Decided on June 01,2009

Dr. Reddys Laboratories Limited Appellant


J. Shyam Sundar Rao, Chairman - (1.) THIS is an appeal filed against the orders of Joint Commissioner (CT), Audit -II, O/o the Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad in CCTs Ref. No. BVI(1)/Refunds/16/2005, dated 6 -4 -2008. The appellant is M/s. Reddy's Laboratories Limited, Ameerpet, Hyderabad 11 is on the rolls of Assistant Commissioner (CT) (LTU), Punjagutta Division, Hyderabad. The Deputy Commissioner (CT), Punjagutta, Hyderabad submitted the refund claim of the appellant to the (sic) of Rs. 2,87,14,114/ - relating to sales tax relief on closing stock held as on 1 -4 -2005.
(2.) AFTER verification of the proposals, the O/o the Joint Commissioner issued notice on 13 -2 -2007 under Section 13(2)(a) under Section 38(3) read with Rule 59(6) of Andhra Pradesh VAT Act and Rules 2005, proposing to reject the claim on the ground that the relief claimed on capital goods, parts and accessories have lost their identity as having been installed and erected as plant and machinery. The appellant filed their objections on 19 -2 -2007. The matter was heard on 8 -3 -2007. The Joint Commissioner observed that in the cast of M/s. Sri Dhana Lakshmi Cotton & Rice Milts Pvt. Ltd., Ganapavaram the Commissioner (CT) found that the clarification given by the Advance Ruling Authority under Section 13(2)(a) of APVAT Act, 2005 is improper under Revisional powers conferred, the Commissioner set -aside the finding of the Advance Ruling Authority in the case of M/s. Sri Dhana Lakshmi Cotton & Rice Mills Pvt. Ltd., which was previously in favour of the dealers and was now against the dealer and having observed the same, the refund claim of the appellant was rejected. Aggrieved by the same, the present appeal is preferred. In the appeal grounds it has been contended as follows: The order of the Joint Commissioner dated 6th April, 2003 is illegal and contrary to law and without jurisdiction. The Assistant Commissioner already issued order granting refund of Rs. 2,99,80,079/ - in Form 126, dated 15 -9 -2005. Hence, the Joint Commissioner has no jurisdiction to refuse the refund, Section 33(3) referred by the Joint Commissioner is irrelevant since it relates to Input Tax Credit (ITC) and not sales tax credit. Under the scheme of the Act the refund of sales tax credit has to be approved by the assessing authority as the Form 126 itself indicates. Item 6 of Rule 59 which confers jurisdiction on Joint Commissioner to approve refunds where the sum exceeds Rs. 10.00 lakhs applies only to Input tax credit and is not applicable to refund of Sates tax credit.
(3.) THE order passed is against the principles of natural justice. The hearing was done before Dr. K. Ravindra, the then Joint Commissioner on 15 -3 -2007, However, the order is passed by a different officer Dr. K. Raghavaiah. Further, the order refers to subsequent proceedings of the Commissioner of Commercial Taxes dated 29th March, 2008 revising the order of Advance Ruling Authority in M/s. Sri Dhana Lakshmi Cotton & Rice Milts case. The appellant had no opportunity to submit its case based on the said order. Even for this reason, order suffers from violation of principles of natural justice, vide 96 STC 369. The Joint Commissioner erred in rejecting the claim for refund an the ground that the capital goods which have been installed already before 31st March, 2005 cannot be considered as stock, Rule 37(1) of APVAT Rules clearly indicates that the dealer is entitled to claim sales tax relief on goods, which are in the stock on the date of commencement of the Act. The reasoning that capital goods are not stock because they are already installed is wholly untenable, arbitrary and unjustified because they continued to be in appellant's possession as its property. The Joint Commissioner grossly ignored the Leaflet No. 20 relating to sales tax relief issued under Section 77 of VAT Act, by the Commissioner of Commercial Taxes when the VAT Act was introduced. The leaflet is binding on the Joint Commissioner. The appellant relies on the recent Supreme Court division reported in, 13 VST Page 1. The amendment to Section 13(2)(a) by Act No. 34 of 2000 substituting the expression 'On the stocks held in the State' with the expression 'On the stock held in any form in the State' is Clarificatory and has retrospective effect from 1 -4 -2005. But the same was overlooked by the learned Joint Commissioner. This fact has been pointed out in the objections dated 19 -2 -2007. The Joint Commissioner having noted the amendment in favour of the appellant failed to refer the same in the final order. The Joint Commissioner grossly erred in rejecting the claim by referring to the order of the Commissioner of Commercial Taxes dated 29 -3 -2008 without notice to the appellant. The Proceedings of the Commissioner dated 29 -3 -2008 are subsequent to the hearing held on 15 -3 -2007.;

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