IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE SIXTH DAY OF JULY TWO THOUSAND AND NINE PRESENT THE HON'BLE THE CHIEF JUSTICE SRI ANIL R. DAVE AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO : 3310 of 2009 Between: M/s. Restile Ceramics Ltd., Flat No.301 & 302, Aditya Trade Centre, Aditya Enclave Road, Ameerpet, Hyderabad, Rep by its Chief Financial Officer Mr. V.V.Chenulu ..... PETITIONER AND The Commercial Tax Officer, Somajiguda circle, Hyderabad. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondent in passing the impugned assessment order dated 29-01-2009 in Form VAT 305 for the assessment years 2005-2006, 2006-2007, 2007-2008 and 2008-2009 by raising huge astronomical demands without providing sufficient opportunity to the petitioners as illegal, arbitrary, high handed contrary to the Provisions of the Act and is in violation of principles of natural justice and set aside the same and pass Counsel for the Petitioner: MR. BHASKAR REDDY VEMIREDDY Counsel for the Respondent: MR. A.V. KRISHNA KOUNDINYA, SPECIAL STANDING COUNSEL FOR COMMERCIAL TAXES WRIT PETITION NO : 5608 of 2009 Between: M/s. Restile Ceramics Ltd., Flat No.301 & 302, Aditya Trade Centre, Aditya Enclave Road, Ameerpet, Hyderabad, rep. by its Chief Financial Officer, V.V. Chenulu. ..... PETITIONER AND 1 The Commercial Tax Officer, Somajiguda Circle, Hyderabad. 2 The HDFC Bank, Begumpet, Hyderabad, rep. by its Branch Manager. 3 The State Bank of India, Somajiguda, Hyderabad, rep. by its Branch Manager. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 1st respondent in issuing the impugned Garnishee Notice dated 17.3.2009, invoking power under Section 29 of APVAT Act for recovery of the disputed tax of Rs.4,97,87,169/- for the tax period 2005- 2006, 2006-2007, 2007-2008 and 2008-2009 under the AP VAT Act 2005 in pursuance of the assessment order dated 29.1.2009 in Form VAT 305 in spite of the fact that earlier writ petition filed by the petitioner challenging the assessment order in W.P.No.3310/09 is pending adjudication where the matter was adjourned at the request of the revenue and orders were passed restraining the 1st respondent from taking any coercive steps for recovery of the disputed tax as illegal, arbitrary, high handed, contrary to the Provisions of the Act and set aside the same. Counsel for the Petitioner: MR. BHASKAR REDDY VEMIREDDY Counsel for the Respondent No.1: GP FOR COMMERCIAL TAX Counsel for the Respondent No.2: N.A. Counsel for the Respondent No.3: SRI DEEPAK BHATTACHARJEE The Court made the following : COMMON ORDER: (per Sri Ramesh Ranganathan, J) Writ Petition No.3310 of 2009 is filed seeking a Mandamus to declare the action of the respondents, in passing the assessment order dt.29.1.2009 in Form VAT 305 for the assessment years 2005-2006, 2006-2007, 2007-2008 and 2008-2009, as illegal, arbitrary and in violation of principles of natural justice. Writ Petition No.5608 of 2009 is filed questioning the action of the first respondent in issuing garnishee notice consequent to the aforementioned assessment order for recovery of the disputed tax of Rs.4,97,87,169/-. Heard Sri Bhaskar Reddy Vemireddy, learned Counsel for the petitioner and Sri A.V. Krishna Koundinya, learned Special Standing Counsel for Commercial Taxes, and with their consent the Writ Petition is taken up for final disposal at the stage of admission. Since both the Writ Petitions are connected, they are being disposed of by this common order. W.P. No.3310 of 2009 The impugned order in this Writ Petition is challenged mainly on two grounds - (i) that a single assessment order could not have been passed for four years since the tax period is only for one month; (ii) that the petitioner was not given adequate opportunity of being heard before the assessment order is passed. Since we are satisfied that the Writ Petition is required to be allowed on the second ground of violation of principles of natural justice, we see no reason to examine the contentions regarding the validity of one assessment order being passed for a four year period. A notice was issued to the petitioner on 26.12.2008 informing that the respondent would conduct value added tax audit of the books of accounts of the petitioner. Pursuant to the audit, show cause notice dt.5.1.2009 was served on the petitioner on 9.1.2009. The petitioner submitted its representation on 16.1.2009 requesting the respondent to