Allu Ramana Murthy vs. Assistant Commissioner (St)
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The petitioner, Allu Ramana Murthy, filed three writ petitions challenging assessment orders passed against one Sri A. R. Maruthi Raj under the Andhra Pradesh Value Added Tax Act, 2005, for the periods 2014-15, 2015-16, and 2016-17. The petitioner also challenged consequential bank attachment notices issued by the Deputy Assistant Commissioner (ST) on February 21, 2025, under Section 79(1)(C) of the CGST/SGST Act, 2017. The petitioner contended that the assessment orders were passed against a third party and that he was made liable for the dues of that third party without proper notice or service of the assessment order. The respondents argued that the petitioner purchased a bus from Sri A. R. Maruthi Raj and, by virtue of Sections 26, 27, and 30 of the VAT Act, became liable for the tax dues.
Held
The Court allowed the writ petitions, setting aside the bank attachment orders. The Court reasoned that while Sections 26 and 27 of the VAT Act allow for the creation of a charge over assets and the provisional attachment of property for recovery of tax dues, and Section 30 stipulates that a person to whom the business of a dealer is transferred is liable for taxes, the sale of a bus by Sri A. R. Maruthi Raj to the petitioner does not constitute a transfer of business. The Court held that the respondent authorities could, at best, proceed against the vehicle sold by Sri A. R. Maruthi Raj, subject to the conditions stipulated under Section 27 of the VAT Act. However, they could not seek to recover the taxes due from Sri A. R. Maruthi Raj directly from the petitioner. The Court left it open for the authorities to recover the tax dues from Sri A. R. Maruthi Raj and to take steps against the vehicle if the conditions under Section 27 of the VAT Act were complied with.
Key Issues
1. Whether the assessment orders passed under Section 21(5) of the AP VAT Act, 2005, against Sri A. R. Maruthi Raj, and the subsequent bank attachment notices under Section 79(1)(C) of the CGST/SGST Act, 2017, are void, illegal, arbitrary, and in violation of the principles of natural justice, as the petitioner was not the assessee and did not receive proper notice or service of the assessment order? Petitioner's contention: The assessment orders were passed against a third party, Sri A. R. Maruthi Raj, and the petitioner was made liable for the tax dues of this third party without being named in the assessment order, without service of notice, and without service of the assessment order, thus violating principles of natural justice. Revenue's contention: The petitioner purchased a bus from Sri A. R. Maruthi Raj. By virtue of Sections 26, 27, and 30 of the VAT Act, the petitioner is liable to discharge the tax dues of Sri A. R. Maruthi Raj.
Sections Cited
Section 21(5), Section 79(1)(C), Section 26, Section 27, Section 30
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following Common Order:
... ^ APHC010185852025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Juri iction) [3535] WEDNE AY, THE TWENTY THIRD DAY OF APRIL TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE B V L N CHAKRAVARTHI WRIT PETITION Nos: 9376, 9385 & 9389 /2025 Between: Allu Ramana Murthy, ...PETITIONER AND Assistant Commissioner St and Others ...RESPONDENT(S) Counsel for the Petitioner:
L CHANDRA OBUL REDDY Counsel for the Respondent(S): 1.GP FOR COMMERCIAL TAX The Court made the following common order: (per Hon’ble Sri Justice R. Raghunandan Rao) The respondent had passed orders of assessment against one Sri A. R. Maruthi Raj, under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (here-in-after referred to as “VAT Act”), for the assessment periods 2014-15, 2015-16 & 2016-17. The 1®^ respondent, after giving due notice and opportunity of hearing, had passed orders of 2 RRR,J& BVLNQ J W.P.No.9376 of 2025 & batch assessment Raj, on account of hire to bus bearing No.AP 35 X 0288. determining various amounts to be due from Sri A. R. Maruthi charges received by him from M/s.APSRTC iin relation
Thereafter, the a bank attachment petitioner herein as well as his banker, had notice by the 2 been served with 21.02.2025, Sri A. R. Maruthi Raj nd respondent, dated raised against calling upon the banker to remit the tax dues ■under the orders of assessment.
