THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.14934 of 2011 July 04, 2011 Between: M/s.Sri Venkateswara Agencies, represented by its Proprietor, T.Rama Reddy, S/o.Adi Reddy ... Petitioner And The Commercial Tax Officer, Ramachandrapuram Circle, East Godavari District And another ...Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.14934 of 2011 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) Aggrieved by the order of the first respondent dated 23.8.2010, and the order of the second respondent – appellate authority dated 24.12.2010 to the extent tax was levied on the petitioner at 12.5% without granting input tax credit for the assessment years 2006-07 and 2007-08, the present writ petition is filed. The petitioner seeks a consequential direction to the respondents not to collect the disputed tax of Rs.2,98,321/-. The petitioner, a registered Turnover Tax (TOT) dealer on the rolls of the first respondent, was issued show cause notice dated 09.6.2010 for the assessment years 2006-07 and 2007-08. After assessment, the first respondent passed assessment order dated 28.1.2010, which was served on the petitioner on 23.8.2010, levying tax of Rs.5,32,314/- on the ground that, under Section 17(3) of the Andhra Pradesh Value Added Tax Act, 2005 (the Act), every dealer, whose taxable turnover exceeds Rs.10,00,000/- in the preceding three months or Rs.40,00,000/- in the preceding twelve months, is liable to be registered as a VAT dealer. The first respondent further held that any dealer who failed to apply for registration, as required under Section 17 of the Act, was liable to penalty of 25% of the tax due, and was not be entitled to input tax credit. Against the order of the first respondent, the petitioner preferred an appeal to the second respondent who held that the petitioner is liable to pay tax at the VAT rate in respect of the quarters ending June, 2007 and September, 2007, and remanded the matter to the assessing authority. Before this Court the aforesaid orders are under challenge mainly on the ground that, once the petitioner is treated as registered VAT dealer under the Act, he is entitled for all benefits including the benefit of input tax credit available under the Act on production of tax invoices. Learned Counsel would contend that, since the petitioner had produced tax invoices before the authorities concerned, they were entitled to input tax credit available under the Act. Section 2(43) of the Act defines VAT dealer as a dealer registered and entitled for VAT. Section 4(1) of the Act prescribes that every dealer registered or liable to be registered as a VAT dealer shall be liable to pay tax on every sale of goods, in the State at the rates specified under the Schedules. Under sub-section (2) every dealer, who has not opted for registration as a VAT dealer and who was registered only for the purpose of TOT, is liable to pay tax at 1% on the taxable turnover. The petitioner had registered themselves as a TOT dealer, and were exigible to tax under Section 4(2) of the Act. Nonetheless, in view of Section 4(1) of the Act, since they were liable to be registered as a VAT dealer and their turnover exceeded Rs.10,00,000/- per quarter/Rs.40,00,000/- per anum for the assessment years 2006-07 and 2007-08, they were levied tax under Section 4(1) of the Act. With regards their claim of input tax credit, it is necessary to note that under Section 13(1) of the Act, subject to the conditions if any prescribed, an input tax credit shall be allowed to the VAT dealer for the tax charged in respect of all purchases of taxable goods made by that dealer during the tax period, if such goods are for use in the business of the VAT dealer. The input tax credit, which is available under Section 13(1) of the Act, is only for a VAT dealer and not for a TOT dealer. Under Rule 20(1) of the Andhra Pradesh Value Added Tax Rules, 2005 (the Rules), any dealer who gets himself registered as a VAT dealer, or where the authority prescribed registers any dealer as a VAT dealer under Rule 11(1), such dealer shall be eligible for input tax credit as provided under Section 13(2)(b) of the Act. In the case on hand, the petitioner neither got themselves registered as a VAT dealer nor were they registered as a VAT dealer by the registering authority and as such the petitioner is not entitled to input tax credit. This is made further clear by Section 49(2) of the Act whereunder among the consequences for non-registration is that such a dealer would not be eligible for input tax credit for the sales made prior to the date from which registration is effected. Admittedly, in the case on hand, the petitioner has claimed input tax credit for sales effected by them for periods anterior to the date on which they were liable to be registered as a VAT dealer under the Act. As such the respondents cannot be faulted for denying them the benefit of input tax credit. We see no reason, therefore, to interfere with the order of assessment and the appellate order confirming the assessment order. The writ petition fails and is, accordingly, dismissed. In the circumstances of the case, no costs. ________________ (V.V.S. RAO, J) ______________________________ (RAMESH RANGANATHAN, J) July 04, 2011 YS