Jaykay Marketing Associates vs. State Of Andhra Pradesh
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Juri iction) FRIDAY, THE FIRST DAY OF MARCH, TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE U.DURGA PRASAD RAO THE HONOURABLE SRI JUSTICE A.V. RAVINDRA BABU WRIT PETITION NO: 21622 OF 2019 Between: JAYKAY MARKETING ASSOCIATES D No 14/264/1 2 and 3 KamalaNagar Anantapuram Rep by its Managing Partner Sri J Sameer Ahmed S/o J Khaja Moinuddin Aged about 41 years ANANTAPUR DISTRICT. ...PETITIONER(S) AND State of Andhra Pradesh Ren bv its Principal Secretary RevenueCT Department Velagapudi Amaravathi Guntur District Andhra Pradesh The Denutv Commercial Tax Officerll Anantapuram 11 Circle Anantapuram Division Anantapur District Andhra Pradesh 1. 2. 3. The Commercial Tax Officer Anantapuram II Circle Anantapuram Division Anantapur District Andhra Pradesh
The Aonellate Deputy Commissioner CT Tirupati Chittoor District Andhra Pradesh
Peddeti Narasimhulu S/o Not known Presently working as Deputy Commercial tax Officer in Kumool Kumool Division Kumool District Andhra Pradesh ...RESPONDENTS
2 This Court made the following ORDER; (Per Hon ’ble Sri Justice .U Durga Prasad Rao) The petitioner seeks writ of mandamus declaring (1) the order dated 31.03.2019 of the 2"^ respondent denying the Input Tax Credit (ITC) to the petitioner to a tune of Rs.34,97,141/- for the period April, 2012 - May, 2014 and June, 2014 - August, 2016 and directing the petitioner to pay the said amount under the AP VAT Act, 2005 as illegal, arbitrary and to take appropriate action against the 2^^ respondent for denying the ITC despite receipt of 35 box files of 2462 original tax invoices and; assessment (2) Alternatively, declaring the order dated 21.10.2019 of the 4“^ respondent /Appellate Deputy Commissioner, Tirupathi rejecting
the appeal filed by the petitioner against the order dated 31.03.2019 of the 2"'' respondent on the ground that the petitioner has produced proof of payment of 12.5% of the disputed tax as illegal and to set aside the same and to direct the 4‘'’ respondent to admit the appeal and dispose on merits and to grant such other reliefs deemed fit. not as 3 Petitioner’s case succinctly is thus:
(a) The petitioner is doing business in electronics, computer peripherals and is a registered dealer on the rolls of 2"‘‘ respondent. While so, in terms of authorization issued by the Deputy ncl respondent Commissioner of CT, Anantapuram Division, the 2 conducted audit of the petitioner’s concern for the period April, 2012 to May, 2014 and June, 2014 to August, 2016 and thereafter passed Assessment Order dated 31.03.2019, wherein the 2"*^ respondent observed that the petitioner claimed ITC to a tune of Rs.34,97,141/- without producing the tax invoices in support of his claiin and thus levied tax for an amount of Rs.34,97,141/- as per the provisions of .AP VAT Act, 2005 and directed the petitioner to pay the said amount within 30 days from the date of receipt of the said order. The petitioner’s case is that on receiving the notice for personal hearing, 13.08.2018-the petitioner produced 35 boxes containing 2462 invoices and without considering the same the 2"‘^ respondent has on illegally and unjustly rejected the claim for ITC. (b) Aggrieved, the petitioner fded appeal before Appellate Deputy Commissioner (CT), Tirupathi /4"’ respondent. By his order
:4 dated 21.10.2019, the 4'*’ respondent rejected the appeal holding that in terms of Section 31(1) of AP VAT Act, 2005 the appeal cannot be admitted as the appellant has not produced proof of payment of 12.5% of the disputed tax. Hence the writ petition. The 2"‘' respondent filed counter and opposed the writ petition contending that the Assessment Order dated 31.03.2019 and the appellate order dated 21.10.2019 are perfectly valid and there is no need to reconsider the same, petitioner has an efficacious alternative remedy of appeal against the rejection order passed by the 4"^ respondent.
