Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(AP) 5180

HIGH COURT OF ANDHRA PRADESH
R. RAGHUNANDAN RAO, Smt Sumathi Jagadam, JJ
M/s. Yuva Constructions Private Limited – Appellant
Versus
The State Of Andhra Pradesh and Others – Respondent
Writ Petition Nos.4046, 4141, 4146 & 4195 of 2021 and 17211 of 2024

Advocates:
For the Appellants/Petitioners: J.N Venkata Suresh Kumar
For the Respondents: GP FOR COMMERCIAL TAX

Court determined tax liability cannot arise if entities do not meet dealer criteria under the APVAT Act, emphasizing adherence to natural justice.

Headnote:(A) Andhra Pradesh Value Added Tax Act, 2005 - Section 2(10) - Tax liability on sale of completed flats - Petitioners contended that they should not be classified as dealers under the APVAT Act - Court held that without being involved in defined activities, petitioners cannot be deemed dealers. (Paras 7, 13, 19)

(B) Natural Justice - Principles of Natural Justice not adhered to - Orders were passed without proper notice to the petitioners, thereby invalidating the assessment orders. (Paras 19, 20)

Facts of the case:
Petitioners challenged assessment orders issued by tax authorities regarding the sale of completed flats, asserting that they had not been classified as dealers under the APVAT Act and that the orders were passed without notice.

Findings of Court:
Assessment orders and associated penalty were set aside due to lack of jurisdiction over the petitioners as dealers under the APVAT Act and failure to adhere to principles of natural justice.

Issues: The key questions addressed were whether the petitioners could be classified as dealers and whether the assessment orders were valid given the principles of natural justice.

Ratio Decidendi: The court concluded that without verified activities necessary for dealer classification, tax cannot be levied, and emphasized the necessity of providing proper notice before order issuance.

Result: Writ Petitions allowed.

Table of Content
1. development agreement for land construction. (Para 1 , 2)
2. assessment orders issued without notice. (Para 3 , 4 , 6)
3. final ruling allowing the writ petitions. (Para 5 , 15 , 21)
4. tax liability on sale of completed flats debated. (Para 7 , 8)
5. definitions and jurisdiction under apvat act discussed. (Para 9 , 11 , 13)
6. arguments from both sides and implications for the court. (Para 12 , 14 , 16)
7. natural justice violations highlighted. (Para 18 , 19 , 20)

The Court made the following Common Order:

(per Hon’ble Sri Justice R. Raghunandan Rao)

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 2^nd 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 2^nd 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:-

SL .N o.	Writ Petition No.	Name of the Petitioner	Assessment Order Number and Date	Name of the Authority that passed the Impugned Assessment Order
1.	4046 of 2021	M/s. Yuva Constructions Private Limited.	A.O.No.159147, dated 06-05-2019.	The Commercial Tax Officer -II, Circle II, Tirupati, Chittoor District.
2.	4141 of 2021	M/s. Marg Business Park Private Limited.	A.O.No.96011/2012- 13 in Ref: S5/36/2014, dated 10-01-2018.	The Commercial Tax Officer -II, Circle II, Tirupati, Chittoor District.
3.	4146 of 2021	M/s. Yuva Constructions Private Limited.	A.O.No.149262 in Ref: S5/98/2015-2014-15, dated 02.03.2019.	The Commercial Tax Officer -II, Circle II, Tirupati, Chittoor District.
4.	4195 of 2021	M/s. Yuva Constructions Private Limited.	A.O.No.105756 in Ref: NIL/2013-14, dated 23.03.2018	The Commercial Tax Officer -II, Circle II, Tirupati, Chittoor District.

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

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2025 Supreme(Online)(AP) 5180

HIGH COURT OF ANDHRA PRADESHR. RAGHUNANDAN RAO, Smt Sumathi Jagadam, JJM/s. Yuva Constructions Private Limited – AppellantVersusThe State Of Andhra Pradesh and Others – RespondentWrit Petition Nos.4046, 4141, 4146 & 4195 of 2021 and 17211 of 2024

Court determined tax liability cannot arise if entities do not meet dealer criteria under the APVAT Act, emphasizing adherence to natural justice.

Cases Referred (1)

HIGH COURT OF ANDHRA PRADESH
R. RAGHUNANDAN RAO, Smt Sumathi Jagadam, JJ
M/s. Yuva Constructions Private Limited – Appellant
Versus
The State Of Andhra Pradesh and Others – Respondent
Writ Petition Nos.4046, 4141, 4146 & 4195 of 2021 and 17211 of 2024