Andhra HC (Pre-Telangana)
Itc Ltd., India Tobacco Division, ... vs 1.The State Of A.P., Rep. By Its Prl. ... on 11 April, 2018
Author: J.Uma Devi
Bench: J.Uma Devi
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN AND HONBLE Ms. JUSTICE J.UMA DEVI
Writ Petition No.7116 of 2018
11-4-2018
ITC Ltd., India Tobacco Division, Thomson Road, Visakhapatnam, Rep. by its Power of Attorney Sanjay Singh, S/o. S.K. Si
1.The State of A.P., Rep. by its Prl. Secretary, Revenue Dept. (CT-II), Velagapudi, Amaravathi, Guntur Dist., A.P. 2. The Ap
Respondents
Counsel for Petitioner: Dr. M.V.K. Murthy
Counsel for Respondents:Mr. Shaik Jeelani Basha,
Standing Counsel
<Gist:
>Head Note:
? Cases referred:
1. (2005) 2 SCC 515
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
HONBLE Ms. JUSTICE J.UMA DEVI
Writ Petition No.7116 of 2018
Order: (per V.Ramasubramanian, J.)
Aggrieved by the condition imposed by the Appellate
Deputy Commissioner while granting a stay of collection of
disputed tax pending appeal, the petitioner has come up with
the above writ petition.
2. Heard Dr.M.V.K.Murthy, learned counsel for the
petitioner and Mr. Shaik Jeelani Basha, learned Special
Standing Counsel for the department.
2. By Amendment Act No.9/1997, the State of Andhra
Pradesh inserted Section 6(1A) in the Andhra Pradesh Tax on
Luxuries Act, 1987, providing for the levy and collection of tax
on the turnover of receipts over tobacconist, relating to the
supply of luxuries. Section 4A was also inserted mandating
registration of every tobacconist.
3. The validity of the amendment was upheld by
a Bench of this Court by a judgment dated 12-11-1998.
But by a decision dated 20-01-2005 reported in Godfrey
Philips (I) Pvt. Ltd. V. State of U.P. , the amendment was
held unconstitutional. Even while holding the levy of luxury
tax on tobacco and tobacco products as unconstitutional, the
Supreme Court held that if any of the petitioners had
collected luxury tax from their customers, after obtaining
interim orders from the Supreme Court, they were obliged to
remit the same to the Government.
4. After the judgment of the Supreme Court, the
Commercial Tax Officer, Sarojini Devi Road Circle,
Secunderabad, issued notices dated 24-11-2005 demanding
payment of the luxury tax allegedly collected by the petitioner
from its customers. The petitioner filed a reply denying the
claim.
5. Thereafter, the Commercial Tax Officers of two
different Circles filed a contempt petition in Contempt Petition
(Civil) No.40 of 2006 on the file of the Supreme Court alleging
that the petitioner wilfully disobeyed the direction of the
Supreme Court. But the petitioner took a stand that they
never collected luxury tax from the customers.
6. In the light of the claim and the denial, the Supreme
Court appointed a firm of Chartered Accountants to verify
whether the petitioner collected any amount towards luxury
tax during the period from 01-4-1999 to 20-01-2005.
The Auditors filed a report on 23-5-2013 holding that the
petitioner did not collect any amount towards luxury tax.
7. The Supreme Court disposed of the contempt petition
by a final order dated 06-02-2014, permitting the Commercial
Tax Officers to issue show cause notices, if the petitioner had
collected luxury tax but not remitted the same to the State
Government. The Supreme Court gave liberty to the petitioner
to raise all contentions in response to the show cause notices.
After considering the objections, the concerned authorities
were directed to pass orders and the petitioner was given
liberty to question any adverse order passed against them,
before an appropriate forum.
8. The Supreme Court also clarified its order dated
06-02-2014 by a further order dated 11-02-2014 to the effect
that it was open to the petitioner even to raise the question of
maintainability of the proceedings.
9. Thereafter, a show cause notice was issued to the
petitioner alleging that the petitioner collected a sum of
Rs.62.80 Crores and retained the same. The petitioner gave
a reply denying the collection of tax.
10. As a matter of fact, the first notice was issued in
this regard by the concerned officer in Telangana State on
14-9-2014. The notice dated 07-8-2015 was actually issued
by the competitive authority from Visakhapatnam.
11. When the petitioner brought to the notice of both
the authorities that there cannot be a demand on parallel
lines, the authority in Telangana issued a revised show cause
notice contending that in view of Section 50 of the Andhra
Pradesh Re-organisation Act, 2014, he had the authority to
make a demand.
12. Challenging the show cause notice, the petitioner
filed W.P.No.210 of 2017. It was disposed of by an order dated
23-01-2017 directing the petitioner to file a reply and
directing the officer of the Telangana State to pass orders
after considering the reply.
