THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE N. RAVI SHANKAR W.P. No. 9474 of 2010 Dated 05-09-2011 Between: M/s. Sudarshan Overseas Limited, Now known as Rayalaseema Commodities Limited, 3/1, Amaravathinagar East 2nd Cross Street, Arumbakkam, Chennai—600 106, rep., by its Director Mr. J. Parthasarathy. …Petitioner Vs. The Commercial Tax Officer, Puttur Circle, Chittoor District. …Respondent THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE N. RAVI SHANKAR W.P.No. 9474 of 2010 Dated: 05-09-2011 ORAL ORDER: (Per: GR,J) The order of assessment dated 19-02-2010 passed by the respondent for the tax period 1st November, 2008 to 30th November, 2008 determining a tax liability of RS.37,50,000-00 and interest at 1% on the tax due for the delay and as stipulated, is assailed on a plurality of grounds. The petitioner is a company registered under the Companies Act, 1956 (for short ‘the 1956 Act’) carrying on business as merchant export fruit pulps, processing foods and rice. Since 04-03-2010 (subsequent to the period in question in this writ petition) the name of the petitioner company is altered to Rayalaseema Commodities Limited. The petitioner is a 100% export oriented fruit processing unit and a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 and after Andhra Pradesh Value Added Tax Act, 2005 (for short ‘2005 Act’). The petitioner claims to have entered into a Slump Sale Agreement on 25-11-2008 with M/s. Origin Foods Limited, Chennai (for short OFL), another company registered under the 1956 Act, whereunder the petitioner undertook to sell the fruit processing unit at KVB Puram in Andhra Pradesh as a going concern with all its assets and liabilities as a slump sale for a lump sum consideration without values being assigned to individual assets and liabilities. By a separate sale dated 24-11-2008 the immovable property, plant and machinery were also sold for Rs.4,00,00,000-00 (Rupees four crores only) --- the immoveable property was valued at Rs.1,00,00,000-00; and plant and machinery at Rs.3,00,00,000-00. The petitioner did not assume any liability to tax under the 2005 Act, since in its view the business was sold as a going concern. The respondent issued a show cause notice dated 14-09-2007 in Form VAT 305A for the tax period in question proposing to levy tax of Rs.37,50,000-00 on the basis that the plant, machinery and other immoveable property were sold to OFL for Rs.4,00,00,000-00 of which sale value of machinery being Rs.3,00,00,000-00, the said amount is liable to tax at 12.5%. Initially the petitioner submitted its objections on 02- 11-2009 asserting that since it is an 100% export oriented unit and exports not being liable under the provisions of the 2005 Act, there was no liability to tax even under the Central Sales Tax Act, 1956; that the provisions of Rule 36 of the Andhra Pradesh Value Added Tax Rules, 2005 were satisfied that since there was a sale of the business as a going concern and the non intimation of the transfer within ten (10) days of the transaction was not fatal to its claim. The petitioner also claimed that since the entire value of sale at Rs.4,00,00,000-00 pertains to immoveable property and plant and machinery embedded to the earth, the transaction is not liable to tax under the 2005 Act, as a sale of goods. By a subsequent representation dated 12-12-2009 the petitioner specifically requested an opportunity for personal hearing before an assessment order was passed; a representation whose receipt is acknowledged by the ACTO concerned. The petitioner asserted to have submitted the representation dated 12-12-2009 and this assertion is not denied in the counter affidavit filed on behalf of the respondent. Sri S. Dwarakanath, learned counsel for the petitioner would strenuously contend that the order of assessment is passed without considering the elaborate submissions made in the initial memorandum of objections dated 02-11-2009 nor in elaborate objections lodged on 12-12-2009; and that in any event as the respondent proceeded to pass the order of assessment without affording the petitioner a personal hearing, in view of the law declared by this Court in S. Lalaiah & Co., v. The Deputy Commissioner (CT), Saroornagar Division, Nampally, Hyd., & Anr. (APHC)[1], the impugned order is unsustainable. That reasonable opportunity comprehends an opportunity of personal hearing is reiterated in several judgments including a recent judgment of the Supreme Court in Asst. Commr., CT v. Shukla and Brothers (SC)[2], is also the contention of Sri S. Dwarakanath. Sri P. Balaji Varma, the learned Special Standing Counsel for Commercial Taxes representing the respondent does not demur from the legal position following the judgments referred to above. It is however his contention that since the provisional order afforded successive opportunities to lodge objections after the initial show cause notice dated 14-09-2007, for the mere circumstance that a personal hearing was not afforded notwithstanding the petitioner’s request for such request vide his representation dated 12-12-2009, the order of assessment ought not to be invalidated. Having considered the rival contentions and in view of the law declared in S. Lalaiah (1 supra) and in view of the petitioner having specifically sought for a personal hearing vide its representation dated 12-12-2009, a fact not disputed by the respondent, the order of assessment without affording a personal hearing, cannot be sustained. In this view of the matter, it is not necessary to consider whether in view of the substantive objections of the petitioner to treating the amount of Rs.4,00,00,000-00 received towards lumpsum on the sale of business, is a receipt on sale of goods liable to tax under the 2005 Act, need not be considered. The respondent is however at liberty to pass a fresh order of assessment after due and proper opportunity to the petitioner, including personal hearing, in accordance with law. The writ petition is allowed as above. No costs. __________________________ JUSTICE GODA RAGHURAM ____________________________ JUSTICE N. RAVI SHANKAR Dated: 05-09-2011 Pvks/* [1] 45 APSTJ 116 [2] 2010 (3) VST 114