Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(AP) 9925

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 – Respondent
Writ Petition Nos: 4046, 4141, 4146, 4195 of 2021 | Writ Petition No: 17211 of 2024

Advocates:
For the Appellants/Petitioners: SRI J.N. VENKATA SURESH KUMAR
For the Respondents: GP FOR COMMERCIAL TAX

The failure to serve proper notice prior to tax assessments renders the orders void, emphasizing the requirement of natural justice in administrative actions.

Headnote:(A) Andhra Pradesh Value Added Tax Act, 2005 - Section 2(10) - Petitioners challenged assessment orders alleging lack of notice and claiming that the sale of flats does not imply commercial tax liability - Court found that no proper assessment was demonstrated by the authorities to classify petitioners as dealers under the Act - Orders quashed for being arbitrary and against principles of natural justice. (Paras 13-18)

(B) Natural Justice - Assessing authority must provide proper notice and opportunity to the assessed entities before imposing tax assessment. Failure to do so renders the orders ineffectual. (Paras 19-21)

Facts of the case:
Petitioners engaged in the development and sale of flats and argued against the legality of tax assessment orders that were passed without notice, affecting their ability to sell properties. Impugned orders were based on claims of tax from sales of completed flats, but petitioners contended they should not be categorized as dealers under the tax law based on the definition provided in Section 2(10) of the APVAT Act.

Findings of Court:
Orders of assessment and penalty against petitioners were inconsistent with the principles of natural justice, as no proper notices were served and thus were set aside, along with letters restricting property sales.

Issues: Whether the petitioners could be considered dealers subject to tax liability based on the sale of completed flats? Whether the assessment orders were valid given the lack of notice?

Ratio Decidendi: Petitioners did not meet the definition of 'dealer' under the APVAT Act as they were not engaged in activities described within, leading the Court to determine that the assessment and penalty orders were invalid due to lack of proper proceedings and violation of natural justice.

Result: Writ Petitions allowed.

Table of Content
1. development agreement details and tax orders (Para 1 , 2 , 3 , 4 , 5)
2. arguments against tax liability (Para 6 , 7 , 8 , 10 , 11 , 12)
3. court's findings on dealer status and tax assessment (Para 9 , 13 , 14 , 15 , 16 , 19)
4. assessment and penalty orders set aside (Para 17 , 18)
5. writ petitions allowed with no costs (Para 20 , 21)

The Court made the following Common Order: (perHomiesnjusticeRRa ghunan^anRao)

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'^'^ 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"*^ 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 Writ .N Petition No. o.	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 3. 4146 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.
	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.

Order

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 2”^^ respondent is admitting that what was sold are finished flats and not unfinished flats or that the consideration w

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2025 Supreme(Online)(AP) 9925

HIGH COURT OF ANDHRA PRADESHR. RAGHUNANDAN RAO, Smt. Sumathi Jagadam, JJM/s. Yuva Constructions Private Limited – AppellantVersusThe State of Andhra Pradesh – RespondentWrit Petition Nos: 4046, 4141, 4146, 4195 of 2021 | Writ Petition No: 17211 of 2024

The failure to serve proper notice prior to tax assessments renders the orders void, emphasizing the requirement of natural justice in administrative actions.

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 – Respondent
Writ Petition Nos: 4046, 4141, 4146, 4195 of 2021 | Writ Petition No: 17211 of 2024