13. But without being aware of the order dated
23-01-2017 passed in W.P.No.210 of 2017, the officer passed
an order on 24-01-2017. This order was set aside by this
Court by an order dated 30-01-2017 in W.P.No.2905 of 2017.
14. In the meantime, the officer at Visakhapatnam
passed an order dated 04-02-2017 confirming the demand to
the tune of Rs.62,80,29,344/-. Challenging the said order,
the petitioner came up with a writ petition in W.P.No.7155 of
2017. At the time when the said writ petition came up for
hearing, two other writ petitions filed by two different
companies in W.P.Nos.7635 and 8240 of 2017 also came up
for hearing. Though we found that there were not adequate
grounds to allow the petitioners in all the writ petitions
(including that of the present writ petitioner) to bypass the
alternative remedy of appeal, we found that the writ petitions
could not also be dismissed, as one of the important
questions raised in the writ petition related to the availability
of the alternative remedy provided under an Act, which itself
had no application to persons like the petitioner, in view of
the decision of the Constitution Bench striking down
Section 6A. Therefore, even while admitting the writ petition,
we directed the petitioner herein as well as the petitioner in
the other writ petitions to file appeals. The operative portion
of the order passed by us in W.P.M.P.No.8784 of 2017 in
W.P.No.7155 of 2017 is extracted as follows:
(i) There will be a direction to the petitioner, without
prejudice to their contentions in the writ petition, to avail
the remedy of a statutory appeal under Section 11(1) of the
A.P. Tax on Luxuries Act, 1987 as against the impugned
order, within two (2) weeks from the date of receipt of
a copy of this order. If an appeal is so filed, the Appellate
Authority may condone the delay, entertain the appeal
subject to compliance with the prescriptions contained in
Section 11(2) and dispose it of in accordance with law,
uninfluenced by any observation contained in this order.
However, the filing of the appeal will not be taken to be
an act on the part of the petitioner subjecting themselves to
the jurisdiction of the authorities under the Act. The filing
of the appeal will be without prejudice to the contentions of
the petitioner in the main writ petition. Until a period of two
weeks from the date of receipt of a copy of this order, the
impugned demand shall not be enforced, so that the
petitioner is able to file an appeal and also seek a stay
before the Appellate Authority under Section 11(1) of the
Act; and
(ii) till the issue is finally decided, the 3rd respondent
is refrained from passing any order.
15. Pursuant to the aforesaid order passed on
18-4-2017, the petitioner filed a statutory appeal before the
2nd respondent on 03-5-2017 along with a petition for stay of
recovery of the demand. The said stay petition was disposed
of by the 2nd respondent, by an order dated 25-10-2017,
granting an interim stay on condition that the petitioner paid
60% of the demand within 30 days.
16. Challenging the condition imposed for the grant of
stay, the petitioner came up with the writ petition in
W.P.No.38991 of 2017. The main contention of the petitioner
in the said writ petition W.P.No.38991 of 2017, as recorded in
paragraph-3 of the order passed in the said writ petition on
20-11-2017 was that after calling upon the petitioner to
appear on 12-7-2017 for a hearing on the appeal petition, the
2nd respondent disposed of the stay petition. This Court
accepted the contention and held that when a notice of
hearing is issued indicating that the appeal was to be heard,
the petitioner could not be expected to have gone prepared to
argue the stay petition and that therefore a conditional order
of stay could not have been passed without hearing the
petitioner on the stay application. In that view of the matter,
a Bench of this Court, by an order dated 20-11-2017,
set aside the conditional order of stay passed on 25-10-2017
and remitted the matter back to the 2nd respondent to issue
a fresh notice, hear the stay application and pass orders
afresh.
17. Pursuant to the said order passed in W.P.No.38991
of 2017, the 2nd respondent issued a notice of hearing on
24-01-2018 and passed an order dated 15-02-2018, again
granting interim stay on the very same condition viz., the
payment of 60% of the demand within 30 days. It is against
the said order that the petitioner has come back to square
one.
18. As a matter of fact, the long history of this litigation
which we have narrated above, need not actually find a place
in this order, since the present writ petition is against the
imposition of a condition for the grant of a stay pending
an appeal. But we were compelled to record the checkered
history of the case for a specific purpose, which we shall
advert to at the appropriate place.
19. The impugned order is challenged by Dr. M.V.K.
Murthy, learned counsel for the petitioner, primarily on two
grounds viz., (i) that despite the failure of the Assessing
Authority to furnish all evidence and records as well as the
original records to show how the demand was arrived at, the
Appellate Authority imposed such an onerous condition and
(ii) that the 2nd respondent took into account the parawise
remarks submitted by the Assessing Officer on 09-02-2018,
after the completion of the hearing on 24-01-2018, without
even supplying a copy of the parawise remarks of the
Assessing Officer, to enable the petitioner to meet the same.
