 2005 found transporting the goods excigable under AP VAT Act, 2005 without possessing required documents and issued notice, dated 15.06.2013 and 17.06.2013 etc., calling upon the dealers/writ petitioners to pay tax and penalty for transporting the excigable goods without possessing necessary documents and without paying tax. Thereupon, on the next day, the respondents collected tax and penalty from the writ petitioners.

The writ petitioners questioned the action of collecting penalty and tax, under AP VAT Act, is high handed, without affording any reasonable opportunity and the action of respondents 2 and 3 is in contravention of the Full Bench Judgment of this Court in Abmica Lamp House Vs. Commercial Tax Officer (Int)-I Enforcement and Another, .

It is further contended that the TTD is not liable to pay tax on sale of human hair because it was donated by devotees and the TTD had neither purchased nor produced the human hair, exempted from payment of Andhra Pradesh General Sales Tax Act or in view of judgment of Division Bench this Court reported in State of Andhra Pradesh Vs. Bhramaramba Mallikarjuna Swamy Devasthanam, , the question of payment of value added tax by the writ petitioners does not arise.

However, intercepting the vehicles and verification of the vehicle documents etc., issuing notice immediately and collection of amount or within a day, is violation of procedure for levying tax by issuing show cause notice affording opportunity to file reply to the show cause notice and passing an order of assessment, is illegal and arbitrary and prayed to issue a direction declaring that the action of the respondents 2 and 3 as illegal, arbitrary and against the principles of natural justice and for refund of the tax and penalty collected together with interest.

The Special Government Pleader filed counter in these three writ petitions with similar allegations mainly contending that the writ petitions are not maintainable when alternative remedy to approach the appellate authority under the provisions of AP VAT Act is available and thereby this Court cannot exercise its extraordinary jurisdiction under Article 226 of the Constitution of India and encourage the dealers to circumvent the provisions of VAT Act by adopting short cut methods.

The 3rd respondent while conducting vehicle check on 14.06.2013 found the vehicles bearing Nos. TN 04 AH 5353, TN 02B 8277 and TN 04 AB 5353 of the dealers/writ petitioners transporting human hair from Tirupathi to Chennai and produced the following documents:

Form JJ delivery note bearing No. 22, dated 14.06.2013 in triplicate issued the same set of copies for three goods vehicles towards transportation of 1499.5 Kgs. Of human hair from Tirupathi to Chennai.

Invoice book copy of Tirumala Tirupathi Devastanams bearing No. 51150, dated 14.06.2013.

Delivery order of TTD in Roc. No. A1/14/GM(A)/MRKT/TPT/2013, dated 14.06.2013.

Letter addressed in the name of Commercial Tax Officer, Tirupati by Supreme Overseas Traders, Chennai, dated 14.06.2013.

Clarification of CCT, Hyderabad in CCT''s Ref. No. AIII(2)/166/2010, dated 03.09.2010.

Xerox copy of said to be firm sale contract in the letter head of Supreme Overseas Traders, Chennai, dated 18.05.2013.

In terms of provisions of Section 45(2)(b), 48 read with Rule 55 of the AP VAT Act and Rules, 2005 the following documents are required to be produced:

Bill of sale or delivery note or tax invoice.

Way bill in Form X or Form 600

Goods vehicle record/trip sheet/Log book

But they were not produced before the 3rd respondent. The petitioner filed clarification issued by the Commissioner, Commercial Taxes in CCT''s Ref. No. AIII(2)/1666/2010, dated 03.09.2010, which clarifies that "all the dealers, who purchase human hair in the auction, conducted by the TTD, which is not a dealer for the purpose of taxation under AP VAT Act, and transfer such goods to outside the State, are liable to tax under Section 4(4) of the AP VAT Act, as long as there is no ground to show that the movement of goods is in the course of export against the pre existing purchase order, placed by the foreign buyer. Any purchase of goods, before purchase order is received from the foreign buyer and or not conforming to the specifications, laid down in such purchase orders, cannot be said to be a purchase in the course of export and hence not eligible for exemption under the provisions of Section 5(3) of the CST Act."

Finally, it is contended that in the absence of pre existing order from any foreign buyer, the writ petitioners are liable to pay tax and produce necessary documents. Otherwise, it amounts to contravention of Section 45(2)(b), 48 read with Rule 55 of AP VAT Act and Rules, 2005 and prayed to dismiss the suit.

