RAMESH RANGANATHAN, J. - (1.) WHILE W.P.Nos.7561, 8285, 8287, 8288, 8317 and 8448 of 2014 are filed questioning the order of the revisional authority - Deputy Commissioner (CT) dated 31.01.2014, under Section 32(2) of the AP VAT Act, 2005, revising the assessment orders, for the assessment years 2011 -12, 2010 -11, 2009 -10, 2006 -07, 2007 -08 and 2008 -09 respectively, the order under challenge in W.P.No.19501 of 2014 is the assessment order passed by the assessing authority dated 31.05.2014 levying tax on the petitioner for Rs.9,62,91,291/ - for the assessment year 2012 -13.
(2.) THE petitioner, a company incorporated under the Companies Act, executes works contracts and is an assessee on the rolls of the Assistant Commissioner (CT), LTU, Visakhapatnam. Pursuant to the agreement entered into between the Government of Andhra Pradesh (GoAP for short) and M/s.Krishnapatnam Port Company Limited (KPCL for short) on 17.09.2014, for building a deep water sea port at Krishnapatnam on build, operate, share, and transfer basis with a concession period of 50 years, KPCL awarded the works contract, for construction of the port, to the petitioner (hereinafter referred to as NECL); under Clause 3.16, the GoAP undertook to forego revenue streams from the project as per the Andhra Pradesh Infrastructure Development Enabling Act, 2001, (hereinafter called the 2001 Act), among others, regarding exemption of sales tax on all inputs required for project construction.
(3.) IT is the petitioners case that the materials required, directly or otherwise, for construction of the project are considered as inputs, and tax payable thereon is exempt; the GoAP, exercising powers conferred under Section 15(1) of the AP VAT Act, 2005 (the Act for short), issued G.O.Ms.No.609 dated 29.05.2006 refunding the tax paid on purchases by the port developer, its contractors and sub -contractors; they were informed that the turnover, regarding the port contract, was exempt from tax ; they did not, therefore, disclose the turnover relating to port construction in their returns; the assessing authority issued show -cause notice dated 26.05.2014 proposing to levy tax on the turnover for the assessment year 2012 -13, alleging that correct amounts had not been declared in the VAT returns; for the financial year 2012 -13, they were due Rs.10.24,87,886/ - as arrears of tax for the turnover relating to the execution of works contracts, out of which Rs.8,37,97,100/ - related exclusively to the construction of the Krishnapatnam port for KPCL; they had, subsequently disclosed the turnover relating to the execution of works at Krishnapatnam; they were also asked to show -cause why the works under progress should not be assessed under Rule 17(1)(e) of the A.P. Vat Rules, 2005 (Rules for short); they had filed their objections to the show -cause notice, whereby tax was proposed to be levied on the turnover relating to the works undertaken for KPCL; they had contended that, as per the terms of the agreement dated 17.09.2004, GoAP had agreed to forego revenue receipts from the project; not only as per the contractual terms, but also as per the doctrine of promissory estoppel, the State cannot levy tax on the deemed sales involved in the execution of contracts relating to the works awarded by KPCL; the agreement dated 17.09.2004 is an agreement between the State of Andhra Pradesh and KPCL; once the State has declared that all inputs required for project construction are exempt from sales tax, the commercial tax department, which is merely a wing of the State Government, cannot take a different stand and levy tax thereon; they also submitted their objections, contending that the turnover relating to the work under progress had to be determined as per Rule 17(1)(d); they also objected to any amount being added, either towards profit or administrative expenses, to the value declared as per Rule 17(1)(d); they relied on an earlier order of the Sales Tax Appellate Tribunal (STAT for short) in T.A.No.110 of 2012 dated 23.04.2012 in their own case for the assessment year 2006 -07; the STAT had held therein that, when the works were not completed, addition of gross profit was incorrect, and tax could only be levied after ascertaining the value of the goods; the earlier assessment orders were passed by the assessing authority, and the tax due was arrived at on the basis of the value of the materials incorporated in the works, adding transport charges, seigniorage charges, loading and unloading charges, and gross profit at 32% of the purchase value after allowing input tax credit at 90% on the purchases made from the AP VAT dealers; to arrive at the value of material at the time of its incorporation, when the work is not completed in the relative assessment period, the assessment is required to be finalized only by following the procedure laid down under Rule 17(1)(d); they have been executing works contract under the composite scheme; they have