- (1.) THE order of the assessing authority dated 31. 1. 2009 is under challenge in this writ petition, among others, for the reason that the show cause notices preceding it do not mention the basis on which the turnovers mentioned therein were sought to be taxed and that, as a result, the petitioner was denied an opportunity of effectively putting forward their defence thereagainst.
(2.) FACTS, to the extent relevant, are that the Assistant Commissioner (CT), nellore Division issued notice dated 20. 10. 2008 proposing assessment for the period ending June, 2008 on the ground that the petitioner had failed to produce the requisite documents in time. A fresh notice dated 6. 12. 2008 was issued estimating the turnover at 100% of the works contract turnover, the gross and net turnover was fixed at Rs. 901. 78 Crores and Rs. 766. 51 Crores respectively and tax thereon, for a sum exceeding Rs. 95. 81 Crores, was proposed to be levied. Thereafter, the petitioner furnished information. The Assistant Commissioner, vide proceedings dated 6. 1. 2009, informed the petitioner that the proposal to make a best judgment assessment, and determination of turnover on estimated basis, was being dropped and that he proposed to levy tax on the turnover of rs. 815. 52 Crores in addition to the turnover relating to the civil works contract of Rs. 443. 92 Crores. In their explanation, the petitioner informed the assistant Commissioner that the turnover Rs. 815. 52 Crores was not amenable to tax under the provisions of the A. P. VAT Act. The Assistant Commissioner passed assessment order dated 31. 1. 2009, which was served on the petitioner on 5. 2. 2009, levying tax both on the turnover of Rs. 815. 52 Crores, and inter-State purchases of material used in works contract for Rs. 76. 69 Crores. The profit element on labour charges for Rs. 4. 53 Crores was also disallowed. The petitioner claims to have procured material worth Rs. 815. 53 Crores, from various registered dealers situated outside the State of A. P, to comply with the conditions of the supply contract. They would contend that the said goods were moved from places outside the State and were made over to APGENCO by transfer of documents during its movement, that these supplies were exempt from tax under section 6 (2) (b) of the CST Act, that the first seller, in the course of inter-state trade, had paid CST on the strength of the C-forms issued by the petitioner, that APGENCO had also issued C-forms to the petitioner against the corresponding sales effected in their favour and that this turnover of Rs. 815. 53 crores was not exigible to tax, in the hands of the petitioner, under the A. P. VAT Act. The petitioner also claims to have purchased material worth Rs. 76. 69 crores for execution of civil works from sources situated outside the State in terms of Section 3 (a) of the CST Act, that movement of goods to the work site of apgenco was occasioned by way of invoices wherein the petitioner was shown as the consignee and that delivery of the said goods was taken by the petitioner and used in execution of works contracts i. e, civil works. Petitioner would contend that these purchases were specifically earmarked for the work in question with instructions to the vendor to deliver the same at the work site of apgenco, that the said transaction was an inter-State sale in execution of works contracts, and not intra-State sales in the hands of the petitioner under the a. P. VAT Act.
(3.) ON the other hand, the respondent would submit that the petitioner had filed monthly returns in Form-VAT 200 for the period June, 2006 to June, 2008 disclosing a turnover of Rs. 276. 12 Crores and payment of tax thereon, that the business premises of the petitioner was audited on 4. 8. 2008, that, even though the petitioner was called upon to produce their books of accounts, they had failed to do so, that at the time of audit an unsigned statement of turnover was furnished with the assurance that the relevant books of accounts would be produced in due course and, since they were not produced even two and half months thereafter, the respondent, relying on the unsigned statement, had opined that the petitioner had under-declared the turnover through the returns filed with the department. According to the respondent, it was decided to reject the returns and propose an estimate to the best of judgment, under Section 21 (3) of the APVAT Act read with Rule 25 (5) of the APVAT Rules, that a show cause notice was issued on 20. 10. 2008 proposing a turnover of Rs. 824. 12 Crores, that, on receipt of the notice, the petitioner had filed details of the works executed in respect of the three projects upto September, 2008 with gross receipts of rs. 450. 88 Crores relating to civil works, that in addition to the material purchased within the State, the petitioner had also purchased goods from outside the State and had supplied the same to APGENCO for use in the three projects, that the respondent had issued notice on 5. 11. 2008 calling upon them to furnish details of the goods purchased from outside the State and supplied to the contractee for executing the three projects, that, as no reply was received from the petitioner, a revised show cause notice dated 6. 12. 2008 was issued proposing to levy tax on a turnover of Rs. 450. 88 Crores and, in addition, an equivalent sum was estimated and proposed as turnover relating to supply of goods, that the petitioner had filed their objections on 31. 12. 2008 opposing the proposed assessment, that, while they had accepted the turnover relating to civil works worth Rs. 443. 91 crores, they contended that the turnover relating to supply of goods, purchased from outside the State and incorporated in the three projects, was not exigible to tax as the goods were purchased in the course of inter-State trade, that they had filed another letter, along with documentary evidence, informing that supply of material, in respect of the three projects of apgenco for the assessment period in question, was for Rs. 815. 52 Crores, that, in the light of this information, a final show cause notice dated 06. 01. 2009 was issued proposing to assess these turnovers also, that, during the personal hearing on 12. 01. 2009, the petitioner had opposed levy of tax on the estimated turnover of Rs. 815. 52 Crores, and Rs. 76. 69 Crores, contending that they fell within the ambit of inter-state sale and were not exigible to tax under the A. P. VAT Act and, taking into consideration the submissions made, the assessment order was finally passed on 31. 01. 2009.;