L G.Agro Industries V. The Deputy Commissioner (ST), Sanga Reddy STU, Nizamabad Division and The Deputy Commissioner (CT), Nizamabad Division and The Assistant Commissioner, (CT), Nizamabad STU and The Commissioner of Commercial Taxes, State of Telangana and The State of Telangana

WP/12257/2020

AI Insights

The case involves L G.Agro Industries, a firm engaged in rice milling and trading, which challenged an assessment order under the Telangana Value Added Tax Act 2005. The petitioner argued that the assessment was illegal, arbitrary, and violated principles of natural justice, particularly due to the lack of a personal hearing and the inability to respond adequately to the show cause notice during the COVID-19 lockdown. The assessment order increased the tax liability significantly beyond what was proposed in the show cause notice. The court found that the petitioner was denied a fair opportunity to contest the assessment due to the lockdown and the unavailability of its Sales Tax Consultant, leading to a violation of natural justice.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 688459 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 26-08-2020
• Assessment Year: misc
• Laws Referred To: Telangana Value Added Tax Act 2005, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: J KUMAR
• Assessee Lawyers: J RAO
• Keywords: Assessment Order; Input tax credit; Limitation; Natural Justice; VAT; Writ petition
• Section: 151; 226; 29(3)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA (Special Original Jurisdiction) WEDNESDAY THE TWENTY SIXTH DAY OF AUGUST TWO THOUSAND AND TWENTY PRESENT THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO . l) THE HONOURABLE SRI JUSTICE T.AMARNATH GOUD WRIT PETITION NO: 12257 OF 2020 Betwee n: It4/s L G.Agro lndustries, Sy.Ni. 84 & 85, Bypass road, Kaloor Vil;lage,tt/ Nizamabad- 503 002, Telangana, Represented by its lVlanaging Partner, lr/r. Labishetty Sreenivas. S/o. l ,4 r. L. Gangarajan. ...PETITIONER AND 1 The Deputy Commissioner (ST), Sanga Reddy STU, Nizamabad Division, N,4anjeera Pipe Line Road, Sangareddy - 502 001, Telangana. The Deputy Commissioner (CT), Nizamabad Division, I ,4unicipal Complex, 1st Floor, Near Tilak Gardens, Khaleel Wadi, Station Road, Nizamabad- 503 002, Telangana. 3. The Assistant Commissioner, (CT), Nizamabad STU, tt4unicipal Complex, 1st Floor, Near Tilak Gardens, Khaleel Wadi, Station Road, Nizamabad 503 002, Telangana. 4. The Commissioner of Commercial Taxes, State of Telangana, Commercial Taxes Complex, I zl.J. Road, Opposite Gandhi Bhavan, Nampally, Hyderabad - 500 001, Telangana. 5. The State of Telangana, Represented by its Principal Secretary (Revenue) (CT), Telangana Secretariat, Hyderabad - 500 022, Telangana. ..RESPONDENTS Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, Order or Direction one in the nature of ll4andamus declaring the Assessment Order passed by the 1st Respondent herein, in AAO. 57518, dated 1314712020 (served on 2710712O2O), under the provisions of the Telangana Value Added Tax Act 2005, for the period 2A14- 15, as illegal. arbilrary, bad in law, without jurisdiction and bereft of any valrd reasons, barred by limitation, violative of principles of natural justice, and violative of Articles 14, 19(1)(g) and 265 of the Constitution of lndia, and consequently set aside the same. Petrtion 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 to stay all further proceedings, including any recovery, pursuant to the Assessment Order passed by the '1st Respondent herein, in AAO. 57158, dated 1310712020 (served on 2710712020), under the provisions of the Telangana Value Added Tax Act 2005, for the period 2014 -15, pending disposal of the above Wrjt Petition. Counsel for the Petitioner:SRl. J. V. RAO 2 The Court made the following: lA NO: 1 AF 2020 Counsel for the Respondents: SRl. J. ANIL KUMAR, SPL. SC FOR COMMERCIAL TAXES I WRIT PETITION }.'o.12257 ol'2020 ORDER: (pcr Hon'ble Sri Justice M.S.Ramachandra I{ao) This Writ Petition is filed by the petitioner assailing the assessrrent older dt. l3-07-1020 passed b\"u-' the )'' respondent under the'l-elangana VAT Act.2005 (lbr short'the Act') 1br the period l0l +- 1 5. ). Pe'titioner is a f irnr rc'eistered as a dealer on the rolls ol the 3\"' respondc'nt urrcle l tl.rc Act and is engaged in the actil itics o1'rice nrilling ancl trading ol licc' and pacldl . , ccording to the petitioncr. tb| the period 0l-04-2014 to 3l-03-201-5. it had llled its nlonrhl)' Tax Returns and disclosed the sales turnovers. 3. While the nationwide lockdown was in fbrce due to Covid- l9 pandemic, a show cause notice dt.09-04-2020 was issued by the 1'' respondent proposing to levy VAT of Rs.59,58,480/- It rvas nrentioned in the shori cause notice that the petitioner did not llle intbrmation such as books of accoullts eind tax invoices relating to input tax credit clairnc'cl b1. it and thc input tax creclit tas proposed to be ciisallo*ecl. It rias also inclicatecl that certain exernptecl sales * ere sor.rght to bc tared bl the l\" rc'sponcle nt b-\"' lcr f ing a highc'r rate of tax and allou ed at a gross prolit or-r the pLrrchase r alue ol'the HONOURABLE SRt,Il-TSTICE M.S.RAMACHANDITA RAO A l) HONOIJRABLE SRI .IUSTICT] T.AMARNATH GoI.II) goods in order to arrive at the sale turnover belore levving tax at the h ieher rate. 4. Petitioner contends that in reply thereto, it filed few invoices, audited balance sheets and detailed statement perlaining to the claim of the input tax credit. statement of VAT paid apart from Income Tax returns lor the period 20 l4-15 before the l\" respondent on lt-06-1010. 5. It contended that onine to lockdoun. it could not set in touch u,ith its Sales Tax Consultant to prepare and llle rvritten ob.iections and firrnish other reievant inlornration reqr-rired b1' the l\" respondent and that it had requcsted the l\" respondent olally fbr ad.iournnrcnt on the ground that its Sales Tax Consultant 'as not available and to pror,ide personal hearing. 6. But without giving such an oppoftunity, the impugned assessrrent order was passed on 13-07-2020 by the l\" respondent deternrining the under declared tax at Rs.90.50,7251- much more than Rs.59,58,480/- proposed irr the show cause notice l. Petitioner contends that it is not open to the l\" respondent to dcnl opportunitr fbr personal hcaring and proceed to do assessrnent dLrrins the lockdo.,r'n u hen petitiorrer's Sales -lax Consullant s,as not available and the petitioner .,r'as disabled fi'orn preparing and filing ulitten ob.lections and lurnishing other relevant infbrrnation which would be necessary to nrake the assesst.nent, and there has been a violation of principles ofnatural justice by l\" respondent. 8. Learned counsel lor petitioner also contends that it is not open to l \" respondent to make a determination that tax payable is Rs.90,50,725i- because this was not proposed in the show cause notice issued by 1'' respondent where only Rs.59,58,480/- was proposed to be levies as tax. It is also contended that l\" respondent lailed to give credit to Rs.28,82,848/-, which had been paid by petitioner torvards VA1'during the said period. 9. Learned counsel fbr petitioner contended that copies o1'challans irr support ol payments rnade by petitioner, though submitted betbre the l\" respondent, 'ere not even considered by the l\" r'esponclent rvhile passing the impugned order. 