V. V. S. RAO

In this group of writ petitions, filed by registered VAT dealers from various places in the State of Andhra Pradesh, the challenge is to the validity of rule 59(1) of the Andhra Pradesh Value Added Tax Rules, 2005 ("the VAT Rules") in so far as it confers the power of assessment of value added tax, when it appears that the VAT return filed by the dealer is incorrect or incomplete on (i) the Commercial Tax Officer (CTO) or the Deputy Commercial Tax Officer (DCTO) in case of dealers in the territorial jurisdiction of the circle; and (ii) on any officer not below the rank of the DCTO of the division as authorized by the Deputy Commissioner of the Division. The challenge is based on the petitioners' perception that the impugned rule does not satisfy the statutory essentials and is ultra vires the Andhra Pradesh Value Added Tax Act, 2005 ("the VAT Act"). In W.P. Nos. 13015 and 13019 of 2009, sub-sections (3) and (4) of section 17 are impeached as being ultra vires section 17(2) of the VAT Act. In addition, the petitioners also impeach the assessment orders in form VAT 305 for different periods passed by the authorized authority on various grounds.

Facts

As a first step to resolve the controversy in these cases, we may refer to the affidavit accompanying W.P. No. 18598 of 2009 to notice the background. The petitioner - a firm of contractors and engineers - engaged in infrastructure development is a registered VAT dealer on the rolls of the second respondent. They filed monthly VAT returns for 2005-06 and 2006-07. There was, however, audit by the DCTO, Hydernagar, on May 11, 2007. By a notice dated June 7, 2008, the first respondent informed of another audit. Such audit by the first respondent took place on August 21, 2008. Proposing best of judgment assessment in terms of rule 59 of the VAT Rules, a notice dated September 15, 2008 was issued to the petitioner. They filed objections on October 30, 2008 along with the books of accounts. The earlier assessment was withdrawn. A proposal was made to tax the estimated turnover at 12.5 per cent which was the cost of light diesel oil not covered by tax invoices. There were objections again, inter alia, that, as the second respondent was the territorial assessing authority under section 20(1) of the VAT Act, the first respondent had no jurisdiction to take up assessment. By assessment order, dated January 5, 2009, the first respondent demanded a sum of Rs. 15,74,663.

The petitioner unsuccessfully filed an appeal before the Appellate Deputy Commissioner. They then filed an appeal before the Sales Tax Appellate Tribunal (STAT). Even while the same was pending, the dealer filed the instant writ petition seeking invalidation of rule 59(4) of the VAT Rules. They contend that, under substantive provision being section 2(4) of the VAT Act, the Commissioner had authorized the second respondent alone to take up assessment. By reason of authorization to audit under rule 59(1), Sl. 7, the first respondent was precluded to take up assessment for the period for which assessments stood concluded. Rule 59(4) is therefore, ultra vires section 2(4). The Government issued the notification under section 3A of the Act being G.O.Ms. No. 1163, dated August 14, 2006. It was clarified therein that, if the officer authorized by the Commissioner takes up assessment, the territorial officer shall not assess for that year. It is the case of the petitioner that the assessment was already made and, therefore, the first respondent acted without jurisdiction. It is also contended that, under section 3A, all the CTOs have been assigned with territorial areas for the purpose of assessment. The Commissioner, therefore, has to specifically authorize any other official to take up assessment. Rule 59(4) does not override section 2(4) and 2(8), and is therefore ultra vires.

The writ petition indeed impugns rule 59(4). Curiously, the Government of Andhra Pradesh which derives rule-making power under section 78