Entities must engage in taxable activities as defined by law before being liable for tax obligations, ensuring adherence to principles of natural justice.

ORDER :

R. RAGHUNANDAN RAO, J.

M/s. Marg Business Park Private Limited, which is the petitioner, in W.P.No.4141 of 2021 and M/s. Yuva Constructions Private Limited, which is the petitioner, in W.P.Nos.4146, 4195 & 4046 of 2021, together had entered into a development agreement, dated 15.03.2011, for the development of certain lands situated, in Kotamangalam Village, Reniguta Mandal, Chittoor District, Andhra Pradesh. These lands which belonged to M/s. Yuva Constructions Private Limited and M/s. Marg Business Park Private Limited were given to M/s. Marg Limited, for construction of apartments and other buildings under the name and style of Viswashakthi Project. Under the development agreement both these entities were entitled to a share of build up area.

2. The petitioners contend that flats were constructed under the said development agreement and the completed and finished flats were sold by the developer both on account of itself as well as the flats which felt to the share of M/s. Marg Business Park Private Limited and M/s. Yuva Constructions Private Limited.

3. The 2nd respondent, had passed Orders of assessment against M/s. Marg Business Park Private Limited, for the period 2012-2013 on 10.01.2018, against M/s. Yuva Constructions Private Limited, for the assessment period 2013-2014 on 23.03.2018 and for the assessment period 2014-2015, dated 02.03.2019. It appears that the 2nd respondent had also passed an Order of penalty, dated 06.05.2019, against M/s. Yuva Constructions Private Limited, for the period 2013-2014.

4. Subsequently, the assessing authority had also taken steps for collection of these taxes by way of issuing letters, dated 20.01.2024, to the concerned Sub-Registrar, not to permit registration of any deeds of sale executed in relation to the immovable properties of M/s. Marg Business Park Private Limited and M/s. Yuva Constructions Private Limited, being the land which was earlier owned by these two entities.

5. Aggrieved by the said letters, which effectively barred M/s. Marg Business Park Private Limited from selling these flats, the said entity has approached this Court by way of W.P.No.17211 of 2024. The details of the Orders under challenge are set out in the table below:-

6. The case of M/s. Marg Business Park Private Limited and M/s. Yuva Constructions Private Limited is that the Orders had been passed behind their back and without notice to them. On merit, they contend that the impugned Orders themselves state that the tax is being levied on the sale of apartments and the consideration received for the sale of apartments. They would contend that even the 2nd