M/S. Grandville Constructions PVT. LTD. vs. The Commercial Tax Officer
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APHC010176462006
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Juri iction) [3529] MONDAY, THE TWENTY THIRD DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR WRIT PETITION NO: 26928/2006 Between:
M/S. GRANDVILLE CONSTRUCTIONS PVT. LTD.,, AKKARAMPALLI, TIRUPATHI, CHITTOOR DISTRICT REP BY AUTHORIZED SIGNATORY D. JAYACHANDRA REDDY S/O JAYARAMA REDDY AGED ABOUT 68 YEARS.
...PETITIONER AND 1. THE COMMERCIAL TAX OFFICER, Tirupati Chittoor District.
...RESPONDENT Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased toissue an appropriae Writ or order or direction, preferablyinthe nature of Writ of Certiorari calling for the connected and relevant records relating to the impugned proceeding of assessment of value added tax in Form VAT-305 23-10-2006 issued bythe Commercial tax Officer, circle, No. II, Tirupathi, imposing penalty as well as interest in respect of tax over declared by holding the impugned proceedings as illegal arbitrary without authority of law and without juri iction and ultravires the provisions of the Andhra pradesh Value Added Tax Act, 05 in general and Section 53 there of in particular and also without complying with the mandatory requirement as contemplated therein and grant such further or other relief or reliefsas are deemed tobe fit and proper inthe circumstances of the case.
IA NO: 1 OF 2006(WPMP 34595 OF 2006 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased suspend the operation fo the impugned proceedings of assessment of valueadded tax dt 23-1-2006 in form VAT-305 issued bythe commercial Tax Officer, No. II Circle, Tirupathi IA NO: 1 OF 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased Pleased to receive the Counter Affidavit copies on the Respondent herein on record by allowing the leave petition in the above writ petition and pass Counsel for the Petitioner:
M V J K KUMAR Counsel for the Respondent:
DANTU SRINIVAS( SPL SC FOR CT)
GP FOR COMMERCIAL TAX The Court made the following Order: (per Hon’ble Sri Justice R. Raghunandan Rao)
The petitioner had initiated construction of a Hotel and Resort in Tirupati. In the course of such construction, the petitioner had purchased various goods and had paid Value Added Tax, on the purchase of such goods to its sellers. The petitioner, had thereupon, declared the tax paid by the petitioner as Input Tax and sought to record the said input tax as credit in its account.
The Assessing Officer, issued a show-cause notice, dated 31.08.2006, calling upon the petitioner to show cause why penalty and other dues should not be levied on the petitioner, under Section 53 of the A.P.V.A.T. Act. The petitioner gave its reply, after which the Assessing Authority, passed an order of assessment, dated 23.10.2006, holding that, the petitioner had sought to declare input tax credit, which was not available to the petitioner and that, such over declaration would amount to an infraction of Section 53 of the A.P.V.A.T. Act, read with Rule 23 of the A.P.V.A.T. Rules.
Aggrieved by this order, dated 23.10.2006, the petitioner has filed the present Writ Petition.
The contention of Sri M.V.J.K. Kumar, the learned counsel appearing for the petitioner is that, Section 53 read with Rule 25(8) of the A.P.V.A.T. Rules, make it clear that these provisions would be applicable only when the petitioner claims such input tax credit, in the course of payment of its dues, on the sales made by the petitioner. The learned counsel for the petitioner would also contend that, the petitioner had not completed the hotel building and had never made any claim of adjustment of input tax credit against the liability that would arise for the petitioner, on the sales made by the petitioner.
The respondent has filed a counter-affidavit, wherein this contention is denied. Section 53 read with Rule 25(8) of the A.P.V.A.T. Rules, read as follows:
“53. Penalty for failure to declare Tax Due
(1) Where any dealer has under declared tax, and where it has not been established that fraud or willful neglect has been committed and where under declared tax is:-
i) less than ten percent of the tax, a penalty shall be imposed at ten percent of such under-declared tax.
ii) more than ten percent of the tax due; a penalty shall be imposed at twenty five percent of such under-declared tax.
(2) Where any dealer, prior to the detection by any authority prescribed, voluntarily declares that tax due for a tax period is under declared and he pays the tax due along with interest, no penalty shall be imposed provided that such declaration is made within the time limit and in the manner prescribed.
(3) Any dealer who has under declared tax, and where it is established that fraud or willful neglect has been committed he shall be liable to pay penalty equal to the tax under declared; besides being liable for prosecution:
Provided that before levying penalty under this Section the authority prescribed shall give the dealer a reasonable opportunity of being heard.”
Rule 25(8) of the A.P.V.A.T. Rules, 2005:-
8) a) For the purpose of Section 53, the tax under declared in respect of input tax means the excess of input tax claimed over and above the input tax actually entitled to be claimed in the return for a particular tax period b) The tax under declared in respect of out put tax means the difference between output tax actually chargeable and the output tax declared in the return for a particular tax period;
c) In respect of a TOT dealer the tax under declared means the difference between the tax declared on Form TOT 007 and the tax actually due by the dealer for the period.”
Section 53 of the A.P.V.A.T. Act, states that any under declaration of tax, even if there is no fraud or willful neglect, would attract penalties set out in Section 53(1). A plain reading of this provision would mean that it is only under declaration of tax payable by the petitioner, which would attract these provisions. However, Rule 25(8)(a) states that over declaration of input tax would be treated as under declaration under Section 53 (1) of the A.P.V.A.T. Act.
However, Rule 25(8)(a) states that an over declaration of input tax would become under declaration under Section 53 only when such excess input tax has been claimed over and above the actual entitlement of input tax. This would mean that the provisions of Section 53 read with Rule 25(8) would come into play when there is an actual claim of adjustment of input tax credit against the tax liability of the tax payer. In the present case, that situation had not yet arisen and consequently, the over declaration of input tax made by the petitioner can only be treated as an aberration, which requires to be corrected.
In these circumstances, the impugned order, dated 23.10.2006, is set aside and accordingly, this Writ Petition is allowed. There shall be no order as to costs.
As a sequel, pending miscellaneous applications, if any, shall stand closed. ________________________ R. RAGHUNANDAN RAO, J
_________________ T.C.D. SEKHAR, J
Date:23.02.2026 KPV THE HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
AND THE HON'BLE SRI JUSTICE T.C.D.SEKHAR
WRIT PETITION No.26928 of 2006 (per Hon’ble Sri Justice R. Raghunandan Rao)
2026
KPV
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.