It is further contended that the Heard learned Senior Counsel Sri M. K. Murthy on behalf of Sri M.V.J.K Kumar, learned counsel for the petitioner and learned 4 Government Pleader for Commercial Taxes for respondents. Fulminating the order of the 2"^ respondent learned Senior Counsel for the petitioner would argue that the petitioner in fact produced 2462 original purchase bills and invoices in 35 boxes 5. nd on 13.08.2018 in support of his claim for ITC but the 2 respondent without considering the same passed the impugned order dated 31.03.2019 as if the petitioner has not produced the 5 original tax invoices and disallowed ITC for Rs.34,97,141/- and directed the petitioner to pay the tax to that extent which is illegal and unjust. He thus prayed to set aside the AO dated 31.03.2019. Learned counsel further argued that aggrieved by the above order, the petitioner filed appeal before the 4 respondent and submitted that the petitioner has to its credit ITC to the tune of Rs.34,97,141/- and the statutory pre deposit of 12.5% can be availed from that amount and therefore there was no 6. requirement of again paying 12.5% of the disputed tax for However, without considering said admission of appeal, submission, the 4‘*’ respondent rejected the appeal on the sole ground that the petitioner has not produced the proof of payment of 12.5 % of disputed tax. Learned counsel formidably argued the said ground is unjust and that the rejection of appeal on illegal and contrary to the spirit of the judgment of Hon’ble Apex Court in S.E. Graphites Private Limited v. State of :6 Telangana'. Learned Senior Counsel thus prayed to set aside the Assessment Order dated 31.03.2019 of 2"^^ respondent and appeal rejection order dated 21.10.2019 or alternatively to set aside the appeal rejection order dated 21.10.2019 and remand
the appeal to the 4* respondent for admission and disposal on merits.
Learned GP for Commercial Taxes-I opposed the writ petition on the ground that the petitioner failed to produce nd original tax invoices and purchase bills before the 2 respondent at the relevant time of auditing and assessment. Learned GP vehemently argued that mere production of some documents claiming to be 2462 in number in 35 boxes is not sufficient and the petitioner must cogently explain and correlate those documents to the ITC claimed by him. Since that was not done, the 2"^ respondent has no other go except holding that the petitioner failed to produce the original tax invoices and purchase bills and rejecting the ITC. Therefore, the said order is perfectly valid. Learned GP further argued that as per Section ^ [2019]68GSTR1(SC) = MANU/SC/0894/2019
7 31 of AP VAT Act, 2005, pre deposit of 12.5% of the disputed tax is mandatory for admission of the appeal. Since the petitioner failed to make such pre deposit but unduly claimed that the said amount shall be adjusted from the alleged ITC which is to his credit. Learned GP would argue that when the ITC claim itself was rejected by the 2"^* respondent and the same the subject matter of appeal before the 4*'’ respondent, the petitioner cannot claim appropriation of pre-deposit of 12.5% from the said ITC. Since the petitioner failed to make the due deposit of 12.5% of the disputed tax, the 4‘'' respondent has rightly rejected the appeal. was The point for consideration is whether the rejection of appeal by the 4*'’ respondent is legally sustainable?
Point: We gave our anxious consideration to the above 9. arguments of both the learned counsel. It should be noted the petitioner’s first prayer is to set aside the impugned Assessment Order dated 31.03.2019 passed by the 2"^* respondent on the ground that the authority has not considered the voluminous record produced in support of the ITC claim. His alternative prayer is to set aside the appeal rejection order passed by the respondent and direct the 4* respondent to admit the appeal and dispose on merits. In our view, since the petitioner has already filed appeal challenging the Assessment Order, it is not apt for us to decide the validity of the impugned Assessment Order dated 31.03.2019 passed by the 2"^* respondent. Therefore, we will decide the validity of appeal rejection order dated 21.10.2019. 10. As per proviso of Section 31 of the AP VAT Act, 2005, an appeal preferred shall not be admitted by the appellate authority unless the dealer produces proof of payment of 12.5% of the difference of the tax / disputed tax, penalty, interest assessed by the authority. So far as limitation for filing the appeal is concerned. Section 31 (1) of the AP VAT Act, 2005 says that an appeal against the orders mentioned in that provision may be filed within 30 days from the date on which the order was served on the dealer. The appellate authority may.
