M/s.Sri Sai Venkatarama Constructions v. Following the said judgment, the impugned assessment order is

(Per Hon’ble Sri Justice V.V.S.Rao) The petitioner, a firm engaged in construction of apartments/flats, is a value added tax dealer on the rolls of the second respondent. Statedly, they are filing their returns regularly under the Andhra Pradesh Value Added Tax Act, 2005 (the Act). Acting under the purported authorization of the jurisdictional Deputy Commissioner, Vijayawada, the first respondent conducted audit of the account books for the period from 01.04.2009 to 31.12.2009. Pursuant to such audit, the first respondent undertook assessment and passed the impugned order dated 31.03.2011. This is assailed in the writ petition, inter alia, on the ground that the authorization to conduct audit under Rule 59(1)(7) of the Andhra Pradesh Value Added Tax Rules, 2005 (the Rules), does not confer any jurisdiction on the first respondent to undertake assessment under Rule 59(1)(4)(ii)(b) and (d) of the Rules.

When the matter was called on 21.04.2011, we directed the Special Counsel to get instructions in the matter. After getting information he does not seriously dispute the allegation. In addition the contention noticed hereinabove, other contentions are also raised. We, however, do not propose to examine these aspects as the writ petition must be allowed, and the impugned order has to be set aside, on the short ground that the first respondent was merely authorized to conduct audit, and not assess the petitioner to tax under the Act. The Division Bench of this Court in Balaji Flour Mills v. the Commercial Tax Officer-II, Chittoor, Chittoor District[1] held: (a) In the result, in the analysis and for the reasons as above, we reject the relief to declare Rule 59(1)(4)(ii)(b) and (d) of the VAT Rules as ultra vires. We also declare that sub-sections (3) and (4) of Section 17 do not suffer from any constitutional infirmity and are valid.

We also reject all other prayers for declaring the impugned rule and impugned assessment orders as ultra vires or invalid except to the extent indicated in (b) and (c) below; (b) In view of our holding that the authorisation to audit under Section 43 read with Rule 59(1)(7) by itself does not enable audit officer to undertake assessment, we set aside all the assessment orders and consequential orders, if any under Section 53 of the VAT Act, in all the writ petitions; (c) All the impugned assessment orders shall stand remitted to the respective audit officers who shall submit audit reports as contemplated under Chapter VII of appropriate Post Audit Action. If the competent controlling and/or supervising authority like Deputy Commissioner issues separate orders authorizing assessment, it shall be open to such authorizing officer or authority prescribed, as the case may be, to undertake assessment in accordance with law; the VAT Audit Manual Following the said judgment, the impugned assessment order is quashed.

The writ petition is, accordingly, allowed and the matter is remanded to the jurisdictional/authorized Commercial Tax Officer who shall issue notice to the petitioner, and assess the petitioner to tax in accordance with law. However, in the circumstances, without costs. _______________ (V.V.S.RAO, J) ______________________________

(RAMESH RANGANATHAN, J)

25.04.2011 [1] W.P.No.855 of 2008 and batch, dated 30.12.2010