Bhagyanagar Metals Ltd. vs Commercial Tax Officer, Ramgopalpet Circle, Secunderabad

V. Sivaraman Nair, J.—The only question which arises in this writ petition is :

Whether, the Commercial Tax Officer is entitled to issue a demand couched in the form of notice requiring an assessee to pay a fairly large amount of money allegedly towards sales tax, which may be due, if, according to him, the correct rate of tax was applied to the turnover of the dealer, who is the petitioner before us ?

It is surprising that the Commercial Tax Officer would not look into the law which has conferred power on him and which regulates the exercise of such power. It is not his ipse dixit that the tax paid by the assessee is short of what was due or the rate at which the tax was paid was less than the tax which was due, that should determine the entire proceedings. If the assessee pays tax which is less than what ought to have been paid or the rate applied was less than what should apply, the provisions of the Andhra Pradesh General Sales Tax Act (A.P.G.S.T. Act) would require the Commercial Tax Officer to notify the assessee, call for his explanation and quantify the amount due after due consideration of the objections which the assessee may file. We do not understand any provision of the Andhra Pradesh General Sales Tax Act to have conferred an unregulated power on the Commercial Tax Officer to demand the assessee to pay the tax within a period of three days from the date of receipt of the notice, without preceding that by the process for assessment or reassessment of tax due. In the present case, admittedly, there has been no attempt made to assess or reassess the tax due or to apply correct rate of tax to the turnover which is taxable after due compliance with the provisions of the Andhra Pradesh General Sales Tax Act and the Rules made thereunder.

Government Pleader for Commercial Tax Department submits that the impugned notice of demand is only in the nature of a provisional proposal; and instead of coming to this Court, the assessee could as well have approached the Commercial Tax Officer for necessary relief.

We do not find any such invitation in the notice which is impugned. A bleated explanation on the part of the Commercial Tax Officer that he meant the demand notice requiring payment of amount of Rs. 4,49,623 within three days only to be a provisional proposal which the assessee could have objected to, does not justify the exercise of power in an arbitrary manner by the Commercial Tax Officer.

We are therefore constrained to hold that the impugned notice dated September 21, 1993 is illegal and violative of the rules of natural justice. It can only be set aside. Had the Commercial Tax Officer adverted to and advised himself of the procedure which is sanctioned by law, he could have passed an order of assessment or reassessment as the case may be after hearing the assessee. The assessee in such circumstances could file an appeal, if he is aggrieved by the resulting order. All the procedural safeguards were thrown to the winds by the Commercial Tax Officer in issuing the impugned notice demanding immediate payment of tax. That is the reason why we hold that there is no authority of law to support the demand impugned in this writ petition.

The fact that we have quashed the impugned order demanding payment of tax does not preclude the Commercial Tax Officer to act according to law with due notice to the assessee.

In view of the arbitrariness of the Commercial Tax Officer in passing the impugned proceedings dated September 21, 1993, he shall pay the costs of the petitioner which we quantify at Rs. 1,000. The respondent shall either deposit the said amount of Rs. 1,000 in the court to be paid over to counsel for the petitioner or pay it over to the counsel for the petitioner within six weeks from today.

The writ petition is allowed accordingly.

Writ petition allowed.