IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY SEVENTH DAY OF JANUARY TWO THOUSAND AND FIVE PRESENT THE HON'BLE MR JUSTICE BILAL NAZKI, THE HON'BLE MR JUSTICE S.ANANDA REDDY, And THE HON’BLE MR. JUSTICE L. NARSIMHA REDDY W.P.No.15225 of 1991, W.P.Nos.6099, 10810, 12033, 16095, 17523, 17525 of 1992, W.P.No.11662 of 1993, W.P.No.1176 of 1994, W.P.No.12930 of 2002, W.P.Nos.16515, 22959 of 2003, and W.P.No.3253 of 2004 *** WRIT PETITION NO : 15225 of 1991 Between: M/s Abmica Lamp House, Rajahumndry, rep.by its Managing Partner S.Anantha Ram. ..... PETITIONER AND 1 The Commercial Tax Officer (Int) -I Enforcement , Commercial Taxes Complex, Nampally, Hyderabad. 2 The Commercial Tax officer Alcot garden, Rajahmundry, East Godavari district. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate writ or order or direction declaring the action of the 1st Respondents in collecting cheques on 30/07/91 and 31/07/91 for Rs. 48,361/- and Rs. 25,000/- towards the tax and C-fees respectively as illegal and without juridication and direct the respondents to refund the amount of Rs. 73,361/- to the petitioner forthwith together with interest at 18% per annum. Counsel for the Petitioner:MR.S.DWARAKANATH Counsel for the Respondents : GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.NO. 6099 OF 1992: Between: M/s.Shankar Agencies Rep. by its Proprietor Sri Ratan Chand Rajahmundry. ..... PETITIONER AND 1 The Commercial Tax Officer (Int) kakinada. 2 The Deputy Commercial Tax Officer Rangireejupeta , Rajahmundry. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue of writ of Mandamus directing the respondents to refund the amount of Rs.31,098/- collected as tax , without authority of Law and also issue writ of Certiorari or any other appropriate writ or order or direction quashing the order Dt: 2- 12-1991 passed by the 1st respondent and direct the respondent to refund the C-fee of Rs.31,098/- collected based on inspection on 12-11-1991 or in any event direct the respondents to refund the excess compounding fee of Rs.28,098/- and pass such other order or orders. Counsel for the Petitioner : MR.S.DWARAKANATH Counsel for the Respondents : GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 10810 of 1992: Between: M/s.Nataraj Electricals, Rep. by its Managing Partner Mr.M.K.Mohan Rao, Vijayawada. ..... PETITIONER AND 1 The Commercial Tax Officer (Int) No.1 (Enft) , Hyderabad. 2 The Commercial Tax Officer Kothapet , Vijayawada. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate writ or order directing the respondents to refund the Tax of Rs.71,139/- and compounding fees of Rs.25,000/- collected from the petitioner on 1st and 2nd August , 1991 respectively and consequently set aside the order of the 1st respondent in No.14/1991-92 , dt: 2-8-91 levying 'C' fees of Rs.25,000/- or in the alternative declare that collection of excess "C' fee of Rs.22,000/- is illegal and direct the respondents to refund the excess collection of 'C' fees of Rs.22,000/- and pass such other order or orders as this Hon’ble Court deems fit and proper in the circumstances of the case. Counsel for the Petitioner:MR.S.DWARAKANATH Counsel for the Respondents : GP FOR COMMERCIAL TAX Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 12033 of 1992: Between: M/s.Vijayalakshmi General Traders, Tenali, Rep by its Partner K.Subba Rao., S/o. Kotaiah, R/o.Tenali, Guntur Dist. ..... PETITIONER AND 1 Commercial Tax Officer Gandhi Chowk , Tenali , Guntur Dist. 2 Spl.Assistant Commercial Tax Officer Gandhi Chowk , Tenali , Guntur Dist. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate writ or order or direction , declaring the collection of 'C' fees of Rs.17,008/- on 18-11-88 and 24-11-88 and the proceedings in O.R.NIl/88-89 Dt: 25-11-88 as illegal and without jurisdiction and direct the respondents to refund the same forthwith to the petitioner along with interest at 18%P.A or in the alternative declare that maximum 'C' fees leviable is only Rs.3,000/- and direct the respondents to refund the excess amount of Rs.14,008/- with 18% interest P.A and pass such other order or orders. Counsel for the Petitioner : MR.S.DWARAKANATH Counsel for the Respondents: GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 16095 of 1992: Between: M/s.Maheswari Jewellery Mart, Vijayawada-1, Rep by its partner Mr.Praveen Kumar Saboo, Sivalayam Street , Vijayawada-1. ..... PETITIONER AND Commercial Tax Officer (Int). Vijayawada. