M/S Bekem Infra Projects Private Limited vs. The Assistant Commissioner

Held

The Court held that the impugned order dated August 25, 2018, suffered from the vice of non-application of mind. Firstly, the Court noted a significant discrepancy between the amount proposed for forfeiture in the show-cause notice (Rs.1,36,58,183/-) and the amount actually forfeited in the impugned order (Rs.1,44,03,978/-). The Court reasoned that an order under the Act cannot exceed the proposal made in the show-cause notice, and this discrepancy indicated a failure to adhere to procedural fairness. Secondly, the Court found that the respondent had not applied their mind to the applicability of G.O.Ms.No.11 to a Sub-Contractor, nor had they considered the petitioner's status as a Sub-Contractor and the nature of their EPC Turnkey contracts. Consequently, the Court concluded that the impugned order was liable to be set aside. The writ petition was allowed, the impugned order was set aside, and the matter was remanded back to the 1st respondent for fresh consideration, with a direction to fix a personal hearing date for the petitioner to produce additional documents and make submissions.

Facts

The petitioner, M/s. Bekem Infra Projects Private Limited, a dealer under the Telangana Value Added Tax Act, 2005, filed a writ petition challenging an assessment order dated August 25, 2018, passed by the Assistant Commissioner, State Tax. This order directed the forfeiture of Rs.1,44,03,978/-, representing excess tax credit available to the petitioner. The petitioner claimed a net excess carry forward input tax credit of Rs.2,09,21,437/- for the tax periods 2015-16 and 2016-17, arising from excess tax deduction at source by main contractors and excess input on purchases. The respondent issued a show-cause notice proposing forfeiture of Rs.1,36,58,183/- under Rule 18(3)(b) of the Telangana VAT Rules, 2005, citing G.O.Ms.No.11.

Key Issues

1. Whether the impugned assessment order dated August 25, 2018, suffers from the vice of non-application of mind, particularly concerning the discrepancy in the amount proposed for forfeiture in the show-cause notice and the amount ordered to be forfeited, thereby violating principles of natural justice? (Framed as a question of law turning on principles of natural justice and administrative law). 2. Whether the Assistant Commissioner correctly applied G.O.Ms.No.11 Finance (Works and Projects F8) dated June 29, 2005, to the petitioner, who acted as a Sub-Contractor in EPC-Turnkey contracts, and whether the petitioner's objections regarding their role and contract type were adequately considered? (Framed as a question of mixed law and fact turning on the interpretation of G.O.Ms.No.11 and the nature of the petitioner's contracts). Petitioner's arguments: The petitioner contended that the impugned order was passed without proper application of mind, citing the discrepancy between the show-cause notice amount (Rs.1,36,58,183/-) and the forfeiture amount (Rs.1,44,03,978/-). They also argued that G.O.Ms.No.11 was not applicable to them as a Sub-Contractor in EPC-Turnkey contracts, and their objections to this effect were not considered. Respondents' arguments: The judgment records no specific arguments made by the respondents.