:9 sufficient cause being shown by the dealer for the delay, on extend the time for a further period of 30 days. Be that as it may, in S.E. Graphite’s case (Supra 1) the Apex Court considered the aspect as to whether deposit of 12.5% of the disputed tax after the limitation period of one month though appeal was filed within one month can be said to be due compliance of the provisions of Section 31 of the AP VAT Act. In that context, the Apex court observed thus:
“8. These provisions have been interpreted by the Division Bench of the High Court in the case of Ankamma Trading Company (supra). We are essentially concerned with the second proviso of Section 19 and Section 31 of the respective enactment; and first proviso of Section 21(2) and Section 33(2) of the respective enactment.Upon readingthe Section under considerationas a whole, it is evident that the first proviso in the concerned Section (Section 19 and Section 31, as the case may be) pertains to limitation period “for filing” of an appeal; and discretion of the Appellate Authority to condone the delay in filing of such appeal, up to a maximum period specified therein. Indeed, the second proviso is part of the same Section. However, it is an independent condition and in one sense, mutually exclusive condition mandating or enjoining the appellant to produce proof of payment of tax dues in respect of which the appeal is preferred. That obligation, in our opinion, can be discharged until
the appeal is considered for admission and/or condonation of delay in "’A filing of the appeal, as the case may be, by the Appellate Authority for the first time. We are inclined to take this view as even the High Court in Ankamma Trading Company (supra) had justly noted that the said proviso does not provide for any specific period within which the tax dues should be paid. Moreover, there is no express stipulation to deposit the tax dues in respect of which the appeal is preferred, at the time of its filing, institution or presentation as such. In the absence of such a clear stipulation, it must necessarily follow that it is open to the assessee to file the appeal within the statutory period of limitation provided therefor and later on, deposit the specified tax dues but before the appeal is taken up for consideration by the Appellate Authority for the first time - be it for condonation of delay in filing the appeal and/or to admit it on merits or otherwise. The proof of such payment having been made could be produced thereat. Failing which, the Appellate Authority will have no other option but to reject the appeal on that count. The Appellate Authority has no power to extend the time to deposit the specified tax dues.
Suffice it to observe that, stricto sensu, the said proviso is not a provision of predeposit at the stage of filing, institution or presentation of the appeal as such; but is a provision stipulating payment of tax dues as a prerequisite or sine qua non for consideration of appeal on merits or otherwise and/or for condonation of delay in filing the same, as the case may be, for the first time. If we may say so, it is also to impose fetter on the Appellate Authority from admitting the appeal for consideration on merits. It is well recognized that filing, institution or presentation of appeal in the office of the Appellate Authority is an independent event than the appeal being taken up for consideration “for the first
for being admitted on merits or otherwise and/or for condonation of delay in filing it, as the case may be. There is no reason to interpret the stated proviso in any other manner lest, inevitably, it would result in rewriting the same and entail in doing violenee to the legislative intent. Presumably, this Court in M/s. Innovatives Systems (supra), and other decisions rendered following the same, therefore, was persuaded to allow the appeal preferred by the assessee and to relegate the parties before the Appellate Authority for consideration of the appeal for admission on merits. time
