Telangana High Court
M/S Voltas Limited, vs The Assistant Commissioner Ct, Ltu, on 25 November, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE
SUDDALA CHALAPATHI RAO
W.P.No.14000 OF 2008
ORDER:(per Hon'ble Sri Justice P.Sam Koshy) Heard Mr. P.Karthik Ramana, learned counsel for the petitioner and Mr. T. Chaitanya Kiran, learned Assistant Government Pleader representing Mr. Swaroop Oorilla, learned Special Government Pleader for the State Tax for the respondents. Perused the record.
2. The present is a writ petition which has been filed assailing the order dated 28.05.2008 (Annexure P-3) passed by the Assessing Officer in G.I.No.1617/03-04/CST.
3. The challenge to the said order primarily is that the Assessing Officer has in excess of his jurisdiction passed the impugned order on 28.05.2008.
4. The matter revolves around two Government Orders i.e., G.O.Ms.No.552 dated 12.09.2002 and G.O.Ms.No.554 also dated 12.09.2002 wherein it has been reflected that the tax collected on 2 purchase of raw material has to be reduced on the tax leviable on sale of the finished products in interstate sales.
5. Initially, the Assessing officer had passed an order against the petitioner holding that the petitioner would not be entitled for the set off of entry tax paid on the raw materials so purchased by them vide his order dated 29.03.2007 (Annexure P-1). The said order was challenged in an appeal before the Appellate Deputy Commissioner vide Appeal No.S/13/07-08. The appeal stood partly allowed in favour of the petitioner and so far as the question of set off of entry tax paid on purchase of raw material in terms of G.O.Ms.No.554 dated 12.09.2002 is concerned, the Appellate Deputy Commissioner has held as under:
"It is observed that in terms of G.O.Ms.No.552 dated 12.09.2002 and in terms of G.O.Ms.No.554 dated 12.09.2002. Wherein the word 'like' is used the tax collected on purchase of raw material is to be reduced from tax payable on sale of finished products in interstate sales. Thus the benefit of G.O.Ms.No.554 dated 12.09.2002 for set off entry tax is available to the appellant and the entry tax paid on them is to be quantified correctly. Thus the appeal on this point is remanded to the assessing authority directing him to quantify the entry tax paid and grant relief found eligible as per law".3
6. From the plain reading of the observation made by the Appellate Deputy Commissioner, it is apparently evident that the Appellate Deputy Commissioner had, in fact, partly accepted the contention of the petitioner insofar as making the petitioner eligible for set off of entry tax on the purchase of raw material and it is also apparent from the said order that after accepting the contention of the petitioner, the Appellate Deputy Commissioner has remanded the matter to the Assessing Officer only on the point of quantification of the entry tax payable by the petitioner and for granting of appropriate relief insofar as entry tax paid by them. However, after the aforesaid clear order passed by the Appellate Deputy Commissioner when the matter stood remanded before the Assessing Officer where the nature of the responsibility casted upon the Assessing Officer was only to quantify the amount of entry tax paid. The Assessing Officer took an altogether different route and again ventured into deciding the entitlement of the petitioner so far as the raw material used by the petitioner is concerned and in the process overruled the order passed by the Appellate Deputy Commissioner and went on holding that the petitioner is not entitled for set off of entry tax paid on the raw 4 material used by the petitioner. This, in the opinion of the petitioner, is in excess of jurisdiction and literally amounting to sitting over the order of the Appellate Authority and testing its veracity, which otherwise was not within the powers of an officer subordinate to the Appellate Deputy Commissioner. The only course available to the department or for that matter the Assessing Officer was in making efforts in ensuring that the view and opinion expressed by the Appellate Deputy Commissioner is subjected to revision by the department under Section 20 Andhra Pradesh General Sales Tax Act, 1957. Though the learned counsel for the State contended that once when the matter stood remanded, it was the Assessing Officer thereafter to decide whether the claim raised by the petitioner for set off of entry tax was in accordance with law or not and, therefore, it does not warrant interference, as the opinion expressed by the Assessing Officer is also plausible view that could be taken, particularly keeping in view the word 'like' which was referred to in G.O.Ms.No.552 and 554 are concerned, which all the more reduced the scope of interference.