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of mandamus or any other appropriate writ or order or direction declaring that the action of the respondent in collecting Rs.5,223/- towards penalty and Rs.1,000/- towards compound fees by order Dt:17-8-89 as illegal and arbitrary and direct the respondents to refund the said amounts. Counsel for the Petitioner: MR.P.SRINIVAS REDDY Counsel for the Respondent: GP FOR COMMERCIAL TAXES W.P.No. 17523 of 1992: Between: Punjab Automobiles, Rajahmundry, Rep by its Proprietor . Ajit Singh Kapur Rajahmundry. ..... PETITIONER AND 1 The Commercial Tax Officer, (Int.) Kakinada. 2 The Assistant Commercial tax Officer Aryapuram , Rajahmundry. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate writ or order direction declaring the action of the respondents in collecting tax of Rs.18,020/- and 'C' fees of Rs.20,000/- on 14-11-1991 as illegal and arbitrary and direct the respondents to refund the said amounts forthwith to the petitioner and set aside the proceedings of the 1st respondent in O.R.No.65/91-92, Dt: 14-11-1991 or in the alternative declare that collection of excess 'C' fees as illegal and direct the respondents to refund the excess collection to the petitioner forthwith and pass such other order or orders. Counsel for the Petitioner:MR.P.SRINIVAS REDDY Counsel for the Respondents : GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 17525 of 1992: Between: M/s.Syam Enterprises, Rep by its Proprietor Mr.K.Ch.Anka Rao 9-11-15 , Kakumanuvari Street, Kothapet Guntur-522 003. ..... PETITIONER AND Asst. Commercial tax Officer (Int) Puttur , Chittoor Dist. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of Mandamus or any other appropriate writ or order or direction declaring the action of the respondent in collecting tax of Rs.22,640/- & 'C' fees of Rs.15,000/- as illegal and arbitrary and direct the respondent to refund the said amounts forthwith to the petitioner and consequently set aside the proceedings of the respondent in Rc.No.CTIS279S91 Dt: 3-8-92 levying C-fees of Rs.15,000/- and direct the respondent to refund the said amount or in the alternative to declare that collection of excess C-fees of Rs.12,000/- is illegal and direct the respondent to refund the excess collection to the petitioner forthwith and pass such other order or orders. Counsel for the Petitioner : MR.P.SRINIVAS REDDY Counsel for the Respondent : GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 11662 of 1993: Between: M/S Vikas Oil Industries Maharaj Gunj, Hyderabad Rep.by its Partner Bajranglal Agarwal, son of late Dulichand Agarwal ..... PETITIONER AND The Assistant commissioner Commercial Taxes, Intelligence No. III (Enforcement Wing). Hyderabad .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ, or direction, directing the respondent to refund the tax of Rs. 42,233/- and compounding fees of Rs. 42,233 collected on 24/07/93 from the Petitioner and set-aside the order dt. 24/07/93 passed by him in levying compounding fees of Rs. 42,233/- or in the alternative declare that the collection of excess compounding fees of Rs. 39,233/- is illegal and further direct him to refund the same forthwith to the petitioner Counsel for the Petitioner:MR.S.DWARAKANATH Counsel for the Respondent: GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No.1176 of 1994: Between: M/s Ramcharan Oil Industries 15-2-449/7, Kishan Gunj Hyderabad- 12 rep.by its Parner Balmukund Agarwal ..... PETITIONER AND 1 Asst. Commissioner (CT) Int.No.II Enforcement Wing,Hyderabad. 2 The State of A.P., rep. by its Secretary Revenue Department Hyderabad .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a writ of mandamus or any other appropriate writ order or direction declaring the collection of compounding fee of Rs.19,707/- on 24/07/1993 by the respondent vide CCT's Ref Enf.Case No.12/93-94, Dt.24/7/1993 is illegal, arbitrary and without jurisdiction and direct the authorities to refund the compounding fee forthwith to the petitioner and pass such other order. Counsel for the Petitioner : MR.TEJ PRAKASH TOSHNIWAL Counsel for the Respondents: GP FOR COMMERCIAL TAXES Mr. A.V.Krishna Koundinya Mr. K.Raji Reddy, Spl.SC for C.T. W.P.No. 12930 of 2002: Between: Sree Meenakshi Cashew Company. K.T. Road, Palasa, Srikakulam District, rep. by its Proprietor- Mr. T. Jayaram, S/o. Ramkumar, R/o. Palasa, Srikakulam Dist. ..... PETITIONER AND The Assistant Commercial Tax Officer, Kasibugga Circle, Srikakulam Dist. