THE HON’BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE and THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN W.P.No.6539 of 2009 ORDER: (Per HON’BLE SRI JUSTICE RAMESH RANGANATHAN) The assessment order passed by the 1st respondent dated 24.3.2008, and the revised assessment order dated 24.9.2008, are under challenge in this Writ Petition. The petitioner, carrying on business in execution of government contracts, seeks a direction to have the said assessment orders set aside and for refund of Rs.35,027/- collected in excess of 2% of the gross turnover, as provided under G.O.Ms.No.94 dated 01.07.2003, together with interest thereon. For the financial year 2004-2005, the first respondent assessed the petitioner’s gross turnover as Rs.2,08,64,700/- and, after allowing exemption of Rs.1,34,36,990/-, assessed the net turnover as Rs.74,27,710/- and the tax payable thereon as Rs.5,94,217/-. The petitioner submitted a representation dated 4.6.2008 informing the 1st respondent that tax of Rs.35,000/- had been paid on 31.03.2006 much prior to the assessment order. They also produced certificates, relating to tax deducted at source, before the 1st respondent who, by proceedings dated 24.9.2008, revised the assessment taking into consideration the TDS amount of Rs.3,90,121/-, Rs.35,000/- paid on 31.3.2006 and Rs.27,200/- paid on 16.6.2008 i.e., for a total sum of Rs.4,52,321/- . The first respondent, thereafter, arrived at the balance tax payable as Rs.1,41,896/-. The petitioner would contend that both the assessment, and the revised assessment orders were contrary to G.O.Ms.No.94 dated 1.7.2003, whereby contractors were entitled to opt for the composition scheme under Section 5-G of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as ‘the Act’). On opting for it they were to be subjected to a tax deduction of 2% at source on the total value of the contract and, in such a case, production of clearance certificate would not be insisted upon and assessment of tax would not be needed. The petitioner relies on Maruthi Constructions Vs. the Government of A.P.[1]. According to the petitioner, they had submitted a representation on 10.8.2007 informing the 1st respondent that they had not exercised the option, as contemplated under Section 5-G of the Act earlier, but in view of the Division Bench judgment of this Court, in Maruthi Constructions1, the department should extend them the benefit of Section 5-G and, consequently, only 2% of the gross turnover should have been collected as tax. In his counter-affidavit, the 1st respondent would state that the petitioner, without recourse to the alternative remedy of an appeal, had filed the present writ petition invoking the extraordinary jurisdiction of this Court and, since both the assessment orders dated 24.03.2008 and the revised assessment order dated 24.09.2008 passed by the 1st respondent had become final and as the petitioner had not filed any appeal within the extended period of limitation as provided under Section 19 (1) of the Act, they could not invoke the jurisdiction of this Court under Article 226 of the Constitution of India. The first respondent would further contend that the petitioner had not opted to pay tax under the composition scheme and could not, therefore, claim that they were entitled to pay tax at the rate of 2% on the gross turnover. The 1st respondent would submit that the object of issuing the guidelines, in G.O.Ms.No.94 dated 01.07.2003, was to ease the cumbersome and time consuming procedure being adopted by government departments in calculating the tax to be deducted at source from contractors. According to the 1st respondent, the procedure prescribed in G.O.Ms.No.94 dated 01.07.2003 was in accordance with the provisions of Section 5-F of the Act read with Rule 17-I of the Andhra Pradesh General Sales Tax Rules, 1957 (hereinafter referred to as ‘the Rules’), and that the government had simply adopted the contents of Rule 17-I of the Rules in the G.O for deduction of tax at source. The 1st respondent would further contend that, if the dealer had not opted for payment of tax under the composition scheme, it was to be paid as per Section 5- F of the Act, that G.O.Ms.No.94 dated 01.07.2003 was not intended to amend the charging section, that it was issued to the contractee departments with regards deduction of tax at source and that it was not intended to reduce the rate of tax. Heard Sri A.Krishnam Raju, learned counsel for the petitioner, and Sri K. Raji Reddy, learned Standing Counsel for the respondent, and at their request the writ petition was finally heard. Section 5-F of the Andhra Pradesh General Sales Tax Act, 1957 provides for levy of tax on transfer of property in goods involved in the execution of works contracts and, thereunder, notwithstanding anything contained in Sections 5 or 6, every dealer shall pay tax under the Act for each year, on his turnover of transfer of property in goods, whether as goods or in some other form, involved in the execution of works contracts. Section 5-G of the Act reads as under:- “Composition of tax payable under Section 5F:- (1) Subject to such conditions and in such circumstances as may be prescribed if a dealer, who executes any works contract other than the category of contracts notified by the Government under sub-section (2), so opts, the assessing authority of the area may accept, in lieu of the amount of tax payable by him under the Act during the year, by way of composition, an amount at the rate of four paise on every rupee of the total amount paid or payable to the dealer towards execution of the works contract: Provided that no tax shall be payable under this section on the turnover relating to the amounts paid to a sub- contractor as consideration for the execution of the works contract whether wholly or partly subject to the production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amounts