The High Court · 2025

Counsel for the Petitioner: Sri T. Chaitanya Kiran, Learned Assistant Government Pleader for Revenue Counsel for the Respondent Sri Karthik Ramana Puttam Reddy The Court made the following: ORDER f') i THE HOIrBLE SRI JUST'ICE P.SAM KOSHY ANI) THE ITON'BLE SRI JUSTICE SUDDALA CHALAPATHI RAO ORD ER: r tlrc Hon'bLe Sn ']/ustie. Suddaia Chalopathi Rao) .!Io.300 of zx)g This Tax Revision Case is fil.ed assailing the order of the Sales Tax Appellate Tribunal, Hyderabad, (for short .the S-IAT) in TA.No. t196/2OO4, dt.O2.O6.2OOg. The assessment yea.r involved is 1998-99 ur.rcler the provisions of ApGST Act, 1957(for short .the Act).

2. Hcard Sri T.cFraitanya Kira,, learned Asst. Govt. pleacier for the petitioner/l?evenue and Sri Karthik Ramana puttam Reddy, learned counsel flor respondent/assessee.

3. The brief facts of the case are that, the respondent/assessee namelv M/s Ra_r,alseema, Concrete Sleepers(p) Ltd., registered on the rolls of Commercial Tax Officer, Maharajgunj Circle, Hyderabad, is dealing in Concrete Sleepers; that subsequently, the Commercial Tax Officer, Charminar Division (for short ,Assessing AuthorityJ passed final assessment order, dt.24.O4.2OO0, for the assessment y.ear l99g_99 under the Act; that the Deputy 2 Commissioner (CT)' Division, Hyderabad (for short 'Revisional AuthorityJ, in exercise of power under Section 1a(a)(8) of the Act, proposed to revise the said assessment order on the ground that the assessee failed to disclose turnovers relating to to Rs.39,74,89L1- and Rs. 11,46,618/-' sand and metal and issued a pre-rwision cause notice, to which respondent/assessee submitted objections by letter dt.27 .L1.2OOO, and thereafter the rerrisional authority uide ordet dt.23.O7.2OO3, revised the orders of the Assessing Authority, concluding that the respondent/assessee has not included the turnovers of sand and metal.

4. The said revisional order was respondent/assessee before challenged by the learned STAT in TA.No. 119612004 on two grounds : r/ that the Revisional AuthoritY has not mentioned in ttre revisi,on show-cause notice as under revision, the amounts of Rs.39,74,891/-and Rs'l1,46,688/-' respectively, in respect of suppression of metal and sand; and ii/ the revisional authority has not supplied the report of the Regional Vigilance and Enforcement ofliCer to the respondent/assessee so 't-; 3 as to substantiate their defence before the said authority at the time of hearing, in spite of repeated requests and objections. 5' The assessee contended before the learned srAT that flie turnover pertaining to sand and metal was not specifically mentioned in trre show-cause notice so as to substantiate their case , and non-mention of the same amounts to procedural lapse, which will potentially prejudice to the defence a'd impact the fairness of the proceedings.

6. It was furl.her argued by the assessee tl.at failure of the revisional authority to furnish a copy of tl:e report of the Regional Vigilance & Enforcement Officer, despite a specific request, violated the principles of natural justice, as the right to a fair hearing includes access to all material evidence relied upon by authority. On these grounds, it was urged by the assessee that the revision procecdings were vitiated and tl:e impug:ned revisionaqr order deserves to be set aside.