The main endeavor of the counsel for the writ petitioners is that the similar question came up before the Full Bench of this Court, wherein the Full Bench of this Court issued certain guidelines to be followed by the Vigilance and Enforcement Officers of the Commercial Tax Department or Officers of the Commercial Tax Department for levying tax and penalty. In pursuance of the directions, a circular was issued by the concerned authorities directed, the officials to follow those guidelines. In the said judgment, the Full Bench held that collection of tax and penalty on the spot is violation of principles of natural justice and set aside the impugned orders and declare the action of the authorities as illegal and arbitrary. Therefore, the question involved in all these three writ petitions no longer res integra and by following the above principles laid down in the above judgment, prayed to allow the writ petitions.

It is further contended that the remedy available under Section 31 of the AP VAT Act is not a bar when the action of respondents 2 and 3 is high handed against the principles of natural justice, since the collection of tax and penalty on the spot is without affording opportunity and it is violation of the principles of natural justice. Therefore, when the act of respondents 2 and 3 is against the principles of natural justice, the Court can entertain these writ petitions and pass appropriate orders by exercising extraordinary jurisdiction under Article 226 of the Constitution of India placed reliance on several judgments of this Court which will be referred at appropriate stage while deciding the point involved in these matters.

Per contra, learned Special Government Pleader for Commercial Taxes contended that notices were issued calling upon the dealers/writ petitioners to pay taxes and penalty in contravention of Sections 45(2)(b) and 48 read with 55-A of AP VAT Act and Rules, 2005 framed thereunder for non possessing the requisite documents mentioned in the notice and the tax and penalty were collected on the next day after issuing notice. Therefore, voluntary payment of tax and penalty does not amount to collection of tax and penalty high handedly without affording reasonable opportunity to the dealers/writ petitioners. Therefore, it does not amount to violation of principles of natural justice. On this ground, the writ petitions cannot be allowed and liable to be dismissed.

It is further contended that when an alternate, effective and efficacious statutory remedy is available under Section 39 of the AP VAT Act, this Court cannot exercise its extraordinary jurisdiction to issue any order by way of writ of Mandamus declaring the action of respondents as illegal and prayed to dismiss these three writ petitions.

Considering rival contentions, perused the material available on record, the points that arose for consideration in these three writ petitions are as follows:

Whether issue of demand notice, levying tax and penalty to the dealers/writ petitioners and collection of the same on the next day is against the principles of natural justice and in contravention of the guidelines issued by the Full Bench of this Court and the Circular issued by the Commissioner of Commercial Tax Department? If so, whether the action of respondents 2 and 3 be declared as illegal and arbitrary?

Whether respondents 2 and 3 be directed to refund the tax and penalty collected together with interest at the rate of 18% per annum in the event the action of the respondents in collection of tax and penalty is illegal?

Whether the availability of alternative remedy by way of appeal under Section 39 of AP VAT Act, 2005 is a bar to entertain the present writ petitions without existing statutory remedy available to the writ petitioners?

Point No. 1:

A common question involved in these writ petitions, particularly with regard to violation of principles of natural justice in levying the tax and penalty and collection of the same under different proceedings, referred in paras 1 to 3 of this order amounts to violation of principles of natural justice.

In W.P. No. 26345 of 2013, on 14.06.2013 at about 10.00 P.M. the Deputy Commercial Tax Officer-II, Tirupati - 3rd respondent intercepted the vehicle bearing No. AP 29 BE 6752, while transporting 20 bags of human hair.

In W.P. No. 26374 of 2013, on 14.06.2013 at about 10.00 P.M. the Deputy Commercial Tax Officer-II, Tirupati - 3rd respondent intercepted the vehicle bearing No. AP 03 X 7336, while transporting 20 bags of human hair.

In W.P. No. 21929 of 2013, on 14.06.2013 at about 8.20 P.M. the Deputy Commercial Tax Officer, Tirupati - 3rd respondent intercepted the vehicles bearing Nos. TN 04 AH 5353, TN 02 B 8277 and TN 04 AB 5353, while transporting 1499.35 kgs., of human hair.

On examination found that they did not possess the following documents:

Bill of sale or delivery note or tax invoice.

Way bill in Form X or Form 600

Goods vehicle record/trip sheet/Log book

But produced other documents, which are not required to be possessed in view of Section 45(2)(b) and 48 read with Rule 55 of AP VAT Act, & Rules 2005.

Therefore, transportation of excigable goods, which is human hair, without accompanying the above documents referred supra is a clear violation thereupon, issued the impugned detention notices, dated 15.06.2013 & 17.06.2013 respectively and collected tax at Rs. 19,18,371/- so also penalty at Rs. 38,36,742/- from the dealers/writ petitioners in W.P. No. 26345 of 2013, tax at Rs. 11,55,587/- and penalty at Rs. 27,11,174/- from the dealers/writ petitioners in W.P. No. 26374 of 2013 and tax and penalty at Rs. 1,01,36,543/- from the dealers/writ petitioners in W.P. No. 21929 of 2013.

