2018 (2) TMI 772 - HC - VAT and Sales Tax

Validity of assessment order - APVAT act, 2005 - appeal rejected on the ground that the pre-deposit condition was not satisfied - main grievance of the petitioner is two fold, viz., (a) that the original order of assessment was without jurisdiction, as it included the turnover relating to works executed in other States; and (b) that in any case, the decision of this Court in Ankamma Trading Company 2011 (2) TMI 1254 - Andhra Pradesh High Court has been suspended by the Supreme Court. Held that - the Division Bench came to the conclusion in Ankamma Trading Company that even the payment of admitted tax and 12.5% of the disputed tax beyond the period of 60 days, from the date of receipt of a copy of the order of assessment, would disable the appellate authority from admitting the appeal and that the prescription was mandatory and not directory - it is contended by the learned counsel for the petitioner that as on date, the decision in Ankamma Trading Company cannot be taken to be a binding precedent and that it is always open to this Court to be allowed to be persuaded to come to a different conclusion. The contention of petitioner cannot be agreed. On first principles, there cannot normally be an interim suspension of a principle of law enunciated in a decision. At the most, the interim relief granted by the Supreme Court in the Special Leave Petition filed by the Ideal Industrial Explosives Limited, can be taken to be an interim suspension of the consequences that flowed out of the judgment of this Court. By way of an interim order, the ratio decidendi of a judgment cannot be kept in suspended animation or in a state of limbo. Therefore, we do not agree with the contention that the ratio of the decision in Ankamma Trading Company stands suspended. Whether it will be open to an assessee to challenge the original order of assessment, after getting their statutory appeal rejected for failure to comply with the statutory prescription? - Held that - In cases where an assessee chooses to challenge the original order of assessment, after his appeal is rejected for non-compliance with the statutory prescription, this Court will also see whether the assessee is guilty of delay and laches. In other words, the assessee falling under this category should satisfy this Court not only on the parameters of violation of natural justice or lack of jurisdiction but also on the parameters of delay and laches. Wherever it is found by this Court that an assessee has come up with a writ petition at the earliest point of time, without being guilty of delay and laches, this Court can certainly examine whether the original order of assessment was vitiated by a violation of the principles of natural justice or lack of jurisdiction on the part of the assessing authority. The second objection to the original order of assessment is that in respect of the works carried out outside the State, the 2nd respondent had no jurisdiction. But in support of this contention the petitioner ought to have produced pending agreement copies. The other contention that the works executed by the petitioner for AMR Constructions and Sushee Infratech Private Limited are in the nature of civil contracts for removal of overburden and that therefore the receipts cannot be considered as hire charges, is an argument that does not go to the root of the issue of jurisdiction. Petition dismissed.

Summary

Issues Involved:
1. Jurisdiction of the original order of assessment.
2. Rejection of the appeal due to non-compliance with the pre-deposit condition.
3. Alleged violation of principles of natural justice.
4. Applicability and binding nature of the decision in Ankamma Trading Company.

Detailed Analysis:

Jurisdiction of the Original Order of Assessment:
The petitioner contended that the original order of assessment dated 04.02.2015 was without jurisdiction as it included turnover relating to works executed in other States. The court noted that the petitioner was required to produce relevant agreement copies to substantiate their claim that the works were executed outside Andhra Pradesh. The court found that the petitioner failed to provide these documents despite being granted sufficient time. Consequently, the court held that the jurisdictional challenge was not substantiated by the petitioner.

Rejection of the Appeal Due to Non-Compliance with the Pre-Deposit Condition:
The petitioner’s statutory appeal was rejected by the appellate authority on 07.10.2015 due to the failure to deposit 12.5% of the disputed tax, as mandated by the A.P. VAT Act, 2005. The petitioner argued that they were unable to make the deposit due to financial constraints and cited the suspension of a related judgment (Ankamma Trading Company) by the Supreme Court. The court emphasized that the requirement of pre-deposit is a mandatory condition for entertaining an appeal, as established in Ankamma Trading Company. The court concluded that the petitioner’s failure to comply with this statutory requirement justified the rejection of the appeal.

Alleged Violation of Principles of Natural Justice:
The petitioner argued that the failure of the 2nd respondent to grant additional time to produce proof of works executed in other States constituted a violation of natural justice. The court examined the timeline and found that the petitioner was given ample opportunity to present their case, including a personal hearing held on 19.01.2015. The court concluded that there was no violation of natural justice as the petitioner had sufficient time to collect and submit the required documents.

Applicability and Binding Nature of the Decision in Ankamma Trading Company:
The court addressed the petitioner’s argument that the decision in Ankamma Trading Company was suspended by the Supreme Court and therefore should not be binding. The court clarified that an interim suspension by the Supreme Court does not nullify the principle of law established in a judgment. The court maintained that the decision in Ankamma Trading Company remains binding until it is reversed or modified by the Supreme Court. The court also noted that the statutory requirement of pre-deposit is a common feature in revenue statutes and is designed to balance the interests of the revenue and the rights of the assessee.

Conclusion:
The court dismissed the writ petition, upholding the original order of assessment and the rejection of the appeal. The court emphasized that the petitioner failed to comply with the statutory pre-deposit requirement and did not substantiate their jurisdictional challenge. The court also found no violation of natural justice in the assessment process. The decision in Ankamma Trading Company was deemed binding, and the court saw no reason to take a different view. The writ petition was dismissed, and all pending miscellaneous petitions were closed with no order as to costs.