M/S Swamy Agencies vs. The Asst Commissioner

HONOURABLE SRI JUSTICE U.DURGA PRASAD RAO AND HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA Writ Petition No.6625 of 2021 ORDER:(Per Hon’ble Smt. Justice Venkata Jyothirmai Pratapa) The Challenge in this Writ Petition is against the proceedings dated 23.01.2021, passed by the 2nd respondent as arbitrary and in violation of principles of natural justice and consequently, set aside the said order and the attachment notice dated 11.02.2021, issued by 1st respondent attaching the bank account of the petitioner lying with 4th respondent demanding the tax of Rs.10,05,650/- SGST and Rs.10,05,650/- as CGST. 2. The case of the petitioner succinctly: Petitioner is a proprietary concern engaged in the business of Stainless steel articles and home appliances situated at Parvathipuram of Vizianagaram District. Petitioner is a registered dealer under A.P.VAT Act, 2005 (For short „Act‟) and later registered on the rolls of the 1st respondent under GST Act, 2017. First respondent completed the assessment of the petitioner firm for the tax period April-2017 to March-2019, dated 25.02.2020 and the same was served on the petitioner on the very same day. The UDPR,J & VJP,J 2 of 15 WP No.6625 of 2021 Respondent No.1 passed the assessment proceedings holding that petitioner has chosen registration as regular since migrated to GST w.e.f., 01.07.2017. Thereafter, petitioner opted to pay the tax under the composition w.e.f. 01.10.2017, by filing GSTR-4 returns and paid tax @ 1%. The assessing authority i.e., first respondent having observed that petitioner has crossed thresh hold limit of one crore aggregate turn over during the year 2017- 2018 held that he is not eligible to pay tax under the composition. Assessing authority assessed the appellant under composition for the period from 01.07.2017 to 21.03.2018. For the remaining period, appellant was assessed as regular dealer.Accordingly, the assessing authority levied tax amount of Rs.20,11,300/-. (b) The petitioner preferred statutory appeal before the 2nd respondent in Form GST APL-1 electronically on 16.03.2020, as prescribed under Section 107 of A.P. GST Act r/w. Rule (108) (1) of A.P. GST Rules. Respondent No.2 dismissed the appeal. He failed to consider the specific contention of the petitioner that the turnover relatable to the period 01.04.2017 to 30.06.2017, under VAT Act, amounting to Rs.20,52,478/- cannot be computed under the GST regime. Respondent No.2 passed order holding that turn over would be computed basing on the financial year UDPR,J & VJP,J 3 of 15 WP No.6625 of 2021 and petitioner is not eligible for composition, since he crossed the turnover of one crore at thresh hold. Appeal lies before the GST tribunal against the order passed by the 2nd respondent but tribunal is yet to be constituted in the state of Andhra Pradesh. Assessment order is not valid since issued without electronically generated DIN number. The aggregate turnover of the appellant has never crossed Rs.1,00,00,000/- and it is only Rs.86,64,041/- during the period from 01.07.2017 to 31.03.2018. Hence the levy of higher tax is not tenable. (c) As per section 67 (1) of GST Act, 2017 joint commissioner is the authority to conduct inspection as proper officer. Respondent No.1failed to grant reasonable opportunity to the petitioner to place his contention before him hence, it is a case of violation of principles of natural justice. 3. CONTENTION OF THE RESPONDENTS: As per Section 73 and 74 of A.P. GST Act, 2017, respondent No.1 has got jurisdiction to pass impugned order. Petitioner opted to pay tax as composite dealer from 01.10.2017. After giving ample opportunity to the petitioner, the appellate authority dismissed the appeal confirming the assessment order passed on UDPR,J & VJP,J 4 of 15 WP No.6625 of 2021 25.02.2020. Tax period means the period for which, the return is required to be furnished. For monthly return, tax period is one calendar month, for a quarterly return tax period is one quarter comprising three (03) months, such as April-June, July- September, October-December and January-March and for annual return, the tax period is financial year. (b) Computation of aggregate turn over for the financial year 2017-2018 is justified. Joint Commissioner (ST) of the division is authorized to empower the proper officer to assess correct tax payable by registered person, in case of any ambiguity found in the returns filed. In the present case, though the petitioner‟s business crossed the thresh hold mark, they did not choose regular tax scheme with a view to evade tax. Petitioner appeared before the assessing officer, but not filed any written objections. After hearing authorized representative of the petitioner, the appellate authority passed final orders. The question of violation of principles of natural justice doesn‟t arise in this case. Prays for dismissal of the petition. UDPR,J & VJP,J 5 of 15 WP No.6625 of 2021 4. Heard Sri C.Sanjeeva Rao, learned counsel for petitioner and learned G.P. for commercial tax-1 for the respondents. 5. Learned counsel for the petitioner would submit that the orders passed by the respondents are improper and in correct. Respondents having accepted the option exercised by the petitioner to pay the tax at one percent of the total turnover in terms of the composite scheme, cannot turn around and reject the option exercised and consequently direct the petitioner to pay GST as per the regular rates. He would further argue that Section 10 (1) of the Act doesn‟t reveal inclusion of turnover under VAT regime for the purpose of determining the tax payable. The provisions of GST Act are not retrospective in operation and that the word preceding financial year has no relevance for the tax paid for the financial year 2017-2018. Respondent No.1 has no jurisdiction to pass assessment order, without giving proper opportunity to the petitioner, the impugned orders are passed. 6. Refuting the above submissions, learned Government Pleader would submit that, the option exercised by the petitioner in web portal cannot be accepted without verification. In the GST UDPR,J & VJP,J 6 of 15 WP No.6625 of 2021 regime filling of the returns based on a self-declaration. It doesn‟t mean that the authorities have accepted the scheme opted by the petitioner. Having regard to the fact that, the GST regime came into effect from 01.07.2017, naturally it took some time for the officials to process all the options exercised by the dealers. Learned counsel further submits that, had the intention of the legislature was to exclude the provisions of the VAT Act, or make the provisions of GST prospective in operation, they would have made a reference to that effect in section 10 of the GST Act itself. In the absence of the same, it cannot be said that the word „preceding year‟ excludes turn over declared during the VAT regime. 7. At this juncture it is beneficial to refer the Judgment of Hon‟ble Apex Court, which is a guiding precedent for appreciating the issue relating to tax. In MC Dowell & Company Limited Vs. The Commercial Tax Officer1 namely, that “there is no equity about a tax, there is no presumption as to a tax, nothing is to be read in and nothing is to be implied”. Keeping in mind, the observations referred to supra, we shall now proceed to discuss the meaning of the word „preceding year‟. Learned 1 AIR 1986 SC 649 UDPR,J & VJP,J 7 of 15 WP No.6625 of 2021 Government Pleader for Commercial Taxes to buttress their contention placed reliance on the order passed by the co-ordinate bench of this Court in Writ petition No.10350 of 2020, dated 11.11.2020, wherein a question that fell for consideration was the meaning of the word „preceding financial year‟ appearing in section 10 (1) of the Act. It is apt to mention that after the advent of GST regime, transitional provisions are introduced with the object of allowing seamless flow of credit and the supplies under the GST Regime, which have already suffered tax once, do not suffer tax again. 8. It is necessary to extract the relevant paras in the