IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD Wednesday, the 29th day of September, Two Thousand and Ten PRESENT HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE RAJA ELANGO WP.MP.No.20554 of 2009 And WRIT PETITION No.28341 of 2008 Between: M/s.Quality Care India Limited, (Care Hospitals), Rep. By its Director-N.Krishna Reddy. … Petitioner And The Commercial Tax Officer, M.J.Market Circle and another … Respondents This Court made the following: HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE RAJA ELANGO WP.MP.No.20554 of 2009 And WRIT PETITION No.28341 of 2008 COMMON ORDER: - (Per Hon’ble Sri Justice A.GOPAL REDDY) By means of filing this writ petition under Article 226 of the Constitution, the petitioner/assessee seeks issuance of a rule particularly one in the nature of Ceritorari calling for the records relating to the final Assessment Order in proceedings No.LT/QCH/06-07, dated 17.11.2008, issued by the Commercial Tax Officer-1st respondent for the assessment year 2006-07 and to quash the same. Pursuant to the revisional order passed by the Joint Commissioner, the petitioner filed WP.MP.No.19247 of 2009 to implead the Joint Commissioner as 2nd respondent and WP.MP.No.20554 of 2009 to set aside the order of the Joint Commissioner, directing the assessing officer to pass final assessment order for the entire year 2006-07 by levying the tax on the total amount of bed charges collected from the patients during the year 2006-07. This court by order, dated 22.07.2009, ordered WP.M.P.No.19247 of 2009, impleading the Joint Commissioner as 2nd respondent in the writ petition. Petitioner was provisionally assessed for payment of luxury tax for the year 2006-07 upto the month of July, 2006 by the provisional Assessment Order, dated 07.06.2007, issued by the 1st respondent. Against the orders of the provisional assessment, the assessee filed the appeal before the Appellate Deputy Commissioner. The Appellate Deputy Commissioner (CT), by order, dated 31.12.2007, set aside the order and remitted the matter to the assessing authority to have a de novo enquiry without relying on the observations of the officials of Vigilance & Enforcement, examine the books of account again and re- determine the turnover liable to luxury tax. On passing the said order, the Joint Commissioner (CT) (Legal)-2nd respondent, on the proposed revision issued a show cause notice to the petitioner on 01.07.2008, to which the petitioner filed statement of objections on 14.08.2008, and passed revisional order, dated 16.09.2008, confirming the proposed revision for the year 2006-07, setting aside the order of the Appellate Deputy Commissioner along with consequential order, if any, passed thereof directing the assessing officer to pass final assessment order for the entire year 2006-07 by levying tax on the total amount of bed charges collected from the patients during the year 2006-07. Pursuant to the remand order passed by the 2nd respondent, the 1st respondent by the impugned proceedings, dated 17.11.2008, passed final assessment order for the entire year 2006-07 by levying the total amount of bed charges collected from the patients during the year 2006-07, in the light of the directions issued by the 2nd respondent in his proceedings, dated 16.09.2008. Aggrieved by the same, the petitioner filed the present writ petition. Sri S.R.Ashok, learned Senior Counsel representing S.Chakrapani, learned counsel for the petitioner contends that when the provisional assessment order is confined for the year 2006-07 upto July, 2006 only, passing of the final assessment order for the entire year 2006-07 by the 1st respondent as per the directions issued by the 2nd respondent, is not in accordance with law and the same is liable to be set aside. Since the earlier assessment order is a provisional order, the assessee is entitled to adduce evidence in arriving the turnover, as per Section 7(2)(a) of the A.P.Tax on Luxuries Act, 1987 (for short, “the Act”). The assessing authority has not chosen to conduct any enquiry, but proceeded to pass final assessment orders as per the findings recorded by the 2nd respondent. Therefore, the final assessment order passed by the 1st respondent is liable to be set aside and he has to conduct a de novo enquiry as contemplated under Section 7A of the Act. Per contra, Sri A.V.Krishna Koundinya, learned counsel representing the respondents, who filed a counter affidavit, contends that the petitioner-assessee was finally assessed for the years 2004-05 and 2005-06 and provisionally assessed for the year 2006-07 for the period upto July, 2006 raising the demands on the turn over. Aggrieved by the said provisional assessment orders, the