High Court · 2025

HONOUT{ABLE SRr IUSTICE P.SANI r(,)SHY ANf) IION,BLI] SRI JUSTICE SUDDALA CHALi. ,ATI-II RAO I AX I{EVISION CASE NO.264 OI. ,I [I9 DATE:27.11.2025 Between: .lhc. SLatc. of i\n,-lhr.r I'ratlcsh, r'r,p.[r1 1111 Statc. Ileprescn l.r t iv t, br.torc 51.\ I, Nampslly, I lvdcrabad. Arrtl M/s.Scshasaycc I)apt,l & Roartl l,tcl., I 03, I)oshi SqLr lt,, Ii.rslrccrballh, [{vderabacl. Petit r ncr/ responderlt Ilesp r idc'nt/applicant ORDER: (per Hon'blt'Sri luslica Sudtltls Chaltrptl,r Ruo) The prescnt l.rr llevrsirrn Casc- ts filctl lr, thr, petitioner- Revenue challcrrging thc order passed in 'f.A.No.1i I 1 of 2003 on the file of the lear:rc-d State I'ax i\1-rpt'llatc I'ribun.rl, 'nrll-rra Pr;rdesh, Hyderabacl (for short, 'Sl A1 ') 2 The brief facts of the case arc tlrat the rt.spc,r r, (]ut/'ass(,ssee is on thc rolls ol- Contntcrcial 'l.rx Off iccr, \ar.tr , r'rar,,Lrda Circle, Hydcrabacl artl thc ( .rr'rnrcrr.:ial Iax Oflicer 1,, sst,rl tl-r. final assessnlent order on 07.03.2002 Lrnder thr. provisions of APGS I \ct for thc .lsscssnlerlt year 2000-0 l, .rrrd aggr.icved thereby, the assesst,r. filed an rrppeal before the Aplrellate De;ruty Commissioner (C t), Securrclcrabacl Division, I Ir dcr.rbad. I hc r\ppellate Dcpr-r[r Commissioner dismissed the saici z\ppeal by order dated 12.03.2003 and the order r,r,as assailed beforc the lcarrred STAT in T.A.No.]57l of 2003.r-tc-l the saicl ap|q.2[ is allolvcc] ancl tlrc saicl orciers oI lc.arnt'cl STAT are assaiiecl in ttre p:rresent ['ax Rcvisiorr Case by thc Revenr-re

3. The mair-r contcr-rtion of tl're respon clcnt/ assessee beforc tl-rc. Triburral was that thc L.r x liabilitr on a turnover of Rs.3,11,54,946/-, which rclates to lease rcntals entered outside the State of Ancihra Pradesh in rcspect of the rnachinerv situated in Andhra Pradcsh and though lease agrtcments lr'cre entercd at Chennai and as such, the lease rentals received by the assessee are amenable to tax in the State of ,\ndhra Praclesl.r

4. lhe lean.red S'l A f after appreciating the facts and material or.r record and also the judgment of this Court in 20th Cenfury Finance Corporation Limited and another v. State of Maharashtrar rvas ' 1zooo1 rrs src 182: (2ooo) 6 scc 12 I i I pleasecl to allon' the saicl appeal by sctting asict the order of the Assessirrg Authoritv along r,r'ith the orcler passt:,i r',, the Appellate Depu ti Conulrissroncr rl a tctl r2 031003 arrtl lre prc I imil'tary assessr-rrcnt orcl er

5. The Appt-al rvas admittecl on the tollcr "ng substantial questions of larr: "Whether the assessmerrt is bacl for norr i ,suing oi rrotice bc[orc the final .lsscssmellt ancl vvht tlrt ' t[-rc Icvt of tax is pr()pcr ur not ?