grant time till 20.2.2009 for filing its objections and for production of records as internal audit was in progress. The respondent, however, by order of the same date, granted only a week’s time till 23.1.2009. It is the case of the petitioner that on 23.1.2009 it had filed its purchase books and invoices for the assessment years 2005-2006 and 2006-2007 as also its preliminary objections and that they had sought further time till 15.2.2009 for final objections to be filed. The respondent, however, by order dt.23.1.2009 granted time only till 28.1.2009. The petitioner claims to have informed the respondent on 28.1.2009 that the matter be taken up on any day other than 28.1.2009 which was not acceded to by the respondent who passed the assessment order on 29.1.2009. Sri Bhaskar Reddy Vemireddy, learned Counsel for the petitioner, submits that as the petitioner’s records relate to a period of four years, vouchers for this four year period were required to be segregated and hence the time granted was hardly sufficient for the petitioner to file its objections. He would submit that the petitioner has now completed the process of segregation and, if another opportunity is given to them to file their objections and produce their records they would do so within one week from today. He undertakes, on the petitioner’s behalf, not to seek any further time for filing of objections and production of records. The show cause notice dt.5.1.2009 was served on the petitioner on 9.1.2009 whereas the assessment order was passed on 29.1.2009. The period of twenty days, in the interregnum, was hardly sufficient for the petitioner to produce all the documents, more so, when they relate to a period of four years. Despite the petitioner’s reasonable request for grant of time till 15.2.2009, the respondent has chosen to reject such a request on the ground that the assessment would be barred by limitation. As per Section 20(4) of the Andhra Pradesh Value Added Tax Act, 2005 (for short, the Act) the period for passing an assessment order is four years from the date of filing of the return. Under Section 21(4) of the Act, the assessment is required to be made within a period of four years from the end of the period for which the assessment is to be made. It is, therefore, evident that the period of assessment even for the tax period April 2009 would expire only by the end of March, 2009 and that the respondent had acted unreasonably in not acceding to the petitioner’s request for grant of time till 15.2.2009 for filing their objections and production of records. We are satisfied that, in the present facts and circumstances, the petitioner was denied adequate opportunity of being heard. The impugned order therefore suffers from the vice of violation of principles of natural justice. We, therefore, set aside the impugned order and remand the matter back to the assessing authority for his consideration afresh in accordance with law. We may at this juncture also take note of Section 37 of the Act whereunder on an assessment order being set aside by any Court, reassessment shall be made within three years from the date of receipt of such order. It would, therefore, be open to the assessing authority to hear the petitioner and pass order afresh for the assessment years in question. The petitioner is given one week’s time from today to file its objections. On receipt of the objections, the respondent shall put the petitioner on notice and give them opportunity of personal hearing. On the date fixed by the respondent, the petitioner shall appear along with all the records, which it considers necessary or which the respondent may require production of. Sri Vemireddy Bhaskara Reddy undertakes, on behalf of the petitioner, that the petitioner would not seek any adjournment either with regard to filing of objections or for production of the relevant records. After affording the petitioner an opportunity of personal hearing, it is open to the respondent to pass order afresh in accordance with law. W.P. No.5608 of 2009 Since the very assessment order is quashed and set aside, the garnishee notice impugned in this writ petition, dt.17.3.2009 is also quashed and set aside. In the result, both the Writ Petitions are allowed. However, in the circumstances, without costs. ______________ ANIL R. DAVE, CJ _______________________ RAMESH RANGANATHAN, J 06-07-2009 bnr Note: C.C. by 8.7.2009. (B.O) bnr