Indus Tower Limited and another. State of Andhra Pradesh and others

[2014] 68 VST 377 (AP) [IN THE ANDHRA PRADESH HIGH COURT] Indus Tower Limited and another State of Andhra Pradesh and others V. ROHINI G. AND SUNIL CHOWDARY T. JJ. December 23,2013 HF Assessee, including dealer (Registered or Unregistered), Department. VALUE ADDED TAX--RECOVERY OF TAX--GARNISHEE PROCEEDINGS--APPEAL--REVISION--STAY--APPLICATION FOR STAY OF DISPUTED TAX PENDING APPEAL--REJECTED BY APPELLATE AUTHORITY--APPLICATION FOR STAY FILED BEFORE REVISIONAL AUTHORITY--NOTICE INSTRUCTING BANKERS OF APPLICANT TO MAKE PAYMENT OF AMOUNT OUTSTANDING UNDER ASSESSMENT ORDERS AND PAYMENT TO DEPARTMENT BY BANK FROM ACCOUNT OF APPLICANT PENDING APPLICATION--NOT JUSTIFIED--INTERIM ORDER DIRECTING AUTHORITY TO REMIT TO BANK ACCOUNT OF APPLICANT 50 PER CENT. OF DISPUTED TAX IN VIEW OF ORDER OF REVISIONAL AUTHORITY STAYING 50 PER CENT. OF DISPUTED TAX--ANDHRA PRADESH VALUE ADDED TAX ACT (5 OF 2005), S.29. VALUE ADDED TAX--RECOVERY OF TAX--APPEAL--REVISION--APPLICATION FOR STAY PENDING APPEAL--ORDERS BY APPELLATE AUTHORITY REFUSING TO GRANT STAY OF COLLECTION OF DISPUTED TAX PENDING APPEAL AND BY REVISIONAL AUTHORITY GRANTING STAY SUBJECT TO PAYMENT OF 50 PER CENT. OF DISPUTED TAX PENDING APPEAL--ON FACTS NOT NON-SPEAKING ORDERS--ALSO POWER OF BOTH AUTHORITIES TO GRANT STAY PENDING APPEAL STATUTORILY RESTRICTED--NO INTERFERENCE WARRANTED--ANDHRA PRADESH VALUE ADDED TAX ACT (5 OF 2005), S.31(3)(A), (B). The petitioner-dealer who was assessed under the Andhra Pradesh Value Added Tax Act, 2005 by the Assistant Commissioner, filed appeals before the appellate authority under section 31 of the Andhra Pradesh Value Added Tax Act along with applications for stay of recovery of the disputed tax but the application was rejected. The petitioner filed revision petitions before the revisional authority as provided under section 31(3)(b) of the Andhra Pradesh Value Added Tax Act and the same were posted to September 6, 2013 for hearing. Meanwhile the petitioner was called upon by respondent No. 5 by notice dated August 21, 2013 to pay the entire tax payable under the assessment orders within three days, failing which coercive steps would be initiated without any further notice. Though the pendency of revision petition was brought to the notice of respondent No. 5 by the petitioner a fresh recovery notice was again issued stating that their stay petitions were dismissed by the appellate authority and by notice dated August 30, 2013 instruction was given to the bankers of the petitioner to make the payment of the total amount outstanding under the assessment orders in terms of the provisions of section 29 of the Andhra Pradesh Value Added Tax Act, 2005. The bank paid the amounts to the Department by debiting from the account of the petitioner on the same day. Thereafter, the revisional authority by order dated September 3, 2013 disposed of the revision petitions granting stay of 50 per cent. of the disputed tax. On writ petitions seeking declarations that the action of respondent No. 5 in recovering the entire amount through the bankers was arbitrary and illegal and that the orders of the revisional authority as well as the appellate authority were arbitrary and illegal on the ground of being non-speaking orders: Held, that the recovery of disputed tax by initiating garnishee proceedings pending disposal of the stay application before the revisional authority was unjust.

