THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.22511 of 2010 Dated:20.10.2010 Between: M/s.Navneeta Steels Private Limited. …Petitioner and M/s.Bharat Heavy Plate & Vessels Limited, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.22511 of 2010 ORDER: (per Hon’ble Sri Justice V.V.S.Rao) The petitioner is aggrieved by the value added tax deducted at source at 12.5% on carbon steel scrap sold by Bharat Heavy Plate & Vessels Limited (BHPV) through the Metal and Scrap Trading Corporation Limited (MSTC) – respondent Nos.1 and 2 herein. The petitioner’s contention is that, as per entry 71 of Schedule IV of the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act), the rate of tax is 4% ad valorem. At the stage of admission itself we directed BHPV to file a reply. They did so. After hearing both sides as well as the Senior Standing Counsel for Commercial Tax, we are not inclined to admit the writ petition. The brief background and reasons for the same are as follows. BHPV generates ferrous, non-ferrous and other scrap material during its production process. The scrap is sold through public auction. They engaged MSTC for the purpose of auctioning the scrap. MSTC issued auction notice proposing to sell the scrap in 17 lots. The scrap was classified and segregated depending on the metal containing therein. The petitioner submitted bids for three lots including lot No.119, namely, Scrap CS Fabricated Tools filled with concrete. The catalogue containing information on the description of the material offered for auction in different lots inter alia mentions the Value Added Tax (VAT) payable by the auction purchaser and it is to be deducted at source in accordance with the provisions of VAT Act. For lot No.119, in column 4 of the auction notice, it has been mentioned that VAT is @ 12.5%. In the auction held on 31.07.2008, the petitioner became successful for three lots including lot No.119. For two lots, the rate of VAT stands at 4% and for lot No.119, it is 12.5%. The difference is due to description of the material and the relevant applicable Schedules of the VAT Act. After accepting the bid, the petitioner paid bid amount including VAT @ 12.5% for the scrap sold in lot No.119. At that stage, the petitioner raised objection for the levy of VAT @ 12.5% contending that the goods (scrap) fall under Entry 71 of the Schedule IV of the VAT Act and, therefore, it should be @ 4%. The petitioner approached respondents 1 and 2 for redressal, in vain. Therefore, he came to this Court for the same. BHPV contends that the petitioner was aware of the rate of applicable tax for the scrap in lot No.119, and that the applicable rate is 12.5% as per Section 4(3) read with Schedule V of the VAT Act. It is also their contention that the tax collected from the petitioner was already remitted to the Assistant Commissioner of Commercial Taxes vide cheque dated 23.10.2008. They deny the allegation of unjust enrichment by BHPV. They also oppose the writ petition on the ground that the petitioner has an alternative remedy of seeking a reference to arbitration as per the terms and conditions of the auction notice and, without availing them, he cannot avail the remedy under Article 226 of Constitution of India. A reading of Entry 71 of Schedule IV prima facie makes it clear that ‘Scrap of Carbon Steel fabricated Tools filled with concrete’ do not fall under any of the clauses in Entry 71. Secondly, the seller and purchaser were very much aware of the applicable rate of VAT even before offers were invited, offers were made and offers were accepted. When once the offers were accepted and the parties entered into a contract, inter alia, agreeing to the rate of tax, even if there is any inadvertence in the collection of the tax, the remedy of the petitioner is elsewhere and not to invoke the jurisdiction of this Court. Be it noted that under Section 22(3) of the VAT Act, it shall be the duty of the BHPV to collect the tax from the dealer in respect of the contract. Therefore, the deduction of the tax by BHPV cannot be faulted. If there is any grievance left out, the remedy of the petitioner is to seek a clarification, if so advised, from the authority for ‘Clarification/Advance Ruling’ under Section 67 of the VAT Act. It is also open to the petitioner to invoke the arbitration clause in the contract. The writ petition is, accordingly, dismissed. There shall be no order as to costs. __________________ (V.V.S.RAO, J) _____________________________ (RAMESH RANGANATHAN, J) 20.10.2010 vs/pln