Concededly, this Court was conscious of the decision in Ankamma Trading Company (supra). In that, the judgment under challenge before it in the concerned appeal was founded on the view already taken by the coordinate bench of the same High Court [including in Ankamma Trading Company (supra)]. It has been so recorded by this Court. In that sense, the legal position expounded in Ankamma Trading Company (supra), stood impliedly overruled, even though that decision has not been adverted to or expressly overruled by this Court.” Thus, the Apex Court held that the pre-deposit of 12.5% can be made even after filing of the appeal but before the appeal came up for admission for the first time. It should be noted that in our case, the controversy is not as to whether the petitioner made pre-deposit of 12.5% of the disputed tax at the time of filing the appeal or before the appeal came up for admission for the first
time. On the other hand, the real controversy is whether, instead of making pre-deposit of 12.5% of disputed tax, whether the petitioner can request the Appellate Authority to adjust the said amount from out of the Input Tax Credit lying in his account. In S.E.Graphites’ case, this aspect has also been dealt with by the Apex Court. In one of the cases, the appellant filed appeal against the Assessment Order and he was called upon by the Appellate Authority to make good the short payment of pre deposit of 12.5%. The appellant filed response to the said communication and answered that there was Input Tax Credit to his account and that amount arose only in respect of tax paid on taxable purchases affected within the State. However, the Appellate Authority rejected the appeal for non-payment of pre deposit. In that context, the Apex Court observed thus:
“31. We have heard the counsel for the parties. As regards the legal position expounded in Ankamma Trading Company (supra), we have already answered the same in Civil Appeal No.7574/2014 decided today. That appeal was heard along with all connected matters, the present case, however, the additional point which arises is whether the appellant was entitled for adjustment of the amount mentioned in the tax credit certificate issued in favour of the appellant. Admittedly, the appellant had specifically taken that plea before the first Appellate Authority. However, as already mentioned hitherto the first Appellate Authority failed to analyse that aspect which it was expected to do, in terms of the earlier order passed by the second Appellate Authority and even otherwise. Further, this grievance was specifically made before the High Court in the writ petition filed by the appellant as is noticed from the impugned judgment, the relevant portion of the judgment recording the argument of the appellant, reads thus: “ Aggrieved thereby, the present Writ Petition is filed. Sri Tejprakash Toshniwal, Learned Counsel for the petitioner, would submit that in M/s. Ideal Detonators Pvt. Ltd. v. Commercial Tax Officer, the Supreme Court had directed the Appellate Deputy Commissioner to revive the earlier order and dispose of the same on merits, after due notice to the parties; in Fytochem Formulations Ltd. V. Commercial Tax Officer, a Division Bench of this Court had held that it is incumbent on the Commercial Tax Officer to decide the representation submitted by the petitioner; and, in case the petitioner is entitled to the excess amount, then a certificate/endorsement should be issued to him, so that the amount can be adjusted towards pre deposit of 12.5% at the time of admission of the appeal; the Commercial Tax Officer was directed to decide the representation ; and, in case the petitioner's representation was accepted by the Commercial Tax Officer, the 2nd respondent was directed to admit the appeal. Learned Counsel would also rely on Chander Prakash Goyal V. State of Haryana, in this regard ”
However, even the High Court has not answered this specific plea urged by the appellant, in the impugned judgment. If the appellant is right in contending that the appellant is entitled for an adjustment of amount and if so done, there would be no need for the appellant to deposit twelve and a half percent (12.5%) amount as required by the second proviso of Section 31 of the Act. The appellant had relied on the decisions of this Court to buttress that argument. However, the same has remained to be analysed and considered even by the High Court.