20. It is true that in the fourth last paragraph of the
impugned order (second para under the heading conclusion),
the Appellate Authority has recorded a finding that the
Assessing Officer failed to forward the evidence and records
for causing any kind of analysis/verification. After taking note
of this, the Appellate Authority found merit in the contention
on behalf of the Department that if the petitioner had stopped
the collection of tax as contended by them, the price of the
goods ought to have decreased. Therefore, the non-furnishing
of the evidence and records may tilt the balance in favour of
the petitioner, but may not entitle the petitioner to
an absolute stay. If at all, the direction to deposit 60% of the
demand may have to suffer on account of the findings in the
fourth last paragraph of the order.
21. Insofar as the second ground of attack is concerned,
it appears that one personal hearing was held on 24-01-2018
and therefore the Assessing Authority filed its parawise
remarks on 09-02-2018. But the next date of personal
hearing was on 14-02-2018. It is not known whether the copy
of the parawise remarks filed by the Assessing Officer on
09-02-2018 was furnished on or before the next date of
personal hearing viz., 14-02-2018.
22. If at all we hold that the non-furnishing of the copy
of the parawise remarks tantamounted to violation of the
principles of natural justice, we may be obliged to set aside
the order and send it back for a fresh disposal.
But considering the checkered history of the case, starting
from the issue of the show cause notices in the year 2005,
we are of the view that one more order of remand, after a first
order of remand in W.P.No.38991 of 2017 will only multiply
litigation. Every action of the respondents is challenged by the
petitioner, right from the stage of show cause notice.
Therefore, setting aside the impugned order and remanding
the matter back to the Appellate Authority for a consideration
of the stay petition afresh, would only keep the issue alive
and pending without any finality.
23. Dr. M.V.K. Murthy, learned counsel for the
petitioner, submitted that the appeal itself was heard partly
on 12-7-2017 and that therefore the Appellate Authority can
be directed to dispose of the appeal within a time frame and
that during the said period the demand can be put on hold.
24. Though the above contention appears very attractive
on the face of it, we do not think that we can do it today. This
is for the reason that the very same argument was raised in
W.P.No.38991 of 2017. But the Division Bench did not direct
the Appellate Authority to complete the hearing and pass final
orders. On the other hand, the Division Bench directed
a fresh notice to be issued for a hearing in the stay petition
and directed the Appellate Authority to pass orders afresh.
Therefore, adopting the course of action suggested by the
learned counsel for the petitioner, will tantamount to doing
something that was not done by another Bench in the
previous writ petition.
25. It is contended by Dr. M.V.K. Murthy, learned
counsel for the petitioner, that none of the parameters for the
consideration of an application for stay was applied by the
2nd respondent in the impugned order and that therefore the
same deserved to be set aside.
26. It is true that there is no detailed analysis of prima
facie case, hardship etc., in the impugned order. But the
same would lead this Court only to pass an order creating one
ore round of litigation. We do not wish to do that in view of
the long history in this case. Repeated orders of remand
passed on the ground that one or other parameters has not
been considered, merely multiplies litigation but does not
take both parties to the destination. Therefore, we are of the
considered view that the petitioner could be granted stay
pending disposal of the appeal, subject to a reasonable
condition. It must be pointed out that insofar as sales tax and
value added tax are concerned, every dealer is obliged to pay
12.5% of the disputed tax as a pre-condition for filing
a first appeal. Once the first appeal is dismissed, the dealer
will be entitled to file a second appeal, subject to payment of
a further amount totalling to 50% of the disputed tax.
27. Insofar as luxury tax is concerned, no pre-deposit
condition is prescribed for filing an appeal. Therefore, the
petitioner has filed a statutory appeal pursuant to the order
passed by this Court on 18-4-2017 in M.P.No.8784 of 2017 in
W.P.No.7155 of 2017, without being obliged to make a pre-
deposit. In other words, the petitioner has had the luxury of
filing a first appeal (though pursuant to the directions of this
Court) without making a pre-deposit, irrespective of whether
they collected luxury tax or not. Hence, the petitioner cannot
make much ado if they are made to deposit at least 12.5% of
the demand. If petty and small time dealers are forced to pay
12.5% of the demand for filing an appeal in sales tax and VAT
matters, there is no reason why the petitioner should not be
directed to pay at least a minimum amount for the grant of
stay pending appeal.
28. Therefore, the writ petition is allowed, the impugned
order is modified, granting an interim stay on collection of the
disputed demand, subject to the condition that the petitioner
deposits 12.5% of the demand within a period of 6 (six) weeks
from the date of receipt of a copy of this order.
The miscellaneous petitions, if any, pending in this writ
petition shall stand closed. No costs.
___________________________
V.RAMASUBRAMANIAN, J.
________________ J.UMA DEVI, J. 11th April, 2018