7. Having heard the contentions put-forth on either side and on perusal of the record, undoubtedly the Appellate Deputy 5 Commissioner had reversed the remand order of the Assessing Officer dated 29.03.2007 vide his order dated 06.12.2007. The operative part of the order is that which has already been reproduced in the preceding paragraphs. As has been discussed earlier, it has been categorically held by the Appellate Deputy Commissioner that the tax paid on the purchase of raw material used by the petitioner would be available for them for set off and second that the remand was only to the extent of making quantification by the Assessing Officer. However, the Assessing Officer in the course of passing of the order made the following observations:
"This amount represents the Entry Tax paid by the assessee company in respect of its purchases from outside the States, which is claimed by way of set off in terms of G.O.Ms.No.552 Rev. dt.12-9-2002 and G.O.Ms.No. 554 Rev. dt.12-9-2002. The ADC has remanded the appeal directing to quantify the Entry Tax paid and to grant necessary relief. The assessee company furnished the details of outside purchases on which Entry Tax was paid along with proof of having paid the said Entry Tax. The items are either refrigerator parts or Air Conditioning parts., The Government notifications relied upon are seen. G.O.Ms.No. 552 is a notification issued Under APGST Act and G.O.Ms.No. 554 is issued Under CST Act. The notification - I in G.O.Ms.No.552 seeks to levy Entry 6 Tax on some 9 items mentioned thereat and notification-ll speaks of reducing the tax levied in respect of raw materials like, Alluminium, white cement, Atta, Maida, Sooji, Ravva and Wheat Flour, from out of the tax payable on finished products Under APGST Act. This is suggestive of the intention of the Government in restricting such set off only to certain categories of raw materials. The use of the word like' connotes 'raw material' but not 'components parts' like compressors condensers etc. Had it been the intention of the Government to extend the benefit of set off even to the component parts like compressors or condensers as the case may be, it could have used the words'---- whereon the purchase of the above materials instead of 'whereon the purchase of raw materials like Aluminium------'. A careful and conscious reading of the notification suggests that the benefit of set off as contemplated in notification-ll of G.O.Ms.No.552 or in G.O.Ms. No.554, is available only on raw materials tike 'Aluminium, white Cement, Atta, Maida, Sooji, Ravva and Wheat Flour', but not to compressors or condensers, as the case may be, as they do not answer to the description of 'raw materials' referred to in the said notifications. Therefore the claim is not accepted and hence rejected".
8. This, in the opinion of the Bench, is (1) for which the matter was not remanded back at all; (2) the course adopted by the Assessing Officer amounts to sitting over the order of the Appellate Authority and deciding its merits and in the course of deciding whether the order passed by the Appellate Authority was 7 proper, legal and justified or not; (3) the order is one which is per se in excess of his jurisdiction, particularly when we read the nature of the role that the Assessing Officer had to play in the context of the remand being made vide order dated 06.12.2007, as directed by the Appellate Authority. It would be relevant at this juncture to refer to the judgment of the Hon'ble Supreme Court in the case of UNION OF INDIA vs. KAMALAKSHI FINANCE CORPORATION LTD 1 wherein in paragraphs 7 and 8, the Hon'ble Court while dealing with similar situation where a subordinate officer took an entirely contrary view that which was passed by the superior officer, has held as under:
7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect.
Section 35-E confers adequate powers on the department in this regard. Under Sub-section (1), where the Central Board of Direct Taxes come across any order passed by the Collector of Central Excise with the legality or propriety of which it is not satisfied, it can direct the Collector to apply to the Appellate Tribunal for the determination of such points arising out of the 1 1992 Supp (1) Supreme Court Cases 443 8 decision or order as may be specified by the Board in its order. Under Sub-section (2) the Collector of Central Excise, when he comes across any order passed by an authority subordinate to him, if not satisfied with this legality or propriety, may direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order and there is a further right of appeal to the department. The position now, therefore, is that, if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section.35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail.
8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional 9 Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them.
9. In the instant case also, once when the matter had travelled to the Appellate Authority and the Appellate Authority having expressed his opinion and had partly allowed the appeal, the said order could not be put to challenge or review by a subordinate officer or an inferior forum than the Appellate Deputy Commissioner. The Assessing Officer to whom the matter stood remanded could have only expressed his powers to the extent of the directions given by the Appellate Deputy Commissioner that was for quantifying of amount of entry tax paid by the petitioner on the purchase of raw material. The Assessing Officer, under no 10 circumstances, could have travelled beyond the directions given by the Appellate Court.
10. In view of the same, we are of the considered opinion that the stand taken by the Assessing Officer is not proper, legal and justified. The impugned order deserves to be and is, accordingly, set aside. There shall be no order as to costs.
11. The writ petition is allowed. However, while setting aside the order of the Assessing Officer, we direct the Assessing Officer to ensure compliance of the Appellate Deputy Commissioner's order dated 06.12.2007 only so far as the quantification is concerned.
Consequently, miscellaneous petitions pending, if any, shall stand closed.
_____________________ P.SAM KOSHY, J _________________________________ SUDDALA CHALAPATHI RAO, J 25.11.2025 Lrkm