is included in the return of the turnover filed by such sub- contractor. Provided further that if a dealer who executes a works contract of construction of apartments or buildings, so opts, the assessing authority of the area may accept, by way of composition an amount calculated at the rate of rupees 4/- (Rupees four only) per square foot of the constructed area. (2) The Government may notify from time to time the category of works contract for which the scheme of payment of tax by composition under sub-section (1) does not apply. (3) Every dealer who elects to pay tax under sub- section (1) shall apply in the prescribed form to the assessing authority to be permitted to pay the amount of tax under sub- section (1), and on being so permitted, in the prescribed form, he shall pay tax as specified under Section 13 and 15 of the Act. Sub-section (4) of Section 5-G, as it earlier stood, read thus:- “Nothing contained in sub-section (1) shall apply to a dealer, who purchases or receives goods from outside the State for the purpose of using such goods in the execution of works contract.” The validity of sub-section (4) of Section 5-G of the Act was under challenge in M/s.Maruthi Constructions1 (W.P.Nos.8853 and 8854 of 2006) and the Division Bench, in its order dated 13.09.2006, observed that the said sub-section only sought to withdraw an option to the dealers, which were otherwise available under Section 5-F, if such dealer used material procured from out of the State of Andhra Pradesh for execution of the works contract. The Division Bench further held that Section 5-G(4) barred the option available otherwise to a dealer falling under Section 5-F and that utilization of goods procured from outside the State of Andhra Pradesh, for execution of works, made the dealer ineligible for being assessed at a lower rate of tax though such lower rate of tax was levied on the total turnover of the dealer. The Division Bench found substantial force in the submission that sub-section (4) sub-classified dealers who were taxable under Section 5-F of the Act, that, while some were allowed to opt for the specific mode provided under Section 5-G, others were debarred from availing that option on the ground that they had utilized goods procured from outside of Andhra Pradesh, that such sub-classification of dealers, who otherwise formed a single class under Section 5-F, did not achieve any legitimate purpose and, as such, was in violation of Article 14 of the Constitution of India. Sub-section (4) of Section 5-G of the Act was declared unconstitutional by the Division Bench. Sri A.Krishnam Raju, learned counsel for the petitioner, would contend that it is only after the Division Bench had declared sub-section (4) unconstitutional was the petitioner entitled to make an application for composition under Section 5-G of the Act and, as an application was made on 10.08.2007 well before the assessment orders were passed, the first respondent ought to have extended the benefit of composition, under Section 5-G of the Act, to the petitioner herein. Learned counsel would submit that since the petitioner, despite having made such a request in his letter dated 10.08.2007, was not given the benefit of composition of tax, both the assessment and the revised assessment orders were liable to be quashed and that the first respondent should be directed to pass orders afresh after giving the petitioner the benefit of composition under Section 5-G of the Act. The fact that sub-section (4) of Section 5-G of the Act was declared unconstitutional by the Division Bench has no bearing on the present case as all that the sub-section provided was that the benefit of composition, under Section 5-G(1) of the Act, would not be available to a dealer who purchased or received goods from outside the State for the purpose of using such goods in the execution of works contracts. Section 5-G(3) of the Act requires every dealer, who elects to pay tax under sub-section(1), to apply, in the prescribed form, to the assessing authority seeking his permission to pay tax under Section 5-G(1) of the Act. The application in the prescribed form, for availing the benefit of composition under Section 5-G(1) of the Act, has to be made to the assessing authority before commencement of the assessment year in question and, only on permission being granted, can the periodical returns be filed along with the tax as specified under the Act. It is not even the petitioner’s case that they had either submitted the prescribed application, or that permission was accorded by the assessing authority, prior to commencement of the financial year 2004-2005. As Section 5-G(3) still forms part of the Act, failure to comply with the procedural requirements thereunder would disentitle a dealer from availing the benefit of composition under Section 5-G(1) of the Act. The assessment order, in question, is for the year 2004-05 and since, admittedly, an application in the form prescribed under Section 5-G(3) of the Act, for composition under Section 5-G(1) of the Act, has not been made, and a representation was submitted only on 10.08.2007 well beyond the financial year 2004-05, the petitioner was not entitled to claim the benefit of composition under Section 5-G(1) of the Act. Failure on the part of the assessing authority to extend to the petitioner the benefit of composition, under Section 5-G(1) of the Act, would not render either the assessment order or the revised assessment order illegal. Since this is the only ground of challenge to the assessment order, and the revised assessment order, the writ petition must fail. As a result, the writ petition is dismissed. However, in the circumstances, without costs. ___________________ ANIL R. DAVE, CJ _____________________________ RAMESH RANGANATHAN, J Date: 03--07-2009 GK/CVRK [1] (2006) 4 APVR page 25