Anab-E-Shahi Wines and Distilleries Private Limited v. Appellate Deputy Commissioner [1995] 98 STC 386 (AP) and Katuri Medical College and Hospital v. Commercial Tax Officer [2013] 62 VST 185 (AP) followed. Held also, that the appellate authority refused to grant stay of collection of the disputed tax observing that the dispute involved in the appeal was determination of under-declared tax on account of sale of plant and machinery and that therefore he did not find any prima facie case to grant stay. The revisional authority having referred to the contentions of both the parties in detail, expressed that the assessing authority having called for certain information on clarification of credit entries identified certain turnover remained unreconciled and thought it fit to grant stay subject to payment of 50 per cent. of the disputed tax. Since the reasons were implicit in the orders themselves there was no reason to hold that the orders were passed without application of mind to the issue involved. Further a reading of section 31(3)(a) and (b) of the Andhra Pradesh Value Added Tax Act would show that the statute itself required imposing terms and conditions while granting stay of collection of the disputed tax pending appeal by the appellate authority and the revisional authority. Therefore the orders did not warrant any interference by the court. [The court while admitting the writ petitions passed an interim order directing respondent No. 5 to remit to the bank account of the petitioner 50 per cent. of the disputed tax keeping in view the order of the revisional authority staying the recovery of 50 per cent. of the disputed tax.] Writ Petition No. 27406, Writ Petition No. 27616 of 2013 decided on December 23,2013 Avinash Desai for the petitioners. The Government Pleader for Finance and Planning and P. Balaji Varma, Special Standing Counsel for Commercial Taxes, for the respondents. Cases referred to : Anab-E-Shahi Wines and Distilleries Private Limited v. Appellate Deputy Commissioner [1995] 98 STC 386 followed Katuri Medical College and Hospital v. Commercial Tax Officer [2013] 62 VST 185 followed Anab-E-Shahi Wines and Distilleries Private Limited v. Appellate Deputy Commissioner [1995] 98 STC 386 Referred to Anwar Ali v. Commissioner of Income-tax [1992] 196 ITR 354 (AP) Referred to Katuri Medical College and Hospital v. Commercial Tax Officer [2013] 62 VST 185 Referred to Kranti Associates Private Limited v. Masood Ahmed Khan [2010] 9 SCC 496 Referred to The order of the court was made by -------------------------------------------------- ORDER MS.G.ROHINIJ.-The petitioner in these two writ petitions is a registered dealer under the Andhra Pradesh Value Added Tax Act, 2005 as well as the Central Sales Tax Act, 1956. The petitioner was assessed under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (for short, "the AP VAT Act") for the years 2009-10 and 2010-11 by separate orders dated May 8, 2013 passed by respondent No. 4-Assistant Commissioner (CT)-VI, Enforcement Wing, Hyderabad. Aggrieved by the said orders, the petitioner filed appeals before respondent No. 3 under section 31 of the A.P. VAT Act on payment of predeposit of 12.5 per cent. of the disputed tax along with applications for stay of recovery of the disputed tax. However, by orders dated August 17, 2013

respondent No. 3 rejected the applications for stay and the said orders were made available on the website of respondent No. 3 on August 23, 2013. On the very same day the petitioner filed revision petitions before respondent No. 2 as provided under section 31(3)(b) of the A.P. VAT Act and the same were posted to September 6, 2013 for hearing. Page No: 379 In the meanwhile, by notice dated August 20, 2013 which was received by the petitioner by e-mail on August 21, 2013, respondent No. 5 called upon the petitioner to pay the entire tax payable under the assessment orders within three days, failing which coercive steps would be initiated without any further notice. The petitioner gave a reply dated August 21, 2013 bringing to the notice of respondent No. 5 that the revision petitions are pending before respondent No. 2 and requesting not to proceed with any coercive steps. In spite of the same, respondent No. 5 again issued a fresh recovery notice dated August 26, 2013 calling upon the petitioner to pay the tax within three days stating that their stay petitions were dismissed by respondent No. 3 on August 17, 2013. The petitioner again made a request by letter dated August 26, 2013 through his counsel not to proceed further since the hearing in their revision petitions is fixed for September 6, 2013. That apart, the petitioner also filed an application before respondent No. 2 to advance the hearing and accordingly the revisions were heard on August 30, 2013. However, respondent No. 5 by notice dated August 30, 2013 instructed the bankers of the petitioner to make the payment of the total amount of Rs. 9,07,96,928 outstanding under the assessment orders for the years 2009-10 and 2010-11 purportedly in terms of the provisions of section 29 of the