In these three writ petitions, the 3rd respondent informed the dealers/writ petitioners that the latter violated Section 45(2)(b) read with Rule 55 of AP VAT Act, 2005, but no opportunity was given to file explanation or written objections for the proposed levy of tax and penalty and collected the tax and penalty on the next day of issue of notices. Such procedure adopting the spot collection without affording reasonable opportunity to explain, not preceded by any proceedings, assessing the goods to tax is violative of procedure prescribed for levy and collection of tax under AP VAT Act and the guidelines issued by this Court.

A special procedure is prescribed for levy of VAT Tax. According to Section 4(4) of AP VAT Act, 2005, every VAT dealer shall be liable to pay tax at the rate specified in that schedule and pay taxes on taxable goods on the sale price at the rate specified in the schedule etc. Here TTD is not within the definition of dealer in view of the clarification issued by the Government of Andhra Pradesh and when the writ petitioners purchased human hair it is excigable to tax, it is obligatory on the part of the dealers/writ petitioners to pay tax at the specified rates under the provisions of AP VAT Act, 2005. However, Section 5 exempts payment of VAT on the sales or purchases outside the State, in course of import or export. Here the contention of writ petitioners is that they are transporting human hair to Hollywood, but did not produce any export order before the authorities to claim exemption under Section 5 of the AP VAT Act, 2005. In normal course, it is for the registered dealer to file Returns every year and pay tax on the turn over. In this connection, as per the procedure prescribed under Section 20 of AP VAT Act, 2005 in case the VAT dealer or TOT dealer fails to file Returns for any tax period within the prescribed time, the authorities under the act shall assess the dealer for the said period for such default, in the manner prescribed, as per Section 21 of AP VAT Act, 2005. For any reason the department has taken up sue motto and found that the dealer is liable to pay tax on the sale of excigable goods, the department shall issue show cause notice pointing out the irregularities complaining non payment of tax and call upon the dealer to produce necessary evidence and file explanation within reasonable time and on receipt of such explanation the concerned officer shall afford a reasonable opportunity of personal hearing, if sought for and pass appropriate order, levying tax. In the event of failure to pay tax within the period stipulated, the authorities may impose penalty for any contravention of the Rules. Thus, it means every demand must be preceded by certain formalities like issue of notice calling for explanation for proposed assessment or levy of tax etc., but in the instant case on hand, admittedly respondent No. 3 did not follow the procedure prescribed under AP VAT Act, 2005 like affording opportunity to file Returns, produce documents and issue of show cause notice calling upon dealer to produce the material on the proposed levy of VAT and passing an order levying tax etc., suddenly issued detention notices proposing to levy tax, mentioned in the earlier paras, and proposed to levy penalty as per the procedure. However, by issuing notice, dated 17.06.2013, collected the tax and penalty on the next day. As seen from the contents of detention notice, no time was granted for payment of tax and no opportunity was afforded as required under Section 45(2)(b) of AP VAT Act to claim exemption under Section 5 of the AP VAT Act.

Similarly failure to possess three documents referred above by itself is not sufficient to levy tax and penalty without affording any opportunity to the dealers/writ petitioners. Therefore, the procedure adopted by respondent No. 3 in levying tax and penalty without affording reasonable opportunity to explain and produce necessary documents is nothing but contravention of principles of natural justice and high handedly collected the tax by putting the dealers/writ petitioners under threat of seizure of vehicle etc.

As per Section 6-A of the Central Sales Tax Act, 1956, the burden of proof in case of transfer of goods claimed otherwise than by way of sale is on the dealer who claims that he is not liable to pay tax under the said Act and for the said purpose he has to furnish to the assessing authority within the prescribed time, a declaration in Form-F duly filled in and signed by the Principal Officer of the place of business or his agent or principal as the case may be and if the dealer fails to furnish such declaration, then the movement of such goods shall be deemed for all purposes of the Central Sales Tax Act to have been occasioned as a result of sale.

