M/S. KARTHIKA ENTERPRISES V. THE DY. COMMERCIAL TAX OFFICER RP ROAD CIRCLE SECBAD

WP/15239/2007

AI Insights

The case involves M/S Karthika Enterprises challenging the revised assessment order issued by the Deputy Commercial Tax Officer, Secunderabad, for the assessment year 2002-2003. The petitioner argued that the revision was arbitrary, based on mere change of opinion regarding the classification of work orders, and lacked any new material outside the original assessment records. The respondent contended that the nature of the work orders was misclassified in the original assessment, justifying the revision. The court examined precedents and statutory provisions, ultimately deciding in favor of the petitioner, emphasizing the need for new material to justify reassessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 726552 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 31-10-2022
• Assessment Year: misc
• Other Referred Cases: Girdharlal and Company v. State of Andhra Pradesh, The Principal Commissioner Of Income Tax-4, Mumbai v M/S S.G. Asia Holdings (India) Pvt. Ltd, State of Andhra Pradesh v. Kedia Vanaspati (P) Limited, Jitender Roller Flour Mills, Hyderabad v. Assistant Commissioner (Crl LTU, Charminar Division, Hyderabad)
• Laws Referred To: APGST Act, 1957
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DANTU SRINIVAS; GP FOR COMMERCIAL TAX
• Assessee Lawyers: P KUMAR
• Keywords: Change of opinion; Natural Justice; Revised Assessment; Writ of Mandamus; Classification of contracts
• Section: 14(4)(C)