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an order or direction more particularly one in the nature of Writ of mandamus or any other appropriate writ or order declaring the action of the respondent in collecting the tax of Rs. 17,920/- and compounding fee of Rs. 35,840/- on 18-5-2002, without passing any order/ proceeding as contemplated under section 32 of the Andhra Pradesh General Sales Tax Act as illegal, arbitrary, and without jurisdiction and consequently direct the respondent to refund the excess compounding fee of Rs. 32,840/- collected illegally by force. Counsel for the Petitioner : MR.SHAIK JEELANI BASHA Counsel for the Respondent : SPL GP FOR TAXES W.P.No. 16515 of 2003: Between: Sri Laxmi Sweets., Kasibugga., Srikakulam District rep.by its prop. Gudia Dandasi Sahu s/o Late Appanna Saahu., aged 40 years., r/o.Palasa., Srikakulam District. ..... PETITIONER AND The Deputy Commercial Tax Officer., Tekkali Circle., Srikakulam District. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an order or direction more particularly one in the nature of Writ of Mandamus or any other appropriate Writ or order declaring the action of the Respondent in collecting the tax of Rs.13,414/- and compounding fee of Rs.26,828/- on 25-9-2002, without passing any order/ Proceeding as contemplated under section 32 of the Andhra Pradesh General Sales Tax Act as illegal, arbitrary, and without jurisdiction and consequently direct the respondent to refund the excess compounding fee of Rs.23,828/- collected illegally by force Counsel for the Petitioner:MR.SHAIK JEELANI BASHA Counsel for the Respondent : SPL GP FOR TAXES W.P.No. 22959 of 2003: Between: M/s. Sri Kalki Industries, 1-3-21/37, Salt Godown St., Vidyadharapuram, vijayawada - 2, rep: by its Partner Mr.Ch.Rajagopal ..... PETITIONER AND The Commercial Tax Officer, Gudivada Circle, Krishna District. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an order or direction more particularly one in he nature of Writ of Certiorari or any other appropriate writ or direction quashing the order of the Respondent dt:16- 10-2003 in O.R.No.1/2002-03 in collecting the tax of Rs.25,092/- and compounding fee of Rs.50,184/- as arbitrary, contrary to Law and without jurisdiction as contemplated under Section 32 of the Andhra Pradesh General Sales Tax Act, also as per G.O.Ms.No.625, dt:31-7-1996 and also in violation of principles of natural justice and consequently direct the respondent to refund the compounding fee of Rs.50,184/- collected illegally by force. Counsel for the Petitioner:MR.SHAIK JEELANI BASHA Counsel for the Respondent : GP FOR COMMERCIAL TAXES Spl.G.P. for Taxes Mr. A.V.Krishna Koundinya, Spl.SC for CT A N D W.P.No. 3253 of 2004: Between: M/s.Sri Lakshmi Venkateswara Decorticating & Oil Mill, Konakondla, Anantapur District, rep., by its Partner Sri L.Laxmanudu ..... PETITIONER AND 1 The Commercial Tax Officer (Audit), o/o the Dy. Commissioner of Commercial Taxes, Kurnool. 2 The Deputy Commissioner of Commercial Taxes, Kurnool Division, Kurnool. 3 The Asst. Commercial Tax Officer, Uravakonda, Kurnool. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an appropriate writ or direction more particularly one in the nature of writ of mandamus declaring the action of the 2nd respondent in collecting an amount of Rs.4,51,014/- towards compounding fee vide receipt No.0983083, dated 24-1-2004 and also a further amount of Rs.4,51,014/- through four post-dated cheques from the petitioner, as illegal, contrary to provisions of law, unjustified, besides being violative of principles of natural justice and consequently, direct the 2nd respondent to refund the amount of Rs.4,51,014/- collected from the petitioner towards compounding fee Counsel for the Petitioner : MR.B.SRINIVAS Counsel for the Respondents: GP FOR COMMERCIAL TAXES. COMMON ORDER: (Per the Hon’ble Mr.Justice S.Ananda Reddy) These writ petitions are filed by the dealers registered under the provisions of the Andhra Pradesh General Sales Tax Act, 1957 carrying on various businesses, assailing the action of the Vigilance Wing of the sales tax department, and praying for the issue of writ of mandamus declaring such action of collecting the tax as well as the compounding fee, without framing necessary assessments determining the tax liability or passing orders, coercing the dealers for compounding the alleged offence and collecting the compounding fee on the day of inspection either through payment of cash or through post dated cheques, as illegal, and contrary to the provisions of law as well as the Judgments rendered by this Court, and consequently sought for a direction to the respondents to refund the amounts collected from the dealers with interest. 