When the similar question came up before the Full Bench of this Court referred supra 1, wherein it was held that inspection authorities not entitled to make on the spot collection of tax or penalty or collect compounding fee without making assessment under Andhra Pradesh General Sales Tax Act (6 of 1957), further held, allowing the petitions, that the action of the respondents in demanding and collecting the amount towards arrears of tax as well as compounding fee or penalty, as the case may be, on the same day was highly arbitrary, illegal and contrary to the provisions of the Act. The petitioners shall be refunded the amounts collected from them, or be provided with an option to agree for adjustment of the same towards payment of the tax in future and issued the following guidelines:

i) Under the provisions of the Andhra Pradesh General Sales Tax Act, 1957 and Andhra Pradesh General Sales Tax Rules, 1957, Officers of the Vigilance Intelligence Wing of the Department can exercise the powers conferred, such as inspection of the business premises, books of accounts, stock verification, etc., apart from recording any statement from any responsible person of the business concern.

ii) Based on such information, if any Officer of the Vigilance or Intelligence Department is empowered to make assessments, such officer can proceed to frame assessments based on the material and such assessments can be completed only after complying with the procedure provided under the provisions of the Act and Rules, i.e. granting sufficient opportunity to the dealer to adduce evidence for the proposed assessment, i.e., as to the quantities as well as valuation of the stocks, etc.: otherwise such material or information can be forwarded to the assessing authority having jurisdiction for taking appropriate action including assessment, reassessment, etc.

iii) There shall be at least a gap of one week between the date of an order of assessment, or demand notice, as the case may be, and an order compounding the offence, wherever the dealer comes forward with such an offer.

iv) The judgments in S.R. Traders Vs. Assistant Commissioner of Commercial Taxes IV and Others, , Kaki Butchi Raju Son Vs. State of Andhra Pradesh and Another, , Badrinath Oil Company v. Assistant Commissioner (INT.) (1995) 21 APSTJ 28, Bharat Metals, Chirala, Prakasam Dist. Vs. Special Assistant Commercial Tax Officer, (DS), Chirala and another, and Sri Lakshmi Venkata Raghava Traders v. Commercial tax Officer (INT. & Enforcement Wing) (W.P. No. 10668 of 1993 decided on September 8, 1993) are not authorities for the proposition that the inspecting officials of the commercial tax department are empowered to pass orders compounding alleged offences on the same day of inspection and to collect the amount specified in such orders on the same day.

v) After completion of the assessment, it is open to the department to issue a demand notice along with the assessment order by providing time as contemplated under the provisions of the Act for collection of the tax.

vi) If penalty proceedings are initiated by the competent authorities, such proceedings are also to be completed after giving notice and sufficient opportunity to the dealer, and thereafter the penalty order can be served along with a notice of demand, giving sufficient time for payment of the amount of penalty, if levied.

vii) If the penalty proposed is unrelated to the assessment of the tax liability, such penalty can be levied independent of the assessment proceedings, but if penalty is related to the assessable tax, such penalty proceedings can be initiated and completed only after completion of the assessment and not before.

viii) If the inspecting authorities are of the opinion that the books of account are required to be seized, they can do so only in accordance with the procedure contemplated under the Act and the Rules and not otherwise. Similarly seizure of goods is to be done as per the procedure provided, and in such cases, the dealer can also avail the benefit of getting release of the goods on furnishing security as provided under the provisions of the Act and Rules.

ix) The Commissioner of Commercial taxes is to issue necessary circular to comply with the directions of the Court by all the concerned officers.

In view of the guidelines laid down in the above judgment, levying tax and penalty and collection of the same on the spot inspection is totally arbitrary and illegal. In guideline No. ii, the Vigilance and Intelligence Department is empowered to make assessment, such officer "can proceed to frame assessments based on the material and such assessment can be completed only after complying with the procedure provided under the provisions of the Act and Rules, i.e., granting sufficient opportunity to the dealer to adduce evidence for the proposed assessment, i.e., as to the quantities as well as valuation of the stocks, etc. Otherwise such material or information can be forwarded to the assessing authority having jurisdiction for taking appropriate action including assessment, reassessment, etc.

According to guideline No. iii, there shall be at least a gap of one week between the date of an order of assessment, or demand notice, as the case may be, and an order compounding the offence, wherever the dealer comes forward with such an offer.

In view of these guidelines, a reasonable opportunity must be afforded to the dealer/writ petitioners to produce evidence in support of their contention on the proposed levy of tax and penalty. Even according to Section 45(7)(b) of AP VAT Act, 2005 a reasonable opportunity is to be given to the persons likely to be affected against the proposed penalty. However, we feel it is appropriate to extract Section 45(7)(a) and (b) for better appreciation:

a) Where the goods are carried without paying tax, if any, payable or goods are carried without being properly accounted for in the documents referred to in clause (b) of sub-section (2), the said officer shall collect the tax payable on the goods so carried and in addition levy a penalty not exceeding two times the amount of tax payable on such goods after giving a reasonable opportunity to the person like to be effected, against the proposed penalty;

b) Any such officer shall have power to seize and confiscate any goods where such goods re carried in the goods vehicle without any documents or covered by fictitious documents: provided that before taking action for the confiscation of goods under this subsection, the officer shall given the person affected an opportunity of being heard.

