2018 (11) TMI 1686 - HC - VAT and Sales Tax

Maintainability of petition - alternative remedy of appeal - Jurisdiction - Benami transaction - Concessional rate of tax - C Form - intra-state sales - HELD THAT - It is clear from the impugned order that the 1st respondent has exercised a jurisdiction not vested to him in law, both in terms of territorial limits and also in terms of the failure to give credit to the tax paid. Hence, this is a fit case where the Court would exercise its power under Article 226 of the Constitution of India. This Court had its own doubts about the necessity for the petitioner to be in possession of signed and unsigned cheque leaves, lorry receipts, way bills, rubber stamps of several companies etc. Therefore, in view of the large tax implication, this Court passed a conditional order on 01-5-2018 granting interim stay on condition that the petitioner paid ₹ 50 lakhs on or before 31-5-2018. Such a condition was imposed to check the bona fides of the petitioner. The petitioner has complied with the conditional order. As a matter of fact, if the petitioner had been driven to the alternative remedy of appeal, he would have been called upon to pay 12.5% of the disputed tax - the objection to the maintainability of the writ petition on the ground of availability of alternative remedy has to be rejected. The only argument repeated in several places in the impugned order as well as in the counter affidavit is that the registered dealers in other States were non-existent persons and that they were only benamies for the petitioner. But the orders of assessment in respect of those persons are not claimed by the 1st respondent to be bogus or fabricated. Therefore, we fail to understand as to why a person would suffer an order of assessment and also pay Central Sales Tax in fictitious names or in benami names without a corresponding benefit. What that corresponding benefit was, could not be articulated by the respondents. The fact that the 1st respondent has exercised extra territorial jurisdiction even in respect of the dealers in the State of Telangana, despite the bifurcation, is very clear from the impugned order. Therefore, the impugned order deserves to be set aside and the matter remanded back for a fresh consideration. The matter remanded back to the 1st respondent for a fresh disposal in accordance with law - petition allowed by way of remand.

Summary

Issues: Challenge to best of judgment assessment under Andhra Pradesh Value Added Tax Act, 2005.

Analysis:
1. Search Operations and Allegations: Search operations conducted at various premises revealed discrepancies in transactions related to the purchase and sale of edible oil. The petitioner was alleged to have purchased oil from Andhra Pradesh, sold it in the state, and evaded tax by camouflaging sales as Inter-State transactions.

2. Show Cause Notice and Objections: A show cause notice was issued to the petitioner, who claimed to be a commission agent and denied tax liability due to lack of physical handling of goods. The objections raised by the petitioner were overruled, leading to the best of judgment assessment by the 1st respondent.

3. Jurisdictional Challenge: The petitioner challenged the jurisdiction of the 1st respondent, arguing that the assessment was beyond the authority's scope. The impugned order detailed the alleged modus operandi of the petitioner, indicating discrepancies in reported turnovers and tax payments.

4. Assessment Errors: The assessment order failed to credit taxes already paid and incorrectly calculated the estimated turnover, resulting in a substantial tax demand. The jurisdictional errors by the 1st respondent, including territorial limits and failure to acknowledge tax credits, were highlighted.

5. Court's Intervention: The High Court intervened due to jurisdictional lapses and directed a fresh consideration of the case. Doubts were raised regarding the necessity for certain documents in possession of the petitioner, leading to the imposition of a conditional stay order.

6. Remand and Directions: The writ petition was allowed, setting aside the impugned order and remanding the matter for a fresh disposal. The 1st respondent was instructed to conduct a personal hearing, consider the court's observations, and pass fresh orders within a specified timeline. The amount paid by the petitioner as per the interim order was directed to be held by the Government pending the fresh assessment outcome.

7. Conclusion: The impugned order was deemed invalid, and the case was remanded for a fair reconsideration. The Court emphasized the need for proper assessment procedures and adherence to legal principles in tax matters, ensuring a just outcome for all parties involved.