A.P. VAT Act, 2005. In compliance with the same, the Bank had paid the abovesaid amounts to the Commercial Tax Department by debiting from the account of the petitioner on August 30, 2013 itself. Thereafter, respondent No. 2 by order dated September 3, 2013 disposed of the revision petitions of the petitioner granting stay of collection of 50 per cent. of the disputed tax for the tax periods 2009-10 and 2010-11. By the date of the said order, since respondent No. 5 had already recovered the entire tax under the assessment orders dated May 8, 2013, these two writ petitions are filed by the petitioner seeking a declaration that the action of respondent No. 5 in recovering the entire amounts through the bankers of the petitioner is arbitrary and illegal and consequently to direct respondent No. 5 to refund the entire amount so recovered. A further declaration is sought that the order dated September 3, 2013 passed by respondent No. 2 to the extent of imposing the condition of payment of 50 per cent. of the disputed tax while granting stay of recovery of the disputed tax is arbitrary and illegal since the said condition was imposed without assigning any reasons and without application of mind to the facts and circumstances of the case. Page No: 380 We have heard Sri D. Prakash Reddy, the learned senior counsel appearing for the petitioner and Sri P. Balaji Varma, the learned Senior Standing Counsel for Commercial Taxes appearing for the respondents. Having regard to the ratio laid down in Anab-E-Shahi Wines and Distilleries Private Limited v. Appellate Deputy Commissioner, Secunderabad

Division, Nampally, Hyderabad [1995] 98 STC 386 (AP); 21 APSTJ 98 and Katuri Medical College and Hospital v. Commercial Tax Officer [2013] 62 VST 185 (AP) that the recovery of disputed tax of penalty by initiating garnishee proceedings pending disposal of the stay application before the appellate authority or the revisional authority is unjust, improper and arbitrary and keeping in view that respondent No. 2-revisional authority by order dated September 3, 2013 stayed the recovery of 50 per cent. of the disputed tax, this court while admitting the writ petitions passed an interim order dated October 10, 2013 directing respondent No. 5 to remit forthwith to the bank account of the petitioner 50 per cent. of the disputed tax which was already recovered. In compliance with the said interim order dated October 10, 2013 respondent No. 5 has admittedly remitted 50 per cent. of the disputed tax to the petitioner. Under the circumstances, it is submitted by the learned Senior Standing Counsel for Commercial Taxes appearing for the respondents that no further enquiry is necessary in the writ petitions and the same may be disposed of leaving it open to the third respondent-appellate authority to decide the petitioner's appeals in accordance with law. However, the learned senior counsel appearing for the petitioners opposed the said proposal contending that the order of respondent No. 2, dated September 3, 2013 which was passed without assigning any reasons for imposing the condition of payment of 50 per cent. of disputed tax while granting stay of recovery of tax determined in the assessment orders is arbitrary and illegal and therefore the same is liable to be set aside on that ground alone. It is also contended by the learned senior counsel that even the order of respondent No. 3-appellate authority dated August 17, 2013 is liable to be set aside on the very same ground of not being a speaking order. Thus, according to the learned senior counsel, respondent No. 3- appellate authority shall be directed to consider afresh the petitioner's applications for stay and consequently the balance 50 per cent. of the tax determined under the assessment orders shall also be refunded to the petitioner in the light of the law laid down in Anab-E-Shahi Wines and Distilleries Private Limited's case [1995] 98 STC 386 (AP); 21 APSTJ 98 and Katuri Medical College and Hospital's case [2013] 62 VST 185 (AP). Page No: 381 To substantiate his submission that respondents 2 and 3 are bound to assign sufficient reasons in support of their orders dated September 3, 2013 and August 17, 2013, respectively, the learned senior counsel relied upon Anwar Ali v. Commissioner of Income-tax [1992] 196 ITR 354 (AP) and Kranti Associates Private Limited v. Masood Ahmed Khan [2010] 9 SCC 496. Having carefully gone through the impugned orders dated September 3, 2013 and August 17, 2013, we do not find any substance in the contention that they are non-speaking orders and therefore cannot be sustained. A reading of the order dated August 17, 2013 shows that respondent No. 3 who is the appellate authority refused to grant stay of collection of the disputed tax observing that the dispute involved in the appeal is determination of under-declared tax on account of sale of plant and machinery and therefore he did not find any prima facie case to grant stay. May be that no elaborate reasons were assigned, however we are unable to hold