Even according to the provisions under Section 45(7)(a)(b), an opportunity shall be given to an effected person. In the instant case on hand, the 3rd respondent did not give any opportunity much less reasonable opportunity as directed by the Full Bench of this Court and the Circular issued by the Commissioner of Commercial Taxes in Circular No. LII(2)/154/04/dated 22.07.2005 in pursuance of the guidelines issued by this Court, but obviously for different reasons the 3rd respondent in utter disregard of the guidelines issued by this Court and the Circular issued by the Commissioner of Commercial Taxes, without affording any opportunity of being heard to the effected party, as directed in guideline No. III of the Circular under the guidelines of the Full Bench of this Court levied tax and collected on the spot under the threat of seizure of the goods and vehicle or otherwise, such collection of tax and penalty is totally in contravention of guidelines issued by the Commissioner of Commercial Taxes in pursuance of the guidelines of Full Bench of this Court, so also, Section 45(7)(a)(b) of the AP VAT Act. Thus the 3rd respondent levied tax and penalty on the spot without preceded by any order of assessment and issued detention notices and collected both tax and penalty on the next day without affording any opportunity much less reasonable opportunity to produce any evidence in support of their contention. Therefore, the collection of the tax and penalty by the 3rd respondent from the dealers/writ petitioners is against principles of natural justice, as per the guidelines issued by the Full Bench of this Court and the Commissioner of the Sales Tax referred above. Hence, the collection is declared as illegal and arbitrary.

Accordingly, point No. 1 is answered in favour of the writ petitioners and against the respondents.

Point No. 2:

The main contention of the respondents is that an alternative remedy, under Section 31 of AP VAT Act, 2005, is available to the writ petitioners to file an appeal before the appellate authority, but without exhausting statutory remedy by way of appeal, the writ petitioners filed this writ petitions, hence the writ petitions are not maintainable. No doubt any VAT dealer or any other dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the Act other than an order passed or proceeding recorded by an Additional Commissioner or Joint Commissioner or Deputy Commissioner, may, within thirty days before the appellate authority may file an appeal. Admittedly, the remedy of appeal available under Section 31 of AP VAT Act, 2005 was not exhausted by the writ petitioners. However, the reason for approaching this court by filing writ petition under Article 226 of the Constitution of India is that the 3rd respondent collected the amount in utter violation of principles of natural justice. When an order was passed against the principles of natural justice, the writ petition is maintainable and placed reliance on the judgments of Division Bench of this Court in Writ Petition Nos. 16160 of 2012 and 21060 of 2012, dated 16.12.2013. In the said writ petitions, a similar question came up for consideration, and the Division Bench of this Court by following the judgment referred supra 1 held that no liability can be fastened on the dealer and the Commercial Tax Department is not entitled to collect tax/penalty/compounding fee by coercion at the time of inspection alleging suppression of turnover, or such other irregularities and issued guideline to the respondents 1 to 3 and 5 to refund to the petitioner the amounts collected while releasing the vehicles in question, together with interest at 6% per annum within eight weeks from the date of receipt of this order or to adjust the same against the petitioner''s tax liability, if any, existing as of today.

By applying the principle laid down in the above judgment, when it can safely be concluded that when the respondents violated the principles of natural justice, the writ petitions are maintainable and this Court can grant appropriate relief under Article 226 of the Constitution of India. Hence, the writ petition is maintainable, and the contention of the Special Government Pleader for Commercial Taxes is without any substance.

Accordingly, the point is held in favour of the writ petitioners and against the respondents.

Point No. 3:

In view of the findings of the point Nos. 1 and 2, the writ petitions are maintainable and the levy of tax and penalty on the spot inspection and collection of the same immediately on the next day is arbitrary and illegal and thereby respondents 2 and 3 are liable to refund the amount in view of the judgment of the Full Bench of this Court referred supra and unreported common judgment in Writ Petition Nos. 16160 of 2012 and 21060 of 2012.

Accordingly, this point is held in favour of the writ petitioners and against the respondents. In the result, these three writ petitions are allowed. There shall be a direction to the respondents 2 and 3 to refund to the writ petitioners the amounts collected, together with interest at 6% per annum within eight weeks from the date of receipt of this order or to adjust the same against the petitioner''s tax liability, if any, existing as on today.