2022 (8) TMI 608 - HC - VAT and Sales Tax

Constitutionality of Section 3A of the Luxuries Tax Act - territorial jurisdiction to entertain the writ petition - whether this Court would have the territorial jurisdiction under Article 226 of the Constitution of India against the appellate order dated 31.05.2019 passed by the fourth respondent upholding the order dated 04.02.2017 passed by the second respondent? HELD THAT - Admittedly, the show cause notice issued by the Commercial Tax officer, Visakhapatnam, dated 07.08.2015, has been challenged separately by way of another writ petition. But it is yet to come up for hearing. Therefore, if the claims of both the Commercial Tax Officers are actually sustainable in law, assuming that they are sustainable, the petitioner can always raise a valid point that there cannot be overlap of the claims. There cannot be two demands by two different authorities in respect of one liability. But that is a matter that does not strike at the root of the issue of jurisdiction of the respondent. Therefore, the second contention of the learned counsel for the petitioner also does not appeal to entertain the writ petition, especially at the stage of show cause notice, when the Supreme Court has granted liberty to whoever it is to issue show cause notice and proceed further. Therefore, there are no justification to entertain the writ petition at this stage. This Court held that the revised show cause notice was issued on liberty being given by Supreme Court. Therefore there was no justification to entertain the challenge to the said show cause notice. In so far the jurisdiction of the Commercial Tax Officer, Visakhapatnam or for that matter Assistant Commissioner of Commercial Taxes, Warangal is concerned, view taken by this Court was that - that is a matter which does not strike at the root of the issue of jurisdiction of the taxing authorities. Since it has not collected luxury tax, it is not liable to pay such tax, be it to the second respondent or to the third respondent. In the circumstances, to restrain the third respondent to perform its statutory duties following the liberty granted by the Supreme Court would not be justified - no action of the third respondent is under impugnment in the present writ proceeding. Therefore, no order against the third respondent is warranted. The writ petition is dismissed.

Summary

Issues Involved:
1. Quashing of recovery proceedings dated 04.02.2017.
2. Constitutionality of Section 3A of the Andhra Pradesh Tax on Luxuries Act, 1987.
3. Jurisdiction of the Telangana High Court to entertain the writ petition.
4. Alleged collection and non-payment of luxury tax by the petitioner.
5. Overlapping claims by different tax authorities.

Detailed Analysis:

1. Quashing of Recovery Proceedings Dated 04.02.2017:
The petitioner sought quashing of the recovery proceedings dated 04.02.2017 initiated by the second respondent, the Commercial Tax Officer, Kurupam Market Circle, Visakhapatnam. The second respondent had demanded Rs.62.80 crores, alleging that the petitioner collected luxury tax but did not remit it to the State Government. The fourth respondent, Appellate Deputy Commissioner (CT), Vijayawada, upheld this order on 31.05.2019.

2. Constitutionality of Section 3A of the Andhra Pradesh Tax on Luxuries Act, 1987:
The petitioner had previously challenged the constitutionality of Section 3A of the Luxuries Tax Act, which levied luxury tax on tobacco products. The High Court dismissed the challenge on 12.11.1998. The Supreme Court, in a judgment dated 20.01.2005, declared Section 3A unconstitutional but directed that any luxury tax collected from consumers after the interim order dated 01.04.1999 must be paid to the State Governments.

3. Jurisdiction of the Telangana High Court to Entertain the Writ Petition:
The court examined whether it had the territorial jurisdiction to entertain the writ petition challenging the orders of the second and fourth respondents, both of whom are located outside the territorial jurisdiction of the Telangana High Court. The court concluded that it did not have jurisdiction to entertain the writ petition as the impugned orders were passed by authorities in Andhra Pradesh.

4. Alleged Collection and Non-Payment of Luxury Tax by the Petitioner:
The petitioner contended that it did not collect luxury tax post the Supreme Court's interim order dated 01.04.1999. The Supreme Court had appointed auditors who submitted a report on 25.03.2013, stating that the petitioner had not collected any luxury tax. The contempt petition filed by the tax authorities was disposed of by the Supreme Court on 06.02.2014, allowing the tax authorities to issue show cause notices to the petitioner.

5. Overlapping Claims by Different Tax Authorities:
The third respondent, Assistant Commissioner of Commercial Taxes, Warangal, issued a revised show cause notice on 08.12.2016, claiming Rs.314.39 crores. The petitioner challenged this in W.P.No.210 of 2017, which was dismissed on 23.01.2017. The court noted that overlapping claims by different tax authorities (second and third respondents) could not be entertained at the stage of show cause notice and directed the petitioner to file objections.

Conclusion:
The court dismissed the writ petition due to lack of territorial jurisdiction, allowing the petitioner to challenge the orders before an appropriate forum. The interim order was vacated, and no costs were awarded. The court refrained from expressing any opinion on the merits of the case.