2. According to the learned counsel for the petitioners the modus operendi adopted by the department, especially by the Intelligence Wing is that they will inspect the business premises of the dealer and on the alleged irregularities found in the course of inspection they used to obtain statements from the persons, who are available at the business premises at the time of inspection by force or coercion threatening to seize the stock or close down the business and thereupon collect the tax for the alleged suppression of the sales turnover and also demand for compounding the alleged offence on the very same day and creates the record as if a show cause notice was issued and a reply was given on the same date and also passing an order accepting the offence for compounding the offence by levying the compounding fee, which is almost equivalent to the alleged tax found due on the suppressed turnover. The department officials also collect the cash if available on the spot or if it is not available they will collect post dated cheques, and thereafter there will not be any further proceedings either for assessment or otherwise. It is contended on behalf of the counsel appearing for the petitioners that this action of the department was deprecated by this Court in number of writ petitions, and in spite of it, the department did not mend its ways and has been repeating the same by forcing the dealers only to give statements, accepting the alleged irregularities or suppressed turnover and collecting the tax on the alleged suppressed turnover as well as compounding fee as if the dealer had conceded and offered for compounding. The entire exercise will be completed within a day or two at the most. The said procedure that is being adopted by the officials of the department is even contrary to the provisions of the Act and the Rules made thereunder. Therefore, the learned counsel sought for the issue of appropriate writ declaring the said action as illegal and unsustainable. 3. Counters have been filed on behalf of the respondents in some of the writ petitions supporting their action. The stand of the department is that whenever the Vigilance Cell/Enforcement Wing gets some credible information with reference to the illegal activities indulged by the dealers for evasion of the tax, the officials of the department with proper authorization from the concerned authority inspects the entire premises, records as well as the stocks during the business hours, and wherever there is improper maintenance of the accounts or the stock was not properly recorded showing the suppressed turnover with reference to the said turnover tax was sought to be recovered, and when penal action was proposed, the dealers have come forward seeking compounding the offence in order to avoid further penal action. Therefore, the department was accepting the request of the dealers and collecting the tax as well as compounding fee in respect of the suppressed turnover. It is also the stand of the department that the department never coerced the dealers to give statements accepting the suppressed turnover or unaccounted turnover. In fact, the dealers have come forward voluntarily and have agreed for settlement of the irregularities by getting the offence compounded, apart from paying the tax. Therefore, there is no illegality or irregularity. 4. When these matters came up before a Division Bench for hearing, it was represented by the Members of the Bar that there are decisions taking different views. In view of the said representation, the Division Bench felt that it is proper to have an authoritative pronouncement by resolving the conflict if any among the decisions of this Court. Therefore, the matter was placed before the Hon’ble the Chief Justice for referring to a Larger Bench. That is how the Full Bench was constituted to hear all these matters. 