Prathista Industries Limited vs Commercial Tax Officer and Another

Goda Raghuram, J.—Heard Sri S.R.R. Viswanath, learned counsel for the petitioner and the learned Special Government Pleader for Commercial Taxes for the respondents. The assessment order dated May 19, 2012 passed by the first respondent for the tax period April, 2008-March, 2009 is assailed in this writ petition on a singular ground that the order is in violation of section 67(3) and (4) of the Andhra Pradesh Value Added Tax Act, 2005 (for brevity "the Act").

The relevant facts may be noticed:

The petitioner-company is a registered dealer on the rolls of the first respondent. For manufacture of organic fertilizers for use in various agricultural crops besides feed supplements, organic acids, chelated minerals/mineral mixtures for poultry and veterinary segments, the petitioner claims to have a technical collaboration with the Council for Scientific and Industrial Research, Academia and Department of Bio-technology, Government of India. The petitioner believes that 17 of its products are exempted from levy of tax, under entry 26 of the First Schedule to the Act.

For a ruling on the above aspect, the petitioner made an application to the Advance Ruling Authority-the second respondent on February 6, 2009 and sought advance ruling with regard to classification of certain specified products, under the Act. The second respondent is required under the provision of section 66(4) and (7) of the Act to pronounce advance ruling within the stipulated time. The second respondent-authority however failed to do so within the stipulated period. The order of the authority was effectively served on the petitioner on May 3, 2012.

While so, on April 17, 2012, the first respondent issued a show-cause notice to the petitioner proposing to collect under declared tax of Rs. 1,58,05,754, even while the determination by the Advance Ruling Authority was pending before the second respondent.

On November 16, 2011, the second respondent-authority by a majority ruled that the products (in respect of which advance ruling was sought by the petitioner) fall within the ambit of entry 19 of Schedule IV to the Act, liable to be taxed at four per cent up to September 13, 2011 and five per cent with effect from September 14, 2011. This order was however received by the petitioner on May 3, 2012. There against the petitioner preferred an appeal to the A.P. Sales Tax and V. A.T. Appellate Tribunal in T.A. No. 235 of 2012. The Tribunal, oh June 19, 2012, stayed the order of the second respondent dated November 16, 2011. These are the sequence of facts pleaded and asserted by the learned counsel for the petitioner which are not disputed by the learned Government Pleader for Commercial Taxes.

Since the first respondent initiated assessment proceedings by the show-cause notice dated April 17, 2012, before communication by the first respondent to the petitioner (on May 3, 2012) of its ruling dated November 16, 2011, on the application by the petitioner for advance ruling, initiation of such proceedings and the eventual order of assessment dated May 19, 2012 passed by the first respondent (impugned herein), is clearly in violation of the provisions of section 67(3) of the Act is the contention. This contention requires to be accepted and is fairly conceded by the learned Government Pleader.

For the aforesaid reasons, the impugned order of assessment dated May 19, 2012 passed by the first respondent is quashed. It is however clarified that the first respondent may initiate and pass fresh orders of assessment, in accordance with law. The writ petition is accordingly disposed of at the stage of admission, but in the circumstances, without costs.