In that view of the matter, we deem it appropriate to set aside the impugned judgment and relegate the parties before the High Court for reconsideration of the Writ Petition No.837/2014 afresh its own merits in accordance with law and including in light of decision of this Court in Civil Appeal No.7574/2014 decided today. All contentions available to both sides in the remanded writ petition are left open to be considered on its own merits and in accordance with law.” on Thus, the Apex Court observed that if the appellant right in contending that he was entitled for an adjustment of amount and if so done, there would be no need for the appellant to deposit 12.5% amount as required by the second proviso of Section 31 of the Act. In the light of above decision, when the case on hand is perused, in the impugned order dated 21.10.2019, the Appellate Authority stated that the appellant has 11. was not enclosed proof of payment of 12.5% of the disputed tax and therefore, a check memo dated 27.07.2019 was issued to him to produce such proof of payment and in reply, the appellant filed endorsement given by the Asst. Commissioner (ST), an Anantapuram - II Circle, in which the Assessing Authority refused the ITC claimed by the appellant for not producing original purchase tax invoices and confirmed the demand. Therefore, as the ITC claimed to the credit of appellant was itself in dispute in the appeal, it appears, the 4*'^ respondent rejected the appeal for non-payment of pre-deposit of 12.5%. In this context, we perused the copy of Form APP 400A declaration u/s 31(1) of AP VAT Act r/w Rule 38(2)(d) of AP VAT Rules, 2005, filed by the appellant. In the said declaration. the appellant while admitting that pre-deposit of 12.5% of the difference of tax has not been paid, however, mentioned that he has total ITC of Rs.34,97,141/- for different periods mentioned in the said form. It is needless to emphasize that the said Input Tax Credit was rejected by the 2 respondent in the Asessment Order and the same is subject matter of appeal before the 4‘'’ respondent. In that view, though a dealer while filing the appeal can seek for adjustment of pre-deposit of 12.5% of disputed tax from out of the ITC lying to his credit, however, such request can be done only when there is a clear and undisputed ITC is available to his credit, but not the disputed ITC as in the present instance. It appears, the petitioner bonaifdely requested the 4“^ respondent to adjust the disputed ITC towards payment of pre-deposit of 12.5%. Therefore, in the interest of justice, we consider it apposite to give an opportunity to the petitioner to make pre-deposit of 12.5% separately without relying on the disputed ITC. Another reason also supports our decision. The petitioner, along with material papers, filed a copy of list of purchase bills totaling 2462 covered by 35 files. The said copy bears the stamp of the office of 2"^ respondent with a date 13.08.2018. The said copy prima facie supports the contention of the petitioner that when the matter was posted to 13.08.2018 for personal hearing, he produced those purchase bills in the office of 2"'^ respondent. It appears, the grievance of the petitioner is that those purchase bills and other invoices were not at all considered by the 2"^* respondent. This aspect has to be considered and decided by the Appellate
Authority. Hence, on that ground also, the impugned appeal rejection order is liable to he set aside.
Accordingly, this writ petition is allowed and the ADC Order No.4616/21-10-2019 dt. 21.10.2019 passed by respondent is set aside and the petitioner is directed to make deposit of 12.5% of disputed tax within three (3) weeks from the date of receipt of a copy of this order, in which case, the 4'*’ respondent shall admit the appeal and after affording an opportunity of hearing to both parties, pass an appropriate order on merits in accordance with the governing law and rules expeditiously. No costs. As a sequel, interlocutory applications pending, if any, in this case shall stand closed. M. SRINIVAS ASSISTANT REGISTRAR Action officer //// To, State of Andhra Pradesh, Rep by its Principal Secretary, Revenue(CT) Department, Velagapudi, Amaravathi, Guntur District, Andhra Pradesh. The Deputy Commercial Tax Officer-ll, Anantapuram -II Circle, Anantapuram Division, Anantapur District, Andhra Pradesh. The Commercial Tax Officer, Anantapuram -II Circle, Anantapuram Division, Anantapur District, Andhra Pradesh. The Appellate Deputy Commissioner (CT), Tirupati. Chittoor District, Andhra Pradesh. Peddeti Narasimhulu, S/o. Not known. Presently working as Deputy Commercial tax Officer in Kurnool, Kurnool Division, Kurnool District, Andhra Pradesh. One CC to SRI. M V J K KUMAR Advocate [OPUC] Two CCs to GP FOR COMMERCIAL TAX (AP) ,High Court Of Andhra Pradesh. [OUT] Three CD Copies 1. 2. 3. 4. 5. 6.
Madhu gl
HIGH COURT DATED:01/03/2024 ORDER WP.No.21622 of 2019 ALLOWING THE WP WITHOUT COSTS
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.