THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.27290 and 29842 of 2010 Dated:07.12.2010 Between: M/s.Prem Ispat. …Petitioner and The Commercial Tax Officer, Osmangunj Circle, Charminar Division, Hyderabad, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.27290 and 29842 of 2010 COMMON ORDER: (per Hon’ble Sri Justice V.V.S.Rao) This common order shall dispose of both the writ petitions for the reasons, which will be obvious as we proceed with the order. The petitioner is a registered value added tax dealer under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act), on the rolls of the first respondent with effect from 01.08.2009. During the period from 01.08.2009 to 31.05.2010 the petitioner purchased iron scrap from South Central Railway locally. They paid tax thereon after availing the input tax credit under Section 13 of the VAT Act read with Rule 20 of the Andhra Pradesh Value Added Tax Rules, 2005 (the VAT Rules). It appears, they participated online bidding for sale of scrap auctioned by Steel Authority of India Limited (SAIL) in the State of Chattisgarh. Three lots were allotted to them. They, however, could not mobilize the resources and, therefore, transferred the lots to M/s.Subhi Steels and M/s.Iscon Strips Private Limited, Raipur, in the State of Chattisgarh. After completion of necessary formalities, SAIL completed the transaction by delivering the iron scrap to the two entities to whom the petitioner transferred the lots. Thus, the entire transaction took place in the State of Chattisgarh and the liability under the VAT Act or under the provisions of the Central Sales Tax Act, 1956, would not arise. However, under the clear misunderstanding the petitioner inadvertently included the turnover in relation to the Chattisgarh transactions in his value added tax returns filed under Section 20(1) of the VAT Act. But, realizing the mistake, the petitioner submitted revised returns under Section 20(1) of the VAT Act read with Rule 23(6)(a) of the VAT Rules. The second respondent, however, reckoned the sales effected in the State of Chattisgarh as part of the intrastate sales and levied value added tax on these sales also. Aggrieved by the same, the petitioner filed the first of these two writ petitions. Simultaneously, with the assessment order, the second respondent also passed separate order under Section 53(3) of the VAT Act levying penalty at 100%. The same is assailed in the second writ petition. These matters have come up for preliminary hearing for the third time. During this hearing the Special Counsel for Commercial Tax Department, after obtaining instructions, does not seriously dispute the mistake committed by the petitioner in showing the turnover of the sales effected in Chattisgarh and also does not dispute the levying of tax on such turnover in breach of the provisions of VAT Act. He also does not dispute that even before the assessment for the period could be completed, the petitioner submitted the revised returns in Form VAT 213, which still has not been considered. In the background as summed above, the assessment order impugned cannot be justified. Section 4 of the VAT Act is very clear that every registered dealer is liable to pay value added tax on every sale of goods in the State. None of the components of sale or purchase of iron scrap by the petitioner and transfer to two entities in Chattisgarh occurred in the State of Andhra Pradesh, and therefore, the same does not partake the character of “sale” in the State. We are, therefore, convinced that the levying of value added tax on the sales turnover effected in Chattisgarh is wholly unsustainable. Consequentially the penalty order must also suffer invalidation. The petitioner’s revised returns for the period from 01.08.2009 to 31.05.2010 are not considered so far. It would be better now if the matter is considered afresh. In the result, for the above brief reasons, the writ petitions are allowed. The impugned orders therein are set aside with a direction to the first respondent to determine the value added tax payable by the petitioner for the period in question duly considering the revised returns in Form VAT 213 filed on 22.04.2010. Needless to mention, it shall be open to the petitioner to seek a personal hearing, and also file additional material, if so advised. This exercise shall be completed by the first respondent within a period of six weeks from today. _______________ (V.V.S.RAO, J) _____________________________ (RAMESH RANGANATHAN, J) 07.12.2010 Note: Issue by 13.12.2010. B/o. vs