The petitioner, has approached this Court being aggrieved by the by way of these Writ Petitions. sa/d order of attachment, The petitioner has separate assessment orders. filed three Writ Petitions against three details of the The assessment orders and the consequential attachment orders are given below; Assessment Period W.P.No. Assessment order No. & Date '^H37032ToD474^ dated 30.03.2021 ^ZH3704^20D430077 dated 08.04.2022 ZH371120OD41178, dated 17.11.2020 Bank Attachm^ Notice Date 9376 of 2025 2015-16 21.02.2025 9385 of 2025 2016-17 21.02.2025 9389 of 2025 2014-15 21.02.2025
The contention of passed against clearing the dues of the third ^he petitioner a third party and the was that the assessment orders petitioner was made liable had been A for party.
3 RRR, J & BVLNC, J W.P.No.9376 of2025 & batch
The learned Government Pleader for instructions, submits that the petitioner had bearing No.AP 35 X 0288. The learned Government Commercial Tax, on purchased the said vehicle Pleader would contend that, by virtue of Sections 26, 27 & 30 of the VAT Act, the petitioner wouid become liable to discharge the tax dues of Sri A. FT Maruthi Raj.
Section 26 of the VAT Act provides for creation of a charge over the assets of a VAT dealer or TOT dealer or any other dealer under the VAT Act for recovery of tax dues. Section 27 of the VAT Act voids any transfer of property by a dealer with the intention to evade payment of tax and the authorities under the Act ot provisionally attach empowers any property, even during the pendency of the assessment proceedings so as to protect interests of revenue. Section 30 of the VAT Act stipulates that the liability of taxes of a dealer would have to be discharged by any other person to whom the business of the dealer has been transferred.
In the present case, Sri A. R. Maruthi Raj is said to have sold his bus to the petitioner. This would not business. mean, in any manner, transfer of 8. The provisions of Sections 26 & 27 would at best be available for recovery of taxes by sale of the bus that is said to have been sold to the petitioner. This right would also be subject to the conditions Section 27 of the VAT Act. stipulated under 4 RRRJ&BVLNCJ i W.P.No.9376 of2025 & batch ^
In such circumstances, the respondent authorities, who could at best proceed against the vehicle sold by Sri A. R. Maruthi Raj, subject to the conditions set out under Section 27 of the VAT Act, and cannot seek to recover the taxes due of Sri A. R. Maruthi Raj from the petitioner.
Accordingly, these Writ Petitions are allowed, setting aside the orders of attachment mentioned above, leaving it open to the authorities to recover the tax dues from Sri A. R. Maruthi Raj and to take steps against the vehicle, if the conditions under Section 27 of the VAT Act are complied with. There shall be no order as to costs. As a sequel, pending miscellaneous applications, if any, shall stand closed. SHAIK MOHD. RAFI ASSISTANT REGISTRAR //// To SECTION OFFICER
The Assistant Commissioner (ST), Vizianagaram West Vizianagaram. Deputy Assistant Commissioner (ST), Vizianagaram Vizianagaram.
The Principal Secretary, Revenue (CT) Department, Building, Velagapudi Amaravathi, Guntur District.
The Chief Commissioner of State Taxes
One CC to SRI. L CHANDRA OBUL REDDY Advocate
Two CCs to GP FOR COMMERCIAL TAX Pradesh. [OUT]
Three CD Copies Circle,
The West Circle Secretariat Kunchanapalli, Guntur District. [OPUC] High Court Of Andhra vna
HIGH COURT DATED;23/04/2025 COMMON ORDER WP.No’s.9376, 9385 & 9389 of 2025 ALLOWING THE WRIT PETITIONS’ WITHOUT COSTS
Reproduced from the public record of the Andhra Pradesh High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.