MARK INFRASTRUCTURE PVT. LTD. Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) THE assessment order passed by the first respondent on 31.08.2013 is questioned in this Writ Petition as being arbitrary, illegal, in violation of principles of natural justice, Articles 14, 19(1)(g) of the Constitution of India and Section 4(7)(d) of the A.P. VAT Act, 2005 (hereinafter called the Act). The petitioner also seeks a declaration that they are not liable to pay tax in the light of the exemption under the proviso to Section 4(7)(d) of the Act; and, consequently, to direct the respondents to refund the tax deducted from the main contractor.

(2.) THE petitioner is a works contractor engaged in the business of executing works relating to construction of buildings. The petitioner entered into an agreement with M/s. Sri Ramdas Motor Transport Corporation (for short SRMT) on 04.02.2011 for executing the works contract of construction of residential apartments. The said agreement dated 04.02.2011, which required the petitioner to construct residential apartments in the areas mentioned in the agreement within 24 months, stipulated that payment would be made to them according to the stage of construction. The petitioner claims that SRMT, which is the owner of the property, had entered into agreements with various individual purchasers for the construction and selling of apartments; while SRMT was the owner of the land, they were nevertheless a contractor as they enter into agreements with independent purchasers for construction and selling of residential flats, along with the property; sale by SRMT, to individual and independent purchasers, is a deemed sale taxable under the provisions of the Act as works contracts.

(3.) IN the counter -affidavit, filed by the first respondent, it is stated that, before passing the impugned assessment order, a pre -assessment show -cause notice was issued to the petitioner; in reply thereto, the petitioner submitted letter dated 24.08.2013, received on 30.08.2013, stating that they had no objection to the proposed assessment; this letter contains the round seal of the petitioner company; he had passed the assessment order only after receipt of the said letter; he had referred to the said letter at page six of the assessment order; the petitioner had, however, suppressed this fact and had deliberately filed a copy of another letter dated 30.08.2013, which was never filed before him, and does not bear his signature or the seal of his office; this letter was filed only to mislead this Court, and to strengthen the petitioners case; after the assessment order was passed, a notice was issued to the petitioner, by the second respondent, asking him to pay VAT; the petitioner submitted a petition dated 19.02.2014 before the third respondent admitting his liability to pay VAT, as levied under the assessment order dated 31.08.2013, and had sought to pay the same in instalments; the third respondent had considered the request sympathetically, and had passed an order dated 05.03.2014 granting the petitioner eight monthly instalments to pay the said amount; as per the said order, the first instalment fell due on 25.03.2014; suppressing these facts, the petitioner had approached this Court by filing the Writ Petition on 20.03.2014, and had obtained interim stay of recovery of VAT on 21.03.2014; in their writ affidavit, the petitioner has neither mentioned that they had filed a petition seeking instalments nor that eight instalments were granted by the third respondent; the judgments referred to by the petitioner, in the writ affidavit, deal with cases where a contract is awarded to a contractor either by the Government or some other agency and that contractor, in turn, engages subcontractors; in all those cases, the issue involved was whether or not the liability to pay VAT was on the main contractor; in the present case, the petitioner filed a copy of the agreement entered into between them and SRMT, wherein the petitioner was shown as a contractor or builder, and the other party was shown as the owner of the property; hence, there is a direct contract between the owner and the builder; the owner is not a works contractor under the Act, and is not liable to pay VAT; the petitioner has deliberately mis -stated that SRMT is the main contractor, and they are the sub -contractors; they have referred to all those cases where there is a contractor, a contractee and sub -contractors; in the present case, there are only two parties i.e., the owner of the property, and the contractor or the builder; as per clause 8 of the agreement, the petitioner is liable to pay sales tax or VAT and, hence, they cannot rely on these judgments; the petitioner is trying to mislead this Court suppressing facts; the petitioner had entered into an agreement dated 04.02.2011 with SRMT for construction of a residential building at Sarpavaram Junction in Kakinada; as per this agreement, SRMT is the land owner and the petitioner is the contractor or builder; there is a relationship of contractee and contractor in this case; it is not a relationship between the main contractor and a sub -contractor; nowhere is it mentioned in the agreement that the petitioner is a sub -contractor to SRMT; not only has the petitioner failed to prefer an appeal against the assessment order but they had also filed a no objection letter, to the pre -assessment show -cause notice, accepting and admitting their liability under the assessment order which has become final; they also filed a petition before the third respondent seeking instalments; after eight instalments were granted, they had approached this Court suppressing all these facts, and had obtained interim stay; the letter dated 30.08.2013 submitted by the petitioner to them, is different from the letter dated 30.08.2013 mentioned in the writ affidavit; the letter dated 30.08.2013, referred to in the writ affidavit, was never filed before him; the petitioner is deliberately misleading this Court; the genuineness of the medical certificate, filed by the petitioner, is highly doubtful; the petitioner claims to have fallen sick during the period 03.09.2013 to 06.02.2014, and claims to have suffered from viral hepatitis which is a serious illness; yet the Managing Director, of a big company like the petitioner, claims to have consulted only a doctor with an MBBS degree, and did not consult any specialist in the field; even the rubber stamp, on the so called medical certificate, is not visible to the naked eye; even otherwise, the petitioner is not a proprietary concern but is a company; hence, the illness of the Managing Director would not cripple the company, and would not bring its activities to a halt; the company has many directors, and other officers, to look after all its matters; the allegations in the writ affidavit are made only to mislead this Court; this is not a case of a main contractor and a sub -contractor, but is a case of the owner of the property and a builder, as is clear from the agreement filed by the petitioner; the petitioner, having filed a no objection letter dated 30.08.2013, having admitted their liability and having sought instalments for payment of the entire tax, cannot now question the assessment order on its merits; the present case is not merely one of laches, but is a case where this Court is sought to be mislead by filing an affidavit with false allegations and twisting facts.