5. As the facts are different in each of the case, for convenience, we refer the facts that are available in W.P.No.3253 of 2004. In this case, the petitioner is a registered dealer, engaged in the business of decorticating the groundnuts. According to the dealer, the said decorticating activity was carried on only for the benefit of the farmers, who were growing the groundnuts, and the petitioner charges only the commission or the charges for converting the groundnut kennel into seed. It is also the case of the dealer that it obtained license under Sec.7 of the A.P. (Agricultural Produce & Live Stock) Markets Act, 1966 and was submitting its returns to the Agricultural Market Committee, Uravakonda, Ananthapur District. It is also its further case that though it was also registered as a dealer under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as 'the Act') before the 2nd respondent, and the registration was also being renewed from time to time, but it was not carrying on any business, purchase and sale of groundnut, and therefore, there was no payment of any tax by the petitioner. It was specifically stated that with reference to the groundnuts, it is taxable in terms of Entry-6 of the Schedule-III of the Act and taxable at the point of the purchase by an oil miller other than a decorticating miller, and in all other cases at the point of last purchase in the State of Andhra Pradesh. Therefore, it is the case of the petitioner that the said provisions have no application as there is no purchase and sale by the petitioner. However on 23.1.2004 the respondents 1 and 2 visited the premises of the petitioner and found that the petitioner was in possession of 5,50,000 Kgs., of groundnuts and 76,320 Kgs., of groundnut seed. On the basis of the stock, the 2nd respondent without further verification of the matter, without conducting any further enquiry, and without giving even a show cause notice seeking explanation of the petitioner, highhandedly collected an amount of Rs.4,51,014/- by a cheque drawn on, Andhra Bank, Guntakal. At the same time, the 2nd respondent also obtained a statement from one person by name Krishna Murthy under threat and coercion, accepting the alleged suppressed stocks and also agreeing for compounding the alleged offence, and collected the post dated cheques towards compounding fee. 6. A counter is filed by the 1st respondent disputing and denying the allegations. It is stated that the Deputy Commissioner, Commercial Taxes, Kurnool in exercise of her powers under G.O.Ms.No.625, authorized the 1st respondent to inspect the premises of the petitioner as she received some credible information that the dealer was indulging in clandestine trade with a view to evade the sales tax and accordingly the premises was inspected on 23.1.2004. It is stated that the authorities at the time of inspection asked one Krishna Murthy, who was found at the time of inspection, to produce the books of accounts or any other registers maintained for the stocks available in the business premises, but hey failed to produce any of the books or registers. On the other hand, the said Krishna Murthy voluntarily gave a statement agreeing for compounding the offence by paying a sum equal to the tax. Therefore, the department has collected the said amount accepting the proposal for compounding the offence. It is also disputed that the departmental officials have obtained a statement by coercion or threat. Further, as it is a question of fact the same cannot be adjudicated upon in the present Writ Petition. It is also stated that the dealer has come forward offering to compound the offence, instead of prosecution, and the department has accepted the same. Therefore, it is not open to the petitioner to question the said action. 7. From the above facts, the issue to be considered is whether the action of the departmental officials in collecting the tax as well the compounding fee on the same day of the inspection is in accordance with the provisions of the Act. 8. Before proceeding to adjudicate upon the issue it is proper to refer to the relevant provisions of the Andhra Pradesh General Sales Tax Act, 1957 and the Rules. “Section 12. Registration of Dealers: (1) Every dealer (other than casual trader) whose total turnover in any year is not less than Rs.50,000/- shall and any other dealer may get himself registered under this Act. Section 13. Submission of return of turnover by dealer: Every dealer who is liable to get himself registered under Sec.12, under this Act shall submit such return or returns relating to his turnover, in such manner, within such period, and to such authority as may be prescribed. Section 14: Assessment of tax. 1. If the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his Judgment, the amount of tax due from the dealer. An assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates. 1[Provided further that the period for assessment under this sub- section shall be two years for the assessments relating to the year 1999- 2000 and