2010 (2) TMI 1112 - HC - VAT and Sales Tax

Deferment of the proposals to revise the order of assessment rejected - whether Section 20(6) of the Andhra Pradesh General Sales Tax Act, 1957 is not applicable to the facts of the present proceedings? Held that - As the order impugned is bereft of reasons and recording of reasons is, we consider a non-derogable obligation in exercise of statutory power, the order impugned in this writ petition invites invalidation and is accordingly quashed. The third respondent shall pass a fresh order after due consideration of the representation of the petition dated January 20, 2010 or any additional representation that the petitioner may make within one week from the date of receipt of a copy of this order and communicate the eventual decision to the petitioner, expeditiously.

Summary

Issues:
Challenge to order calling for written objections to revise assessment proceedings under Andhra Pradesh General Sales Tax Act, 1957.

Detailed Analysis:
The petitioner, a company engaged in supply, erection, and installation of lifts, challenged the third respondent's order calling for written objections to revise the assessment proceedings for the year 2003-04 under the Andhra Pradesh General Sales Tax Act, 1957. The petitioner had initially returned a turnover of Rs. 16,44,80,445 for the assessment year 2003-2004, claiming a statutory deduction of 25% of the contract value towards labor and other charges. The second respondent accepted this claim and passed the assessment order. However, the third respondent later proposed to levy tax on the entire contract value, citing a Supreme Court decision. The petitioner filed a writ petition challenging these proposals, and during the hearing, applied to defer the revision proceedings. This application was rejected by the third respondent, prompting the petitioner to challenge the decision, arguing that the discretion to defer revision proceedings under section 20(6) of the Act should have been exercised, especially considering the pending Supreme Court reference on a related matter.

The petitioner's senior counsel contended that the discretion conferred on the revisional authority under section 20(6) is a duty to be exercised in appropriate cases. The counsel argued that in light of the pending Supreme Court reference, the third respondent should have refrained from proceeding with the revision. Additionally, it was submitted that the third respondent should have provided reasons for declining to exercise the discretion available under section 20(6) when the petitioner requested deferment of the revisional proceedings.

On the other hand, the Special Standing Counsel for Commercial Taxes argued that section 20(6) does not mandate the revisional authority to defer proceedings merely due to pending appeals or other proceedings. It was contended that the decision of the Supreme Court cited by the third respondent constitutes binding law, and any potential future interpretation should not affect the current proceedings. The counsel emphasized that the discretion to defer under section 20(6) is not an obligation and should be construed as such.

The High Court, in its judgment, emphasized the importance of recording reasons for the exercise of public power, especially when judicial review is possible. The court found the third respondent's order lacking in reasons, which led to the invalidation of the decision. The court directed the third respondent to pass a fresh order after considering the petitioner's representations and communicate the decision promptly. The writ petition was allowed at the admission stage, with no costs imposed.