10. According to the petitioner, the assessment had to be cornpleted under Section 29(3) of the Act within 4 years tiom the last date of filing the returrr for a particular month; that the assessment order was finalized on 13-07-2020 for the tax period 2014-15, alier the said assessment rvas barred by limitation; and the Amcnclrnent to Section 2 I (3 ) ol the Act which u'as broLrght into tbrce u'.e.l. 17-06-2017 b.u\" way ol Act 26 ol 2017 dt.02-12-2017 cannot be applied to the case of the petitior.rer though under the saicl Amendlnent, time tbr completing assessment was enhanced to 6 eats I L Sri J.Anil Kurnar', learned Special Cor.rnscl tbr Cornmercial Taxes appearing for respondents does not dispute that there was nationwide lockdown in the month ol April, 2020 and it continued I -+ upto 0I-07-1010. and sc crc rcstrictions ou ntoYcntenl ol pcoplc u,ere irrposed b1,thc. Statc as u'ell as Central (iovernrlent to prevcnt and control the spread olCorid-19 pandentic. 12. Naturally during the period between the date of issuance ol show cause notice dt.09-04-2020 and June, 2020 and 30-06-2020, it would have been difficult lor the petitioner to obtain the services of Sales Tax Consultant. hale access to nratelial docuntents such as invoices etc.. to properly del'errd itself agairrst the proposal made by I'r lcspondent in the shorv cause notice dt.09-04-2020. I 3. Wc are therelbre of the opinion that there has been a violation of' plinciplcs of natr-rlal .jr,rstice becausc pctitioncr could not llle ob.jections to the shorv cause notice on account olnon-availabilitl'ol its Sales Tax Consultant, and even a personal hearing was not prorided to thc petitioner though such personal hearing u,as sousltt bl' thc pctit ioner. 14. Accordingly, the Writ Petition is allowed; the impugned assessnrent order No.57158 dt.l3-07-2020 passed by 1'' respondent fbr the tax period 201,1- l5 under the Act is set aside; the matter is remitted back to the l\" respondent for lresh consideration; petitioner is grantcd lbLrr (0.1) uee'ks tinrc from todrr to tile ob.iections and supportillg nraterial befirrc thc 1'' t'espondt'n1 o1t1-xrsiltg the proptlscd ler'1 in the above shou causc noticcr the l'' rcsl-rortdent shall provicle a personal hearing to the pctitioncr: the petitioncl is entitled to raise ail contc'rrtions includin-q plca of bar o1' lirnitation before thc l'' I respondent; and l\" respondent shall then pass a reasoned order.in accordance with law and communicate it to the petitioner. No costs. 15. Consequently, rniscellaneous petitions, pending it any, shall To, stand closed. SD/-K.AMMAJI ASSISTANT REGIS R ,TRUE COPY' SECTION OFFICER 1 The Deputy Commissioner (ST), Sanga Reddy STU, Nizamabad Division, lVanjeera Pipe Line Road, Sangareddy - 502 001, Telangana. 2 The Deputy Commissioner (CT), Nizamabad Division, lVunicipal Complex, 1st Floor, Near Tilak Gardens, Khaleel Wadi, Station Road, Nizamabad- 503 002, Telangana. 3. The Assistant Commissioner, (CT), Nizamabad STU, l ,4unicipal Complex, 1st Floor, Near Tilak Gardens, Khaleel Wadi, Station Road, Nizamabad 503 002, Telangana. 4. The Commissioner of Commercial Taxes, State of Telangana, Commercial Taxes Complex, lVl.J. Road, Opposite Gandhi Bhavan, Nampally, Hyderabad - 500 001, Telangana. 5. The Principal Secretary (Revenue) (CT), State of Telangana, Telangana Secretariat, Hyderabad - 500 O22, Telangana. 6. One CC to Sri.J.V. Rao, Advocate (OPUC) 7. One CC to Sri. J. Anil Kumar, Spl. SC for Commercial Taxes (OPUC) B. Two CD Copies. PY,.' HIGH COURT DATED:26/08/2020 ORDER WP.No.12257 of 2020 Allowing the WP Without costs 01 StP 2020 7 E ST4r€ + I "