2022 (11) TMI 285 - HC - VAT and Sales Tax

Validity of assessment order - execution of Works Contracts - Composition Scheme - territorial jurisdiction to assess the case of the Petitioner - HELD THAT - It is an undisputed fact that, the dealer opted for Composition Scheme and filed Form VAT 250 on 10.06.2015, wherein, the dealer opted for payment of tax by way of composition, for the full value of the contract of Rs.4,35,00,000/-. The dealer commenced its activity of contract by purchasing the goods to a tune of Rs.94,16,538/- for the purpose of construction and development activities at his apartments and by selling the apartments to a tune of Rs.10,00,000/-. Having regard to the filing of Form VAT 250 and opted for Composition Scheme by filing VAT 250, the Petitioner would come under the purview of Section 4(7)(d) and Rule 17(4) of VAT Act. It may be true that the second Respondent is the territorial Assessing Authority, but it is not in dispute that the first Respondent is having territorial jurisdiction over the dealer. The G.O.Ms. No. 503, dated 08.05.2009, which came into effect from 01.05.2009, which is referred to in the affidavit filed in support of the Writ Petition, would show that, if the Deputy Commercial Tax Officer is having territorial jurisdiction over the dealer, he can deal with the case of the dealer irrespective of the fact whether the original order under Appeal or Revision order has been passed by him or not - the argument of the learned Counsel for the Petitioner that the first Respondent has assessed the case of the Petitioner without having territorial jurisdiction, cannot be accepted, when it is a fact that the Petitioner also falls within the territorial jurisdiction of the first Respondent. Whether the findings given by the Assessing Authority vis- -vis finding given by the Appellate Authority are correct? - HELD THAT - The purchases made prior to declaration of VAT 250 and the sale made apartments , the Appellate Authority found that the method adopted in levying tax is totally incorrect. The Appellate Authority categorically held that, when the Petitioner has opted for Composition Scheme and not claimed ITC, then the Assessing Authority has to levy tax under Rule 17(4) of the VAT Act. Having said so, the Appellate Authority further said that the Assessing Authority, without verifying the records properly, levied tax on purchases also, which is against the spirit of VAT Act and, accordingly, remanded the matter back. It is very clear that the Assessing Authority has once again levied tax on the purchases made before filing of VAT 250 period, though tax was paid on them at the time of sale of the apartments, which, as urged by the learned Counsel for the Petitioner, prima facie, may amount to double taxation. The argument that the first Respondent has no power to assess the case of the Petitioner is rejected, but, however, on the second issue, the matter is remanded back to the first Respondent to deal with the same in accordance with law by taking into consideration the observations made by the Appellate Authority - the Writ Petition is allowed by way of remand.

Summary

Issues Involved:
1. Jurisdiction of the first Respondent to pass the Assessment Order.
2. Legitimacy of the Assessing Authority's findings vis-à-vis the Appellate Authority's directions.

Issue-wise Detailed Analysis:

1. Jurisdiction of the First Respondent:

The Petitioner contended that the first Respondent lacked the authority to assess the case, arguing that the second Respondent was the Officer with territorial jurisdiction. The Petitioner pointed to Rule 59(1) of the A.P. VAT Rules, 2005, to support this claim. However, the Court noted that the first Respondent had assessed the Petitioner's case in the earlier round of litigation without any objection from the Petitioner regarding jurisdiction. Rule 59(1) allows the Assistant Commissioner, Commercial Tax Officer, or Deputy Commercial Tax Officer with territorial jurisdiction over the dealer to pass orders, regardless of whether they issued the original order under appeal or revision. The Court concluded that the first Respondent had territorial jurisdiction over the dealer, thus rejecting the Petitioner's argument on jurisdiction.

2. Legitimacy of the Assessing Authority's Findings:

The Petitioner argued that the Assessing Authority failed to consider the Appellate Authority's findings, leading to double taxation. The Appellate Authority had set aside the initial Assessment Order, noting that the Assessing Authority incorrectly levied tax on materials purchased by adding profit, contrary to the VAT Act's provisions. The Appellate Authority directed the Assessing Authority to levy tax under Rule 17(4) of the VAT Act, considering the Petitioner had opted for the Composition Scheme and not claimed Input Tax Credit (ITC). On remand, the Assessing Authority confirmed the earlier order, still taxing purchases made before filing VAT 250, which the Petitioner argued resulted in double taxation. The Court agreed, noting that the Assessing Authority should have adhered to the Appellate Authority's findings and directions.

Conclusion:

The Court allowed the Writ Petition in part. It upheld the first Respondent's jurisdiction to assess the case but remanded the matter back to the first Respondent to reassess in accordance with the Appellate Authority's observations, ensuring no double taxation occurs. No costs were awarded, and any pending interlocutory applications were closed.