7. l.earned STAT by placing reliance on t]re judgment of the erstwhile High Court of Andhra pradesh in Stcte oJ Andhra 4 Pradesh us. Lohant steel rndustrt* Ltmitedr and M/s Ragala.seemlr. Paper Mills, Adhonl o. Du. comrnissiozer{cr), KurnooP held that the revision show-cause notice does not disclose the specific details of the turnovers of sand and metal, enabling the respond.ent/assessee to substantiate their defence and also non-supply of the report of tl,.e Regional Vigilance and Enforcement officer to the respondent/assessee, despite a specific request to furnish the sarne, ar-nounts to violation of principles of natural justice, and these procedural lapses rendered the revisional proceedings unsustainable, and thereby declared the proceedings, dt.23.o7.2oo3 in RR.No.24 /2ooL-o2 R.No.598 /2oot as unsustainable and accordingly, set aside the same by allowing the appeal. B. Assailing the said orders passed by the learned srAT in TA.No. l196 / 04, dt.02.06.2oo9, the appellant/Revenue has filed the present tax revision case and it was admitted to consider, whether the order passed bg tlrc reuisional autlwritg is sustainable under la.w? ' 96 STC Pg.369 2 (t992]' 15 APSTJ 70 5 9 - The learned Assista,t Government pleader supporting the orders passed by the revisionar authoritl, dt.23.o7.2003, submitted that the findings arrivecr at by the learned srAT are erroneous both on facts and in iaw, as the interference of the learned srAT with the revisional order is wrtrrout justifiabre grounds under rnisconception of facts and legal position, and prayed to allow tJ.e Ta:< Revision case by setting aside the order of the learned STAT

10. Per contra,. trre rearnecr counsel appearing for t]Le respondent/assesses supported the findings of the learned srAT contending t].at the order was legally justified and eillowed the appeal by setting aside the order under revision duly appreciating the evidence showing procedural lapses and violation of natural justice, and thus, contended that no interferencc is warranted by this Court. 11' we have gtven earnest consideration to the submissions made by the learned counser appearing on either side and perused the record. 6 12' Before adverting to the substantial questions of law, we feel to extract the revision show-cause notice , dt. 2o..og.2.Or :"-r"o* ror better understanding of the case: "on 27'Or'2001 & 30.01.2001, the business premises was inspected by the commercial Tax officer, (Interigence), Enforcement Wing, Andhra pradesh, Hyderabad, and noticed that follo*i-g turnovers were not disclosed at the time of assessment for the year lggg-gg under ApGsr Act, Under APGST Act, lgSZ , Tax Due suppressed turnover Rs.44,03 ,.664 / _ Rs. 4r5O ,.61g/_ The inspecting officer has colrected the above tax, and the commerciar Tax officer (Int), Enforcement wing has notice the fo'owing irregularities under csr Act, 1g56: " The assessee claimed concession rate of tor @ 40/o against supply of sleepers CSR to SCR fr*ir*rirr*;; 'D' under CST Act,l956, which was given by the Assistanr Inspecting Engineer(ScR), Thimmacharla, Andhra pradesh,," 13' A plain reading of the revision show-cause notice reveals that it does not contain any expranation or reasoning as to how the proposal to revy tax on the turnover rerated to metal and sand was arrived at' The notice merery refers to the deniar of concessional rate of tax on the supply of sleepers to SCR and (' 7 mentions the turnover rerating to metar and sancr. However, it fails to provide trre particulars regarding how the tax is proposed to be levied on the turnover of sand and metal. L4- It is a wefl-settled principre of law that a show_cause notice, particularry one initiatirlg revisionar proceedings, must crearly set out the factual anct regal basis for the proposed action, enabring the assessee/noticee to effectivery respond and defend their case, and thus, the statutory authorities should ensure compliance with the principles of natural justice. 15' Further, in the judgments relied upon by the respondent/ assessee, in M/s Ragarq'eema paper Miu"s,s case(supra) and Lohant stcer rndustrtesr' case (supra), the is s ue o f. no n _ d i sclo sure of the material facts in a revisional show_cause notice, as to how a proposal was mad.e to levy tax on the materials, \ ras considered and categoricafly held that the revision show_cause notice is irregular and cannot form a basis for revision of the originar asse'ssment order, if it fails to give the particulars of the basis for the proposal to lery ta:r. 8

16. The position of law enunciated therein is squarely applicable to the facts of the present case, as in tJ:e instant case also, the show-cause notice issued by the revisional authorit5r does not give complete details as to how the proposal is made to lery ta< on metal and sand transactions, except mentioning the turnover figures, and the absence of such crucial particulars renders the notice defective and cannot form any basis for revision of the order of the Assessing Authority

17. In view of the above, we are of the considered opinion that the revision show-cause notice, dt.20.09.2OO1, is defective, and the learned STAT relying on the judgment in Lohatt Steel Industries's case(supra), has rightly held that when the Deputy Commissioner invokes powers under Section la(a)(cc), the burden lies on the said authority to disclose the specific basis for the alleged suppression, and on this ground alone, the revisional order is unsustainable and liable to be set aside.