that the said order was passed by the third respondent without application of mind to the facts and circumstances of the case. Coming to the order dated September 3, 2013, respondent No. 2-revisional authority having referred to the contentions of both the parties in detail, expressed that the assessing authority having called for certain information on clarification of credit entries identified a turnover of Rs. 77.91 remained unreconciled and hence levied tax. Thus the second respondent thought it fit to grant subject to payment of 50 per cent. of the disputed tax. For proper appreciation, the relevant portion from the order dated September 3, 2013 may be reproduced hereunder: "The main issue involved in this case is under-declaration of tax by the appellant as determined by audit officer to an extent of Rs. 10,12,83,500 for 2009-10 and Rs. 24,84,418 for 2010-11. The Authorized Representative submitted that in the appellant's accounting software, they have multiple items mapped with the account of plant and machinery based on site location. If a particular item is moved/transferred from one telecom site to another telecom site of the company in the same State (or from one warehouse to another in the State), the earlier entry is reversed and new entry is passed based on the new location. Entries move in the same account of plant and machinery, only the location gets changed in the accounting software. Hence effect in the account of plant and machinery is nil due to these entries and therefore credit entries in the account of plant and machinery are only adjustment/rectification entries and not due to sale of plant and machinery. Page No: 382 The Authorised Representative further submitted that it was only a mere credit entries pertaining to reversal of excess provision/interunit adjustment of fixed assets value which were wrongly treated as sale/turnover without giving any reason. Submitting the above, the Authorized Representative requested to grant stay of collection of taxes. I have carefully gone through the contentions of the Authorized Representative. The assessing authority called for certain information on clarification of credit entries, and later on the assessing authority identified a turnover of Rs. 77.91 remained unreconciled and hence levied tax. In view of the above, without expressing any opinion on the merits of the case, I feel it just and proper to grant stay of collection of 50 per cent. of disputed tax of Rs. 10,12,83,500 and Rs. 24,84,418 for the tax periods 2009-10 and 2010-11 under the A.P. VAT Act, 2005, respectively, subject to payment of 50 per cent. of the total disputed tax on or before September 30, 2013. Further if any amount paid by the appellant at the time of/or after admission of this appeal shall be given credit. The stay will be in force, till disposal of appeal by the Appellate Deputy Commissioner (CT), Punjagutta. If the assessee fails to pay the amount as above, the assessing authority/competent authority is at liberty to enforce collection of entire disputed tax." The abovesaid order, in our considered opinion, cannot be held to be a non-speaking order. Since the reasons are implicit in the order itself, there

is no reason to hold that the said order came to be passed without application of mind to the facts and circumstances of the case. It may also be added that the power conferred under section 31 (3) (a) and (b) of the A.P. VAT Act upon the appellate authority and the revisional authority to grant stay pending the appeal is restricted by the statute itself. It is to be noticed that section 31 (3) (a) provides that the appellate authority may order stay subject to furnishing of such security or on payment of such part of the disputed tax, whereas section 31 (3) (b) provides that the revisional authority may order stay of collection of the disputed tax subject to such terms and conditions as he may think fit. Section 31(3)(a) and (b) may be extracted hereunder for ready reference: 31. (3)(a) Where an appeal is admitted under sub-section (1), the appellate authority may, on an application filed by the appellant and subject to furnishing of such security or on payment of such part of the disputed tax within such time as may be specified, order stay of Page No: 383 collection of balance of the tax under dispute pending disposal of the appeal; (b) against an order passed by the appellate authority refusing to order stay under clause (a), the appellant may prefer a revision petition within thirty days from the date of the order of such refusal to the Additional Commissioner or the Joint Commissioner who may subject to such terms and conditions as he may think fit, order stay of collection of balance of the tax under dispute pending disposal of the appeal by the appellate authority;" On a reading of the above provisions, it is apparent that the statute itself requires imposing terms and conditions while granting stay of collection of the disputed tax pending appeal and it is not permissible to pass an unconditional order. Having regard to the statutory power in exercise of which the orders dated August 17, 2013 and September 3, 2013 came