Telangana High Court
Qualcomm India Privatelimited vs Deputy Commissioner Dc St And 2 Others on 18 June, 2020
Author: M.S.Ramachandra Rao
Bench: M.S.Ramachandra Rao
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE T.AMARNATH GOUD
WRIT PETITION NO.8046 OF 2020
O R D E R:
(Per Sri Justice M.S.Ramachandra Rao) The petitioner is a company incorporated under the Companies Act, 1956, engaged, inter alia, in export of Information Technology/Software Services.
2. During the period April, 2015 to March, 2016, it was also registered as a dealer under the CST Act, 1956.
3. The petitioner filed CST-VI returns for the above period in relation to its sales turnover.
4. In this period, the petitioner claims that it also received equipment to render the said services amounting to Rs.15,55,31,808/- under inter-State branch transfer. It contends that there is no element of sale involved in this transaction and the petitioner was not liable to pay any tax on it and did not report it in its CST-VI returns.
5. On 13.06.2019, a show-cause notice was issued to the petitioner by the Assistant Commissioner, AC Audit 2, Hyderabad Rural Division calling upon the petitioner to show cause why tax of Rs.264,85,34,685/- should not be demanded from the petitioner, mentioning that the petitioner's turnover was Rs.1826,57,56,450/-. No documentary evidence, on the basis of which this proposal was made by the said official, was annexed to the said show-cause notice. 2
6. The petitioner filed its reply on 04.07.2019 to the said show-cause notice denying all the allegations made therein. The petitioner mentioned in the said reply that it did not have any domestic sales and part of the alleged turnover was towards goods received under inter-State purchase and/or inter-unit transfer. The petitioner also enclosed specimen documents in support of its claim of export and further stated that if any further information is required, it would comply with it.
7. A personal hearing was conducted before the 1st respondent on 16.07.2019 which was attended by the petitioner's authorized representative. In the worksheet for personal hearing filed as Annexure P-6, the authorized representative of the petitioner mentioned that the petitioner does not agree with way bills turnover as the same were issued for procurements.
8. According to the petitioner, its representative informed the 1st respondent that the petitioner had not made any inter-State sales and also did not transfer any goods to its branch during the relevant period and the petitioner did not have any details from where the respondents had taken the figure of Rs.40,68,01,526/- (Rs.25,12,69,718/- + Rs.15,55,31,808/-) alleged to be taxable in the show-cause notice dt.13.06.2019 and requested that the basis for these figures be disclosed to the petitioner.
9. According to the petitioner, verbal assurance was given by the 1st respondent that any further requirement of documents to verify the claim of the petitioner would be intimated either to the petitioner or to its 3 authorized representative. An affidavit dt.29.05.2020 of its authorized representative is filed as Annexure P-7 to the Writ Petition.
10. There was no communication from the 1st respondent for more than 6 months.
11. Thereafter, suddenly an e-mail dt.24.02.2020 was issued by the 1st respondent stating that though the petitioner filed objections, it had not availed the opportunity of personal hearing and it should avail the same by 29.02.2020.
12. In response thereto, the petitioner, through letter dt.27.02.2020 informed the 1st respondent that they had already attended the hearing on 16.07.2019 and also made their submissions through letter dt.05.07.2019 and had requested the 1st respondent to drop further proceedings and that it is willing to furnish any further information, if required. It mentioned that it was awaiting for one more opportunity of personal hearing after the 1st respondent disclosed the additional documents which he would want the petitioner to produce, and also after the petitioner is disclosed the basis for adopting the figures mentioned in the show-cause notice dt.13.06.2019. On 18.03.2020 the authorized representative of the petitioner had discussion with the 1st respondent and the 1st respondent instructed the petitioner to submit copies of purchase invoices, inter- company invoices and way bills.
13. On 19.03.2020, the petitioner addressed a letter enclosing sample copies of purchase invoices and inter-company invoices and requested for 10 days time for collating and submitting the remaining documents 4 as their offices were closed on account of COVID-19 pandemic and the consequent lockdown declared by Government of India as well as State Government of Telangana. It also mentioned that its employees were working from remote locations. It also requested for a personal hearing. According to the petitioner, it attempted to submit sample invoices physically on 20.3. 2020, but the office of the 1st respondent insisted for submission of complete set of documents on 23.3.2020 and did not accept the same on 20.03.2020.
14. The petitioner then wrote a letter on 21.03.2020 to the 1st respondent stating that their normal operations had been impacted due to COVID-19 pandemic in view of the directions issued by the Central Government and the State Government to work from home to contain COVID-19 spread, and also their employees were required to work from home till mid April. It also mentioned that since the documents required were more than 3 years old, it would be difficult for the petitioner to physically retrieve the documents at such short notice due to COVID-19 situation. It assured the 1st respondent that the documents were available with the petitioner and they would submit the same within 10 days of resolution of the prevailing COVID-19 situation.