been paying tax on the turnover, derived as per Rule 17(1)(d), for the works in progress which extend beyond the tax period; tax has been paid, for the completed works, deriving the turnover as per Rule 17(1)(e), relying on the phrase finalization of accounts relating to particular work; a similar issue came up before the Authority for Advance Ruling which, by its order dated 16.08.2012, clarified that the element of profit, pertaining to a particular work, should be arrived at every year at the time of finalization of accounts; the additional turnover, if any, should be reported in the month in which the accounts are finalized; and the differential tax payable should be paid; they had filed a review petition, before the Authority for Advance Ruling, on 12.06.2013 under Section 67(2) of the Act; they had also requested the authorities to defer the revision/reassessment proceedings till disposal of the review petition pending before the Advanced Ruling authority; they had also filed a rectification petition before the authority; they are entitled for the benefit of composition under Rule 17(2) of the Rules for the works executed for KPCL, and cannot be subjected to tax under Rule 17(1)(g); and, in the light of the order of the STAT in T.A. No.110 of 2012 dated 23.04.2012, exercise of the power of revision under Section 32(2) of the Act is barred. In the counter -affidavit filed by the Deputy Commissioner (CT), Visakhapatnam, it is stated that, as the agreement dated 17.09.2004 was entered into between the State of A.P. and KPCL, the Writ Petition is liable to be dismissed for non -joinder of the State of A.P. or the Secretary, Transport, Roads and Buildings; the petitioner cannot challenge the orders passed by the revisional authority placing reliance on a contractual clause in an agreement; a liability created by a statute has to be dealt with only in terms of the remedies provided therein; the petitioner availed the benefit of refund, on the total inputs used in the Krishnapatnam Port, to a tune of Rs.73 crores; under Section 4(7) of the Act the petitioner, having executed works contract, is liable to pay tax on the value of the goods at the time of incorporation; the petitioner did not pay any tax on the value of the goods incorporated in the works contracts for the periods 2006 -07 to 2012 -13; they neither filed any return nor did they pay tax within the time prescribed under Section 20; they did not also discharge the burden, as stipulated under Section 16 of the Act, to prove that they are not liable to pay tax under the Act; mere attempted compliance of the conditions stipulated in G.O.Ms. No.609 would not suffice, and the mandatory requirements of the said G.O. must be complied with; the petitioner cannot place reliance on the revised concession agreement as they are not a party thereto; as there is no power under the Act to grant exemption, the petitioner cannot claim that exemption should be granted placing reliance on a clause in a contract; the doctrine of estoppel has no application as a clause in agreement cannot be enforced if it is contrary to a statute; in the present case, the said clause is contrary to the A.P. VAT Act which does not provide for exemption; while NECL received consideration, for execution of the contract works for the financial years 2006 -07 to 2012 -13, they did not disclose the said turnover in the respective tax periods nor did they disclose the turnover at the time of finalization of assessment before the assessing authority, though they had reported the said turnover to the Income Tax department in the respective years; they filed a letter before the Assistant Commissioner for the first time on 18.10.2013, and intimated the undisclosed turnover of Rs.2120.44 crores as the escaped turnover for the seven financial years 2006 -07 to 2012 -13; after the petitioner disclosed the suppressed turnover of Rs.2120.44 crores, the revisional authority had issued revised revision show cause notice dated 27.11.2013; thereafter the impugned orders were passed; discreet enquiries were made by the Government regarding execution of various contract works in the State; at this juncture, and on the apprehension that non - disclosure of a huge turnover may result in action being taken against them, NECL had on 18.10.2013 reported the turnover of Rs.2120.44 crores as the escaped turnover which is exempt from tax under the Act; the petitioner had willfully suppressed this turnover; Rule 17(1)(d) is applicable only when the accounts are not finalized at the time of provisional assessment; in the present case as accounts have been finalized, NECL is liable to pay tax only in terms of Rule 17(1)(e); the review application filed by NECL before the Advance Ruling Authority is not maintainable; the petitioner is guilty of suppression of material facts, and have attempted to mislead the Court; and they have failed to avail the alternative remedy of appeal under the Act.;