18. As regards the second contention of non-supply of report of the Regional Vigilance Enforcement Oflicer, Kurnool, it is not disputed that the said report, which formed the basis for the proposed revision, was neither enclosed ,rrrith the show-cause 9 notice nor suppried subsequentry, despite a specific request being made by the assessee, a{rd the revisional auth,rity proceeded to revise the assessment without furnishing the report or addressing the assessee,s objections regarding its non_supply. 19. Once the revisional authority chooses to rely on such a report to initiate revision, the auflrority is duty bound to furnish a copy of the same to the assessee enabring them to put_forth their defence. The said omission announts to a clear violation of the principles of natural justice. 20' sirnilar issue was considered by the Division Bench of the erstwhile High court of Andhra pradesh in umqmaheshwara Rice & Ftour Mi* tt. commerctar Tox offtce. wherein the original Assessing Authority had passed assessment order based on the report of vigilance a'd Enforcement Department, without furnishing a copy of the said report to the assessee. Although the assessee succeeded in appeal, the revisional authority sought to revise the appe,ate order without addressing the specific contention that the report, used, against the assessee, was never 3 w'P'No'33758 of 20 r t & Batch, dt.22.rr,2o* = MANU/ Ap/ r2z r /20rr 10 \ been supplied to them at any stage. The Division Bench observed that the revisionar authority did not deal with the contention of the petitioners that the report of the vigilance and Enforcement Department was not suppried to them by the assessing authorit5r, though it was used against them, and the Division Bench held that the s€une is viorative of principres of naturar justice and thereby uphold tJre order of the apperant authority. 2l' In view of the above, we are of the considered opinion that the revision show-cause notice, dt.2o.og .2oo r , is inherentry defective for non-disclosure of materiar facts, and the revisionar order, dt.2s.oz-2oos, is in crear vioration of principles of naturar justice for non-supply of the report of the vigilance and Enforcement Department to the respondent/assessee, and therefore, the rearned srAT was justified in alrowing rhe appear on both counts. 22' Accordingry, we lind no infirmity in the findings recorded by the learned srAT urarra,ting interference by this court. The re'ision petition is, tJrerefore, devoid of merit and riable to be rejected. / 11 23- Accordingly, the revision petition is rejected by confirmiirg tlre orders passed by flre learned srAT in TA.No. 1196/2004, dt.o2.06 .2009. consequently, miscenaneous petitions, if any, pending shall stand closed. \ \I /,TRUE COPYII SD'. N. SRIHARI DEPUTY S ER One Fair Copy to the HON'BLE SRt JUSTICE P.SAM KOSHY (For His Lordship's kind perusal) one Fair copy to the HON'BLE sRt JUsTlcE SUDDALA cHALApATHt RAo (For His Lordship,s kind perusal) To Hyderabad. [OUT]

1. The sales Tax Appetlate Tribunal, Andhra pradesh, Hyderabad. 2. Two CCs GP FOR REVENUE, High Court for the State of Telangana at 3. one cc to sri Karthik Ramana puttam Reddy, Advocate topucl 4. 11 LR Copies 5. The Under Secretary, Union of lndia Ministry of Law, Justice and Company 6. The Secretary, Telangana Advocates Association Library, High Court for the 7. Two CD Copies State of Telangana, High Court Buildings at Hyderabad. Affairs, New Delhi Kanr/sa d t t '..':' '':--:=i.\.1 -. iri I A --' lS- . \_i- \ \ . .\ .'t\ r" lt 'i L:t P15 ''' 1 HIGH COURT DATED:09/1 A12025 ORDER TREVC.No.300 of 2009 ,( o ^ THE REVISION PETITION IS REJECTED 3\ J