to be passed and in view of the fact that the said orders are only interim orders pending the appeals before the third respondent, we are of the opinion that the said orders cannot be held to be non-speaking orders. As expressed above, the reasons are explicit in both the orders. Hence, the allegation of the petitioner that the said orders were passed without application of mind to the issue involved is unfounded. Coming to the decisions cited by the learned senior counsel appearing for the petitioners, the Division Bench of this court in Anwar Ali's case [1992] 196 ITR 354 (AP) was dealing with the power conferred on the Commissioner of Income-tax under section 273A of the Income-tax Act for waiver of the penalty and interest. The petitioner therein could not file the return under the Income-tax Act within time. He filed return after four years with due compliance of section 273A of the Income-tax Act. The Income-tax Officer imposed interest and penalty for non-filing of return and aggrieved by the same the petitioner therein filed a representation before the Commissioner of Income-tax under section 273A praying for waiver of interest under section 139(8) and section 217 of the Income-tax Act as well as waiver of penalty leviable under section 271(1A) and section

273(1). Pursuant thereto, the Commissioner waived 50 per cent. of the penalty and interest by order dated September 21, 1998. The said order was assailed before this court in a writ petition contending that the Commissioner had misdirected himself in granting partial relief when the petitioner had satisfied all the conditions mentioned in section 273A of the Incometax Act and therefore the impugned order is arbitrary and amounts to failure to exercise the judicial discretion. Having regard to the settled legal Page No: 384 position that the conditions mentioned in sub-sections (1) and (4) of section 273A of the Income-tax Act are sine qua non for the exercise of discretionary power under the said section and that the extent of discretionary jurisdiction under section 273A varies from reducing the penalty/interest to waiver of penalty/waiver completely and having taken note of the fact that though the conditions precedent for the exercise of jurisdiction under section 273A had been satisfied by the petitioner, the Commissioner had not given any reasons as to why the relief is limited to waiving 50 per cent. of penalty and interest, this court quashed the said order and remanded the matter back to the Commissioner for consideration afresh. Thus, the facts and circumstances in Anwar Ali's case [1992] 196 ITR 354 (AP) are entirely different from the case on hand. As noticed above, the relief granted by the Division Bench of this court in the said decision was in the light of the scope and discretion conferred on the Commissioner under section 273A of the Income-tax Act. The other decision cited by the learned senior counsel, i.e., Kranti Associates Private Limited's case [2010] 9 SCC 496 is also in our considered opinion is distinguishable on facts. In the said case, a cryptic order passed by the National Consumer Disputes Redressal Commission was assailed on the ground of absence of reasons. The impugned order passed by the National Commission while dismissing a revision was as under: "Heard. In view of the concurrent findings of the State Commission, we do not find any force in this revision petition. The revision petition is dismissed." After referring to various provisions of the Consumer Protection Act, the Supreme Court held that the National Consumer Disputes Redressal Commission has the trappings of a civil court and is a high powered quasijudicial forum for deciding lis between the parties. While reviewing the decided cases in which it was held by the courts from time to time that a quasi-judicial authority must record reasons in support of its conclusions, the Supreme Court set aside the order of the National Consumer Disputes Redressal Commission and remanded the matter to the said forum for deciding the matter by passing a reasoned order. The validity of the impugned orders in the present case cannot be tested in the light of the well-settled principles reiterated in the above decisions since the statute itself restricted the discretion conferred on respondents 2 and 3. At any rate, as already expressed above, the orders dated August 17, 2013 and September 3, 2013 in our considered opinion cannot be held to Page No: 385

be non-speaking orders. Therefore, the contention of the petitioners that the said orders are illegal and arbitrary is untenable and the same do not warrant interference by this court on any ground whatsoever. For the aforesaid reasons, we hold that the order of respondent No. 2 dated September 3, 2013 granting stay of collection of 50 per cent. of disputed tax shall continue till the appeals are disposed of by respondent No. 3 following due process of law. Both the writ petitions are accordingly disposed of. No costs. Consequently the miscellaneous petitions, if any, pending in both the writ petitions shall stand closed. Page No: 386