15. On 30.03.2020 by an e-mail, the petitioner submitted invoices which it was able to retrieve online to the tune of Rs.24,54,14,433/- pertaining to goods received under inter-State purchase/branch transfer. It assured the 1st respondent that other documents were also available and would be submitted within 10 days of the resolution of the COVID- 19 situation.
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16. The next day on 31.03.2020, through another e-mail, the petitioner submitted more invoices to the extent it was able to retrieve online and requested time to submit all documents as soon as the prevailing COVID-19 situation resolves.
17. However, the 1st respondent passed the Final Assessment Order No.53355 on 31.03.2020 which was received by the petitioner through e-mail on 01.05.2020 finalizing the assessment for the period April, 2015 to March, 2016 without granting any opportunity of personal hearing or virtual hearing by allowing exemption only in respect of export turnover of Rs.1785,89,54,924/- and dropping the demand to that extent.
18. In the impugned order, the 1st respondent however finalized the assessment with regard to inter-State purchases/branch transfer turnover of Rs.40,68,01,526/- applying best judgment on the ground that the petitioner did not submit documentary evidence and determined the tax dues as Rs.5,89,86,221/-.
19. According to the petitioner, signed copy of the Final Assessment Order dt.31.03.2020 was not received by it and what was received was only an unsigned copy; and a notice of demand dt.31.03.2020 was served on the petitioner through hard copy dt.21.05.2020 by the 1st respondent directing the petitioner to pay the said tax dues determined in the impugned Assessment Order. There was a reminder notice dt.27.05.2020 issued by the 1st respondent which was received by e-mail on 28.05.2020 by the petitioner directing the petitioner to pay tax dues 6 within 3 days, failing which coercive action will be taken against the petitioner. So the petitioner filed this Writ petition.
20. Counsel for the petitioner contends that there has been denial of adequate opportunity to the petitioner to place documentary evidence in view of the prevailing COVID-19 pandemic and the lockdown orders in force issued by the State Government and the Central Government in the month of March, 2020; and the petitioner was disabled from producing the same though verbal assurance was given by the 1st respondent in July, 2019 to the representative of the petitioner that they would request for further documents, if required, and inform the petitioner of the same. According to the petitioner, against the total turnover of Rs.40,68,01,526/- under dispute on account of inter-State purchases/branch transfer, the petitioner submitted invoices to the tune of Rs.26,39,48,235/-.
21. Counsel for the petitioner also contended that the respondents did not have any authority to demand tax from the petitioner on goods received under inter-State purchases/branch transfer, that there is no element of sale in this turnover at all, and no tax could have been demanded from the petitioner by the 1st respondent on the said turnover and the very determination of tax dues by the 1st respondent in the impugned Assessment Order is without authority of law. Other contentions on merits were also raised.
22. Sri J.Anil Kumar, Special Counsel for Commercial Taxes appearing for the respondents did not dispute that there was lockdown in 7 force in the month of March, 2020 which was imposed by the Central Government as well as the State Government, that the petitioner asked for personal hearing after the initial personal hearing on 16.07.2019 in the subsequent e-mail dt.27.02.2020, letter dt.19.03.2020 and e-mail dt.21.03.2020. He did not dispute that the petitioner would be disabled from submitting all documentary evidence during the lockdown period and that even the invoices submitted by the petitioner along with the e- mail dt.30.03.2020 and 31.03.2020 were not taken into account by the 1st respondent.
23. We are of the opinion that the petitioner had raised substantial contentions both on law and on facts and the 1st respondent ought to have provided a personal hearing after the COVID-19 pandemic situation resolves to enable the petitioner to submit the documentary evidence regarding its defence that the turnover of Rs.40,68,01,526/- relates to inter-State purchase of goods under inter-State branch transfer and there is no element of sale involved in it.
24. There has been denial of opportunity to the petitioner by the 1st respondent in view of the COVID-19 pandemic and the consequent lockdown and therefore, the impugned order of Assessment dt.31.03.2020 is vitiated.
6 Accordingly, the Writ Petition is allowed; the impugned Final Assessment Order No.53355 dt.31.03.2020 issued by the 1st respondent for the period April, 2015 to March, 2016 under the CST Act, 1956 is set aside; and the matter is remitted back to the 1st respondent to determine 8 afresh after affording hearing to the petitioner within two (2) months. The petitioner is also granted one month time from the date of receipt of a copy of this order to submit all documentary evidence in its possession to the 1st respondent who shall consider the same and pass orders in accordance with law.
6 Pending miscellaneous petitions, if any, in this Writ Petition shall stand closed. No costs.
____________________________ M.S.RAMACHANDRA RAO, J _______________________ T.AMARNATH GOUD, J Date: 18-06-2020 Svv