State of Andhra Pradesh vs Viswa Vijetha Agencies, Guntur

G. Rohini, J.—This revision is preferred by the State u/s 34(1) of the A.P. VAT Act, 2005 against the order of the Sales Tax Appellate Tribunal, A.P. Visakhapatnam, dated 13.02.2012 in T.A. No. 207 of 2009. The question of law formulated in the memorandum of grounds reads as under:

Whether the Tribunal is correct in holding that Rule 16(3)(c), which is beneficial to [he appellants is applicable, though Rule 16(3)(f) was inserted into the statute book at the relevant times?

We have heard Sri P. Balaji Varma, the learned Special Standing Counsel for Commercial Taxes appearing for the petitioner, and perused the material available on record.

The point whether tax reduction can be allowed on the basis of the credit notes under Rule 16(3)(c) and (f) of the A.P. VAT Rules, was answered by the Appellate Tribunal following the order of the Advance Ruling Authority (for short "ARA") dated 25.07.2006 in the case of M/s. Ori Flame India (P) Limited, Hyderabad, wherein it was held:

The issue has been examined with reference to the amended Rule-16(3)(f). This amendment is basically meant for the transactions between two registered VAT dealers to neutralize the effect of credit notes on input tax and output tax in the hands of selling VAT dealer and buying VAT dealer. From the facts explained by the appellant, the ruling is given that the applicant is entitled for reducing his tax liability to the extent of discount offered to the customers by way of credit notes cost as prescribed under Rule-16.

Nothing is placed before this Court by the learned Standing Counsel to show that the opinion of the ARA dated 25.07.2006 is set aside or varied. As provided u/s 67(4) of the A.P. VAT Act, 2005, the order of the ARA is binding on all the officers of the Department other than the Commissioner. Therefore, the appellate Deputy Commissioner has rightly followed the order of the ARA while making the assessment.

We do not find any error even in the order passed by the Appellate Tribunal, since the order of the ARA is in accordance with the settled principles of law. At any rate the law is well settled that if there is any ambiguity or doubt, the benefit of doubt shall always be given to the assessee. In the present case, both Rule 16(3)(c) and 16(3)(f) are on the statute book at the relevant point of time. Rule 16(3)(c) gives the benefit of lower taxation based on the actual sale price, whereas as per Rule 16(3)(f) computation of tax is on the presumptive value. In these circumstances, the Tribunal thought it fit to allow the claim of Input Tax Credit (ITC) by extending the benefit of Rule 16(3)(c) to the assessee. Hence, we do not find any justifiable reason to interfere with the order under revision. Accordingly, the Tax Revision Case is dismissed. No costs.