Judgement Text

"[ 331s 1 HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY ,THE THIRTY FIRST DAY OF OCTOBER TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE T.VINOD KUMAR AND THE HONOURABLE SRI JUSTICE PULLA KARTHIK WRIT PETITION NO: '15239 OF 2007 Between: M/S. KARTHIKA ENTERPRISES, Secunderabad rep by its Proprietrix Smt. G Geetha ...PETITIONER AND The Deputy COMMERCIAL TAX OFFICER RP ROAD CIRCLE SEC'BAD, R. P Road Circle, Secundelabad .RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased toissue Writ of Mandamus or any other appropriate Writ or order ordirection declaringthe action of the respondent tn revisingtheorder for the assessment year 2002-2003 on mere change of opinion without there being anymaterial dehors the assessment records and also demanding the amount from the surety without beingthe revision order onthe petitioner is arbitrary, contrary to law, weight of evidence and also in violationof principles of natural justice and contraryto the decisions of this Hon'ble Court and consequently set a side the revised order dt 04-01-2006 as null and void and pass such other order or roders as the Hon'ble Court may deem fit and proper inthe circumstnaces of the case. l.A. NO: 1 OF 2007(WPMP. NO: 19229 OF 2007l 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 grant stay of all further proceedings pursuant to the revised proceedins of the respondent dated 04-01-2006 for the assement year 2OO2-2OO3 as otherwise the petitioner willbe put to server loss and hardship. Counsel for the Petitioner : SRl. P GIRISH KUMAR Counsel for the Respondents: DANTU SRINIVAS( SPL SC FOR CT) Counsel for the Respondents: GP FOR COMMERCIAL TAX The Court made the following: ORDER THE HON'BLE SRI JUSTICE T. VINOD KUMAR AND THE HON'BLE SRI JUSTICE PULLA KARTHIK Writ Petition No. 15239 of 2OA7 OR-DER: (per lhe llon'ble Sn Justice T.Vtnod Kumar) 1. In this Writ Petition, petitioner is challenging the correctness of the proceedings, dt.O4.01.2O06, termed as revised assessment proceedings for the period 20O2-O3 under the APGSTAct, 1957. 2. He4rd learned counsel for pplitioner, Sri K,Raji Reddy, learned Special Standing Counsel for Commercial Taxes appearing lor the respondent and perused the record. 3. Petitioner contends that based on the returns fiied by it for the relevant assessment year, the respondent-authority had assessed the petitioner to tax vide his proceedings dt.O7.O7.2OO3 determining an excess tax of Rs.4,6OO/-; that on the assessment year coming to an end on 31.O3.20O3, petitioner has closed his br-rsiness activity and had surrendered his registration certi{icate by submitting a letter, dt.O I .04.2OO3, to the respondent, received by the said authority on OZ.O4.2OO3; that while the petitioner had closed its business activit5r, the 2 l respondent had sought to revise the assessment made year 20O2-O3 under the Act Purportedly in exercise of power under Section la@) of the Acr proposing to raise an additional 29 ,312 / - on the ground that the demand of tax in a sum of Rs. 1, work orders recerved by the petitioner for supply, erection and cinema theatres, are to for the commissioning of sound system in the be classified as 'contract for sale, and not fuorks contract,. 4. Sri p.Girish Kumar, Iearned Senior Counsel appearing on behalf of the learned counsel for petitioner contends that the respondent had sought to revise the assessment order on mere change of opinion as to the classification of . which were arready ( th9 work oders, rn record and that there is neither any change or fresh material de horsthe assessment record that has come into the possession of the respondents for initiating revision proceedings. He further contends that on mere change of opinion as to the classification of the work orders received by the pe{.itioner, the resp6pdent could not have invoked the reassessment power under Section t4(4)(Clof the Act. 5. karned Senior Counsel further contends that this court consistendy held that only when relevant material, which is not available on record, has come to the notice of the authority from other sources, it would be justifiable ground to exercise the 3 power under Section l4(4)(C) of the Act; that a reading of the impugned proceeding, on the otherhand, would indicate that there was no change of material or no further material ttrat has come in possession of the respondents for issuing revised assessment proceedings by invoking the provisions under Section l4(4)(C) of the Act and it is only on the basis of the material/work orders which are already on record and only on account of change of opinion as to the classification of the said contracts, the impugned revised assessment order came to be passed and the same cannot be sustained. 6. In,.support of the above contention, learned counsel for the petitioner has placed reliance on the decision of this Court in Girdharlal and Company v. State of Andhra pradeshr and The Principal Commissioner Of Income Tax-4, Mumbai v M/S S.G. Asia Holdings (India) prrt. Ltd.2 7. Per contra, Sri K.Raji Reddy, learned Special Standing Counsel for Commercial Taxes appearing for the respondents, would submit that since the 1st respondent at the time of passing assessment order, dt.OZ.OT.2OO3, had wrongly considered the transaction as fuork contract, while the true '1rsss1 sz src a+z 1ae1 ' zors{o) scc oas { 4 nature of the work appears to be a ,contract for sale of goods, simplicitor, the authority was justified in revising the said order in exercise of power under Section l4(4)(Cl of the Act by passing the rerrised assessment order. 8. We have taken note of the respective contentions urged by the counsel appearing for both the parties. 9. This Court had an occasion to consider similar issue in WP.No.22377 of 2006 wherein this Court having regard to the law laid dovvn in Girdharlal and Company,s case(1 supra), and the decision of this Court in State of Andhra pradesh v. Kedia Vanaspati (p) Limitede and also taking note of the judgment in WP.No.Z53 of 2A17, dr. 14.Og.2018 and a similar decision of this Court in Jitender Roller Flour MiIIs, Hyderabad v. Assistant commissioner (crl LTU, charminar Division, Hyderabad+, held that in order to exercise pou,er under Section 14 of the Act to revise an assessment order already passed, the authori$r should come into possession of fresh material, from that of the material available on record basing on which the original assessment order was passed. '1r9sc; 9s src zoa o 1zotz1 5t tesl zsz 5 10. In Jitender Roller Flour Mills,s case(4 supra), this Court while referring to the decision in Girdharlal and Company,s case(l supra) has observed as under: \"This Court clarifired that for exercise of power und.er Section 14(4) relialce should be made not on the material on record but on the materia_l de hors the record which came to the notice of the assessing autiority subsequent to the assessment. Very categorica.lly this Court held that non-application of mind by the assessing authority to the material on record at the time of assessment is not justifiable ground to invoke power under Section i4(4) of the 1957 Act.......\" -ll. In view of the above settled position of la i/ and also- having regard to the facts of the present case, since it is evident that there is no change or fresh material de hors the assessment record, the exercise of power under Section f4(4){C) of the APGST Act, 1957, by the respondent-authorit5r in issuing the impugned revised assessment proceeding cannot be countenanced, for it to be upheld. 12. Accordingly, this Writ petition is allowed and the impugned revised/re-assessment proceeding, dt.O4.O1.2006, is set aside. No order as to costs. 6 13. Consequently, miscellaneous petitions pending, il any, shall stand ciosed. //TRUE COPY' SDi.N.RAJGOPAL ASSrsrAzl/REGISTRAR SECTION OFFICER To, J BS 1 The Deputy Commercial Tax Officer R.p. Road Circle Secunderabad. R.p Koad urrcte, Secunderabad. 2. One CC to SRt. p GtR|SH KUMAR Advocate [OpUC] 3. One CC to SRl. 9459/DANTU SR|N|VAS( SpL SC FOR CT) Advocate loPUcl 4. Two CCs to GP FOR COMMERCIAL TAX .High Court for the State of Telangana. [OUT] 5. One CC to SRt K.RAJ| REDDy Advocate (SpL SC FOR CT) [OPUC] 6. Two CD Copies / HIGH COURT DATED:31 11012022 ORDER WP.No.15239 of 2007 ALI-,O VTNG TIIE WP WITHOIJT COSTS (^ 1Y 7 ST,qTA [3 Jril ?$8 I '( :) a) !) ', -a C) .t, t, :'F5: u tr "