M/S. Sree Vamsee Pharma New vs. The State Of Andhra Pradesh

Held

The Court held that Section 16(1) of the A.P. VAT Act places the onus on the assessee (petitioner) to prove that any sale or purchase is not liable to tax or is eligible for input tax credit. It was incumbent upon the petitioner to demonstrate that the credit notes reflected in their profit and loss account did not impact their purchases. The Court noted that this contention was not even urged before the revisional authority. Furthermore, the Court observed that these questions could be agitated in an appeal to the Sales Tax Appellate Tribunal. Therefore, the Court found no reason to interfere with the impugned revisional order. The Court clarified that if the petitioner invoked the jurisdiction of the A.P. VAT Appellate Tribunal, their contentions would be considered on their merits, uninfluenced by the observations made in this order. The Writ Petition was dismissed.

Facts

The petitioner-dealer challenged an order dated 12.04.2017 passed by the revisional authority. The revisional authority, upon reviewing the petitioner's profit and loss account for 2012-2013, observed a discount of Rs. 59,95,009/- received by the petitioner. A show cause notice was issued proposing a revision of the assessment order and levying a tax of Rs. 2,99,750/-. This tax represented the disallowance of 5% of the input-tax credit claimed by the petitioner. The revisional authority relied on Rule 28(3)(b) of the A.P. VAT Rules, noting that while the petitioner submitted trade discount records and credit notes from purchasers, there was insufficient explanation for the circumstances leading to the credit notes and inadequate information to identify the taxable sales to which they related. Consequently, the authority held the credit notes were not in accordance with Rules 16(2), 16(3), and 28, and the discount amount could not be deducted from the sale price.

Key Issues

1. Whether the revisional authority erred in disallowing the input-tax credit claimed by the petitioner based on credit notes received, when the credit notes did not impact the purchase value of the goods, as per Section 16 of the A.P. VAT Act. Petitioner's contention: The petitioner argued that input-tax credit eligibility could only be impacted if the credit notes affected their purchases. They asserted that the revisional authority failed to make a finding that the credit notes had indeed impacted the purchase value. Therefore, the impugned order should be set aside. Revenue's contention: The judgment does not record any specific contentions made by the revenue or State. However, the court's reasoning implies that the onus was on the petitioner to establish that the credit notes did not impact their purchases, as per Section 16(1) of the A.P. VAT Act. The court noted that no such contention was urged before the revisional authority.