THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.2665 OF 2010 Date: 09.02.2010 Between: M/s Johnson Lifts (P) Ltd rep., by its Head – Finance, V. Ravichandran. … Petitioner and State of Andhra Pradesh rep., by Principal Secretary (Commercial Taxes), Secretariat, Hyderabad and three others. … Respondents. THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.2665 OF 2010 ORDER: (Per HON'BLE SRI JUSTICE GODA RAGHURAM) Heard Sri Venkataraman, Learned Senior Counsel instructed by Sri R.Raghunandan, Learned Counsel for the Petitioner and Sri A.V.Krishna Koundinya, Special Standing Counsel for Commercial Taxes for respondents 1 to 3. The order of the 3rd respondent dated 4.2.2010 calling upon the petitioner to file written objections to the proposal to revise the assessment proceedings passed for the year 2003-04 under the A.P. G.S.T. Act, 1957 is challenged herein. The 3rd respondent declined to defer the revision proceedings by recording the following reason: “Apropos to their letter vide reference 6th cited M/s Johnson Lifts (P) Ltd. Hyderabad are informed that Section 20(6) of APGST Act’57 is not applicable to the facts of the present revision proceedings for the year 2003-04 under APGST” The petitioner is a company incorporated under Companies Act, 1956 and registered with the 2nd respondent, as a dealer under the A.P.G.S.T. Act, 1957 (Act VI of 1957). It is engaged in the supply, erection and installation of lifts, annual maintenance and servicing etc. For the assessment year 2003-2004, the assessee had returned a turnover of Rs.16,44,80,445/- asserting the same to be on the basis of works contract relating to the supply, erection and commissioning of lifts and escalators. The petitioner discharged taxes on 75% of the contract receipts at 12% of the contract value claiming statutory deduction of 25% of the contract value towards labour and other charges. This claim and the complementary rate of tax liability as presented by the petitioner was accepted by the 2nd respondent who passed the order of assessment dated 31.03.2007 accepting the return. The 3rd respondent issued a show cause notice dated 25.09.2008 proposing to levy tax on Rs.90,25,991/- representing the tax element and by another notice dated 16.12.2009 proposed to withdraw the earlier notice dated 25.09.2008 and to levy tax on the entire contract value by treating the same as sale, rejecting the claim of the petitioner. The proposal to revise was on the basis of the decision of the Supreme Court in State of Andhra Pradesh v. Kone Elevators (India) Pvt. Ltd[1]. The petitioner filed W.P. No.29062 of 2009 challenging the proposals and the said writ petition is pending. It would appear that the Supreme Court by the order dated 12.05.2005 had referred to the decision in Kone Elevators1 for reconsideration by a constitution bench, on the ground that the decision in Kone Elevators1 was in conflict with the earlier judgments of the Apex Court in State of Rajasthan v. Man Indujstrial Corporation Ltd[2], State of Rajasthan v. Nenu Ram[3] and Van Guard Rolling Shutters Works v. Commissioner of Sales Tax, UP[4]. In view of the arguments during the hearing for admission of W.P. No.29062 of 2009 the petitioner considered it appropriate to file an application to the 3rd respondent seeking deferment of the proposals to revise the order of assessment. Such an application was made on 20.01.2010. This application was rejected by the order impugned and for the reasons recorded as have been extracted above. It is contended by Sri Venkataraman, learned Senior Counsel appearing for the petitioner that while sub-section 3 of Section 20 of A.P.G.S.T. Act enjoins a limitation period of four years, from the date on which the order of assessment was served on the dealer, for exercise of revisional power, Sub-section 6 inheres a discretion on the revisional authority to defer a proceeding under Section 20 (revisional proceeding) on account inter alia of an appeal or other proceeding pending before the High Court or the Supreme Court, involving a question of law having a direct bearing on the order or proceeding in question, and if the discretion is exercised by the revisional authority to so defer the revisional proceeding, enacting that the period during which the stay order was in force or such appeal or proceeding was pending (before the High Court or Supreme Court as the case may be) shall be excluded in computing the period of four years specified in Section 20(3), for the purpose of exercising the power under the said section. Sri Venkataraman, Learned Senior Counsel would contend that the discretion conferred on the revisional authority under Sub-section (6) of Section 20 is a discretion coupled with a duty to be exercised in appropriate cases and that in the facts and circumstances of the case and in view of the decision of the Supreme Court in Kone Elevators1 having been referred to a Constitution Bench for reconsideration, the 3rd respondent ought to have exercised the discretion not to proceed with the revision. In addition Sri Venkataraman, submits that in view of the petition dated 20.1.2010 submitted by the petitioner beseeching deferment of the revisional proceedings, the 3rd respondent ought to have recorded reasons for declining exercise of discretion available under sub-section (6) of Section 20 (to defer). Sri A.V. Krishna Koundinya, Special Standing Counsel for the Commercial Taxes, would per contra contend that sub-section (6) of Section 20 does not impose any linear obligation on the revisional authority to defer revisional proceedings merely on account of an appeal or other proceeding pending in the High Court or the Supreme Court involving a question of law having a direct bearing on the order or proceeding in question. According to Sri Koundinya sub- section (2-A) of Section 20 clearly enacts a bar and enjoins that the power under sub-section (1) or (2) shall not be exercised by the authorities specified in respect of an issue or question which is the subject matter of an appeal before, or which was decided on appeal by, the Appellate Tribunal under Section 21. In view of the distinct and dissimilar phraseology employed in sub-section (2-A) and sub-section (6), on a true and fair construction of the provisions, sub-section (6) must be construed as inhering a discretion and not an obligation to defer, is the contention on behalf of the Revenue. Sri Koundinya would also contend that since the decision of the Supreme Court in Kone Elevators1 constitutes the law declared within the meaning of Article 141, it is that law which binds the obligation of all authorities and not an embryonic or potential ratio that may be enunciated by the Constitution Bench after the reference is answered, nor does the mere fact of a reference having been made to a Larger Bench eclipse the ratio decidendi of Kone Elevators1. In the view that we are taking in this case, it may not be necessary to examine in greater detail the contours of the discretion or obligation as the case may that is enjoined on the revisional authority under sub-section (6) of Section 20. The authority to defer consecrated by the provisions of Section 20(6) is a public power and is liable to be exercised for rational and discernable purposes, particularly, when judicial review against any decision by a statutory authority is available. Recording of reasons for the exercise of such power, it is axiomatic, is non-derogable. The order impugned does not set out any reasons for the decision of the 3rd respondent except the bland statement; ‘Section 20(6) of APGST Act’57 is not applicable to the facts of the present revision proceedings for the year 2003-04’. As the order impugned is bereft of reasons and recording of reasons is, we consider a non-derogable obligation in exercise of statutory power, the order impugned in this writ petition invites invalidation and is accordingly quashed. The 3rd respondent shall pass a fresh order after due consideration of the representation of the petition dated 20.1.2010 or any additional representation that the petitioner may make within one week from the date of receipt of a copy of this order and communicate the eventual decision to the petitioner, expeditiously. The writ petition is allowed as above at the stage of admission. No order as to costs. ______________________ GODA RAGHURAM,J Date: 09.02.2010 ____________________________ RAMESH RANGANATHAN,J MRKR/ASP [1] 140 STC 22 [2] 24 STC 349 [3] 26 STC 268 [4] 39 STC 372