M/S.Narsi Associates vs. The Assistant Commissioner Of State Tax

Held

The Court held that while the petitioner could have submitted the TDS certificates directly to the assessing authority (2nd respondent), the 1st respondent also had a duty to forward the original TDS certificates submitted to it on February 16, 2017, to the 2nd respondent for consideration before the assessment order was passed on February 25, 2017. The Court found no logic in the 1st respondent's inaction. Consequently, both the assessment order dated February 25, 2017, passed by the 2nd respondent and the endorsement dated December 3, 2018, passed by the 1st respondent were set aside. The 1st respondent was directed to conduct a fresh assessment for the tax period 2015-16, taking into account the original TDS certificates submitted by the petitioner, pass a reasoned order, and communicate it to the petitioner within eight weeks. The ratio decidendi is that tax authorities have a duty to consider all relevant documents submitted by a taxpayer, and inaction on the part of one authority should not prejudice the taxpayer's legitimate claims.

Facts

The petitioner, a proprietary concern engaged in civil and interior works, filed a writ petition challenging the refusal to grant a refund of Rs. 46,17,291/- under the Telangana Value Added Tax Act, 2005. The petitioner had executed works for M/s. Infosys Limited and M/s. CDK Global India Private Limited during the tax period 2015-16. The petitioner submitted original TDS certificates totaling Rs. 47,96,405/- for the years 2015-16 and 2016-17 to the 1st respondent (Commercial Tax Officer) on February 16, 2017. However, the 2nd respondent (Assistant Commissioner of Commercial Taxes), who conducted the assessment by order dated February 25, 2017, did not consider these TDS certificates. The 1st respondent subsequently refused the refund by an endorsement dated December 3, 2018, stating that the assessment order did not mention the TDS certificates.

Key Issues

1. Whether the 1st respondent (Commercial Tax Officer) failed in its duty by not forwarding the original TDS certificates submitted by the petitioner to the 2nd respondent (Assistant Commissioner of Commercial Taxes) for consideration before the assessment order was passed, thereby prejudicing the petitioner's claim for refund under the Telangana Value Added Tax Act, 2005? Petitioner's arguments: The petitioner contended that it had submitted the original TDS certificates to the 1st respondent prior to the assessment order. The 1st respondent's failure to forward these certificates to the 2nd respondent resulted in them not being considered during the assessment, leading to the denial of a refund of Rs. 46,17,291/-. The subsequent refusal of refund by the 1st respondent based solely on the absence of mention in the assessment order was also challenged. Revenue's arguments: The revenue contended that it was the petitioner's duty to submit the TDS certificates directly to the 2nd respondent who was conducting the assessment.