petitioner preferred appeals before the Appellate Deputy Commissioner and the Appellate Deputy Commissioner by a common order set aside the same and remanded the matter to redo the assessment with certain directions. The said order of the Appellate Deputy Commissioner has been revised by the 2nd respondent and the 2nd respondent passed the impugned revisional order. After such revisional orders were passed by the 2nd respondent, the 1st respondent issued the final assessment orders on 24.09.2008 for the years 2004-2005 and 2005-06 raising demands of Rs.74,25,607/- and Rs.92,71,879/- respectively. Aggrieved by the same, the petitioner filed appeals before the Sales Tax Appellate Tribunal in T.A.Nos.899 and 900 of 2008. With regard to the demands raised for the years 2004-05 and 2005-06, conditional stay has been granted by the Tribunal. Only for the assessment year 2006-07, the assessing authority has completed the assessment for the entire year by levying the tax, since the original assessment orders are only provisional for the period from April to July 2006. The petitioner has not filed any appeal questioning the said assessment order as was done for the earlier years. In the light of the directions issued by the 2nd respondent, the assessing authority issued notice requesting the petitioner to produce its books of accounts, relevant records, audited balance sheet etc., to finalise the assessment for the year 2006-07 under the Act and the same was served on 29.09.2008. The petitioner obtained one month time to furnish the required information. Though time was granted upto 31.10.2008, the petitioner has not produced the records till 16.11.2008 nor sought any further time. Under the said circumstances, the final assessment orders were passed in accordance with law basing on the material and in conformity with the directions of the 2nd respondent. Therefore, the petitioner is at liberty to file an appeal against the said final assessment order and can question the same. Indisputably, the show cause notice issued by the 2nd respondent, dated 28.06.2008, covers the period of the provisional assessment for the year 2006-07 upto July, 2006, whereas the 2nd respondent passed order requesting the assessing authority to pass final assessment orders for the entire year 2006-07. Section 7 of the Act provides the assessment and collection of the tax. Sub-section (1) of the Section 7 of the Act prescribes when the assessing authority is satisfied that the return furnished under sub- sections (1) or (1A) of Section 6, is complete and if there is no reason to believe it to be incorrect, he shall assess the amount of tax due from the proprietor on the basis of such return. Whereas sub-section (2)(a) of Section 7 of the Act prescribes if the assessing authority is not satisfied that the return furnished under sub-sections (1) or (1A) of Section 6, is complete or it has reason to believe that is incorrect and it considers it necessary to require the presence of the proprietor or the production of further evidence, it shall serve a notice on such proprietor in the manner prescribed requiring him on a date and at a place specified therein either to attend and produce or cause to be produced all evidence on which such proprietor relies in support of his return or to produce such evidence as is specified in the notice. In view of the same, the assessing authority has to satisfy with the returns furnished by the petitioner or if he is not so satisfied, he can call upon the petitioner to produce the evidence for making an assessment. When the show cause notice is issued only for the period from April to July, 2006 for the year 2006-07, the assessing authority has not given any opportunity to the petitioner, as required under section 7(2)(a) of the Act for production of necessary evidence. Therefore, the impugned order of the 2nd respondent to the extent of directing the assessing officer to pass assessment order for the entire 2006-07 by levying tax on the total amount of bed charges collected from the patients during the year 2006-07, is set aside and consequent to the same, the final assessment order, dated 17.11.2008, also is set aside. The assessing authority is directed to pass assessment order afresh, uninfluenced by the orders passed by the 2nd respondent only for the year 2006-07 as per the show cause notice issued earlier upto July 2006 and by issuing notice for the subsequent period, within six weeks from the date of receipt of copy of this order. WP.MP.No.20554 of 2009 is allowed and the Writ Petition is, accordingly, disposed of. There shall be no order as to costs. __________________ A.GOPAL REDDY, J ________________ RAJA ELANGO, J 27th October 2010 Lmv