Moulica Constructions vs Deputy Commercial Tax Officer, Jubilee Hills Circle and Another

G. Rohini, J.—The writ petitioner is a registered dealer under the provisions of the A.P. Value Added Tax Act, 2005 on the rolls of the 2nd respondent - Commercial Tax Officer, Jubilee Hills Circle. This writ petition is filed seeking a declaration that the assessment order dated 26.11.2012 in Form VAT-305 for the years 2009-10 to 2011-12 passed by the 1st respondent - Deputy Commercial Tax Officer is arbitrary, illegal and without jurisdiction. We have heard Sri G. Narendra Chetty, the learned counsel for the writ petitioner and Sri Balaji Varma, the learned Senior Standing Counsel for Commercial Taxes appearing for the respondents.

As could be seen from the material available on record, the 1st respondent - Deputy Commercial Tax Officer, Jubilee Hills Circle, who was authorized by the Deputy Commissioner (CT), Panjagutta Division, by proceedings dated 5.7.2012 conducted the audit of the petitioner''s records and made the impugned assessment order dated 26.11.2012.

However the petitioner alleges that the authorization dated 5.7.2012 was only for the purpose of conducting audit and not for making the assessment. Therefore, according to the petitioner, the impugned assessment made by the 1st respondent in the absence of an authorization is illegal and without jurisdiction.

To substantiate the said contention, the learned counsel for the petitioner relied upon the decisions in Sri Balaji Flour Mills Vs. The Commercial Tax Officer and Others, and Dekars Fires & Security Systems Pvt. Ltd., Hyderabad Vs. Dy. Commissioner of Commercial Taxes, Secunderabad & Others 53 APSTJ 45.

In the counter-affidavit filed by the 1st respondent, the allegation that the impugned assessment was made on the basis of the authorization dated 5.7.2012 is denied. It is explained that the Deputy Commissioner, Panjagutta Division issued another authorization dated 24.7.2012 for making the assessment and a copy of the same was also served on the consultant of the petitioner. It is further stated that on the basis of the said authorization dated 24.7.2012, the 1st respondent issued a show-cause notice dated 25.8.2012 calling upon the petitioner to file its objections for the proposed assessment and the petitioner filed its objections on 18.10.2012 and 21.11.2012. In the reply dated 21.11.2012 it was stated by the petitioner that it had no objection for the proposed levy of tax for the period 2010-11. Accordingly, the impugned order of assessment was made determining the tax due for the year 2010-11. Thus, it is contended that the writ petition which is filed suppressing the subsequent authorization dated 24.12.2012 is misconceived and is liable to be dismissed in limine.

The petitioner filed a reply affidavit contending that even assuming that there was a subsequent authorization dated 24.7.2012, it is not a valid authorization since the satisfaction of the Deputy Commissioner (CT), Panjagutta Division that the return of the petitioner needs to be assessed pursuant to the audit report was not recorded therein.

Relying upon the judgments of this Court in W.P. No. 38944 of 2012, dated 3.1.2013 and W.P. No. 5411 of 2013, dated 25.2.2013 it is contended by the learned counsel for the petitioner that recording of satisfaction by the authorizing authority as to the need for assessment is mandatory while giving the authorization for assessment. Since no such satisfaction was recorded in the authorization dated 24.7.2012 it is vehemently contended by the learned counsel for the petitioner that the authorization is not valid and consequently the assessment is without jurisdiction.

In Sri Balaji Flour Mills case (1 supra) this Court held that authorization of audit under Rule 59(1)(7) of the AP VAT Rules does not have the effect of authorizing or empowering the officers mentioned in Rule 49(1)(4)(ii)(b) & (d) to undertake assessment. Following the ratio laid down in the said decision, it was reiterated in Deekars Fires & Security Systems Pvt. Limited''s case (2 supra) that authorization for audit of a VAT dealer and authorization to undertake assessment pursuant to such audit are two distinct requirements and the former alone would not suffice for undertaking the assessment.

In the light of the ratio laid down in the above decisions, it was held in W.P. No. 5411 of 2013 that the authorization which reads "the officer is hereby authorized to assess the following VAT dealers, if required" being a contingent authorization was unsustainable. Similarly, W.P. No. 38944 of 2012 was also allowed holding that the authorization on the basis of which the impugned order of assessment was made under which the Commercial Tax Officer was authorized to verify the accounts of the dealer and assess if any variations noticed was a contingent authorization being contingent on the satisfaction of the C.T.O.

In the instant case, the authorization dated 24.7.2012 on the basis of which the impugned assessment was made by the 1st respondent is neither contingent nor a composite authorization. It is no doubt true that it does not reflect the satisfaction of the Deputy Commissioner that the return of the petitioner needs assessment. However the authorization cannot be held to be invalid merely on the said ground. We have observed that the authorization was issued in the prescribed format i.e., FORM ADM 1B prescribed in VAT Audit Manual, 2012. As held by this Court in Sri Balaji Flour Mills case (1 supra), the Audit Manual is not inconsistent with Section 43 or Rule 59(1)(7) and it is binding on the officers. In the facts and circumstances of the case, the authorization dated 24.7.2012 cannot be held to be invalid merely on the ground that the satisfaction of the jurisdictional Deputy Commissioner for assessment of the petitioner''s return was not specifically recorded. Moreover, this is a case where the petitioner has accepted the tax levied and did not choose to raise any objection before the respondents with regard to validity of the authorization dated 24.7.2012. Therefore, we do not find any justifiable reason to interfere with the impugned order of assessment.

Accordingly, the Writ Petition is dismissed. No costs. Consequently the miscellaneous petitions, if any, pending in the writ petition shall stand closed.