NAMBURI VENKATA SANTOSH Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) Order, dated 16.11.2020, passed by respondent No.3 in AO No.ZH3711200D26989, imposing tax liability to the tune of Rs.3,06,130/- for the assessment year 2014-15 and the consequential penalty and urgent notices dated 16.11.2020 and 16.03.2021 respectively have been challenged by the petitioner-assessee.

(2.) Petitioner is a private bus operator and is assessed under the jurisdiction of respondent No.3/Commercial Tax Officer. On the basis of a vigilance report, which showed that the petitioner had let out 4 vehicles bearing registration Nos.AP35U7798, AP35U7578, AP35Y1229 and AP35Y1238 to APSRTC in Vizianagaram Region for the periods 2014-15 to 2016-17 but had not registered himself under the A.P. Value Added Tax Act, 2005 (for short, 'the VAT Act') and submitted hire charges turnover, a show-cause notice proposing levy of tax at the rate of 1% of the hire charges for the aforesaid years by treating the dealer as TOT dealers was served upon the petitioner. Subsequently, the assessing authority noticed that the rate of tax ought to be levied at 14.5% as per Section 4(8) of the VAT Act. Accordingly, a revised show-cause notice, dated 31.08.2020, was served upon the petitioner. In response to the revised show-cause notice, the mother of the petitioner submitted a written representation and claimed that her son, the petitioner herein, who is presently residing at United Kingdom, was the owner of two vehicles bearing registration Nos.AP35Y1229 and AP35Y1238 but had subsequently sold the said vehicles. The other two vehicles bearing registration Nos.AP35U7798 and AP35U7578 does not belong to the petitioner or his family members. It was further claimed therein as per the directions of the Commissioner, tax at the rate of 1% of the hire charges had been paid and from April, 2016 onwards. In conclusion of the proceedings, the assessing authority came to a finding that the petitioner was the owner of the vehicles and had let out the said vehicles for the assessment period 2014-15. With regard to the rate of tax leviable on the petitioner, the assessing authority, after referring to Section 4(8B) of the VAT Act read with Rule 17A came to a finding that the petitioner was not entitled to the lower rate of tax as he had not complied with the aforesaid provisions. Accordingly, the tax liability to the tune of Rs.3,06,130/- was assessed on the petitioner for the assessment year 2014-15.

(3.) Mrs.T.V.Sri Devi, learned counsel for the petitioner, assailing the aforesaid order submits that the initial show-cause notice had been issued to levy tax at the rate of 1% on the hire charges upon the petitioner. After expiry of the limitation period, the assessing authority, without any factual foundation of wilful evasion of tax, invoked Section 21(5) of the VAT Act and raised a claim of tax at the rate of 14.5%. She contends the revised show-cause notice is barred by limitation as there is no factual foundation averred therein with regard to wilful evasion of tax a 'condition precedent' for the purpose of invoking Section 21(5) of VAT Act. She also argued that there is no finding in the impugned order with regard to wilful evasion of tax. On the other hand, the materials on record show that the petitioner was instructed by the tax authorities to pay tax at the rate of 1% on the hire charges. Subsequently the tax authorities altered their view and after expiry of period of limitation period under sub-section (4) of Section 21 i.e., 4 years raised a claim at the rate of 14.5% upon hire charges by illegally invoking sub-section (5) of Section 21 of VAT Act.