2016 (4) TMI 93 - HC - VAT and Sales Tax

Inclusion of works contract within the purview of A.P. VAT Act - Execution of works contract outside the state - Entire works contract executed in the State of Tamil Nadu where an assessment could be made to bring the said transaction within the purview of the A. P. VAT Act - Petitioner was not registered in the State of Tamil Nadu as on the date of entering into the contract - Held that - While the assessing officer passed the assessment order justified bringing of the transaction into the fold of A. P. VAT Act and the assessment order does not indicate what are the goods which have been transported from Visakhapatnam and at what point of time and whether they relate to the execution of contract or supply of local goods or supply of imported goods. Further, the assessing officer also erred in stating that the contract was entered into in Visakhapatnam as the very documents indicate that the said three contracts were entered into at Mumbai. The statement of the assessing officer would be right with respect to the situs of the contract only when the goods were available at the time of the contract and the same does not hold good when the goods are to be supplied in later point of time. Therefore, the assessment so far as the bringing transaction relating to M/s. Tuticorin Coal Terminal Private Limited is concerned, is liable to be set aside. - Decided in favour of petitioner

Summary

Issues:
Challenge to assessment order regarding inclusion of turnover in taxable turnover

Analysis:
The petitioner, a private limited company engaged in engineering contracts, challenged an assessment order under the Andhra Pradesh Value Added Tax Act. The dispute arose from a contract with a company in Tamil Nadu for work executed outside Andhra Pradesh. The petitioner contended that transactions were filed in Tamil Nadu and objections were raised against the assessment order. The court granted an interim order and the matter proceeded with counter-affidavits. The respondent-Assistant Commissioner admitted to three agreements with the company in Tamil Nadu, justifying the assessment based on the location of contract execution. The main issue was whether the works contract executed in Tamil Nadu could be assessed under the A. P. VAT Act.

The assessing officer did not adequately address the petitioner's objections regarding the contract execution location and applicability of A. P. VAT Act. The assessment order lacked consideration of crucial aspects, misinterpreted legal precedents, and failed to clarify the transportation details. The court agreed that the assessment regarding the company in Tamil Nadu should be set aside. However, considering the availability of additional evidence with the authorities, the matter was remanded for fresh consideration. The petitioner was granted the opportunity to raise objections before the assessing authority. The writ petition was allowed, setting aside the assessment order related to the company in Tamil Nadu, with no costs awarded.

This detailed analysis of the judgment highlights the legal intricacies involved in challenging an assessment order under the VAT Act, emphasizing the importance of proper consideration of objections and legal precedents in tax assessments. The judgment showcases the court's role in ensuring fair assessment practices and providing parties with the opportunity to address concerns before the assessing authority.