6. Learnecl Assistant Covernment I'leader lor li.evt:rrue i.t ould subrnit that tl're learned SI'AT has allowed tht r\p.:petrl ()lt t\'vo grounds; first one was that the Asscssing Autl'ro ' .,, clitl rrot issue any pre-assessment notice before passirrg orders, arr i second grouncl was that the lease agreements w,ere errtered bv tl-Lt t,sser and lessee at Chennai at thc tirne of agrccment, i.c., the f,l.,e rvhcrc goods agreed to be leased are to be ascertainecl and trar-rsf':" ol right to use the goods taken place at Che,nnai, thc incomt ,ut of lho lease agreernents is e.rigible to tax at Chctrnai. ln rc.s1,,.'. oi rrorr-issue o[ pre-assessment sho'"r,-cause noticc, it is conterrrlc,.l lrat thc etssessee ,1 disclosed the disputed turnover as taxable turnovers in the returns i.e., to the Assessir-r11 .\uthoritl, anrl arudit report and final assessrnerlt. I'[-re learncd Assistant covernment pleader alscr contended that learnecl srA'l did nol cxamirre l'l'rether at tire tirne of lease agrccnlent, thc gootls rtcrc alre.tclv asccrtained and set apart for delivery bv the lcssce. Thc leantecl Assistant Covernment Pleader contendecl that the Hor-r'ble STAT l-ras erroneously allon'cd the appcal ancl sct asirlt thc n,ell consir-lerecl firrclings of tht A ppellate Deputy Comnr issioner.

7. Per contrn, lcarncd courrsel appearing for the responderlt/ assessec conter-rded that the .\ppellatc Deputy Commissioner grossly erred in sustainirrg the assessment order of the Commercial Tax Officer, which was passccl without issuing any show-cause notice to the applicant af tel it filed the auclit report dated 21 .11.2001 and it is also contended that the claim rcfund of sales tax on leasc rentals and also as tlre rigl'rt to use goods took place at Chennai arrd such transactions arc not exigiblc to sale tax in Andhra Pradcsh. It is contended that however', the ,\ssessing Authoritv has mechanicallv assessed the turnovcr to tax withoui r-roticr: to the applicant and also Jf* 9EFi l contended that the facts in the case of 20th ilentury Finance Corporation Limited (supra) arc squarelv appli,-,i ,le in the facts of tht- prescnt carse antl the Covenrrncnt oi r\nrll-r. l)ra.lcsh hcrs rtcr iruthoritv under lalt, to ltvy tax as the goocls r'r,cr.: . r existence at thr: time oI lease agreement at Chenn;ri. Thus c()nten(1 'I that admittedlv thc ergre-ements wcre erecute.d at Chenn.ri antl r i ,irt to usc goot{s had taken place at Chennai, heuce, as the goocls (l ln exrstencc at Chennai ancl iransfer of use of goocls took plat t Chennai, Lrx cannot bc leviecl by Andhra I'raclesh. lt rs contL, r, -.t1 that it is orrlr the State of Tamil Nadu that can irnpose tax on srr,r L transfer of right to usc goods and they are taxable undc,r the NCST Act, ancl contcnded that the copies of thc agrccmt rrts harr r rcr.n f ilccl L,efort the Assessing Authority and the clauses in the.rqr \lmerlt inclicated that all the three agrc(.ments were cxecut('tl at (-lr: tn.ri arrd that tltc juclgment in 20th Century Finance Corporation l- mited (supra) IS squarely applicabie to ihe present case and that t rc lcarned STA'I' I-ras rightly allon,ed thc Appeal and set asiclc tlrr- o' i,r p.rssed bv thc Assessing Authority as well as the r\ I rL.ll.rtL. Deputy Commissiorrc.r's orcler. Further, it is contendc.cl thir thc revenuc htrs 6 not substantiated any goorl grouncl for interference of this Court in respect of the orclers passcrl bv the Sl'AT

8. Wc have he;rrcl Ir1r. l'.Chait;rn1,a Kiran, Iearned .,\ssistant Government Pleader replcsentir-rg the learned Special Govt'rnme.nt Pleader for the Siate. Tar for pi.1j11611p1-Rovcnut'and Mr. l'.Karthik Ramana for the rc.sponclen t / asse s see arntl pr.rusetl the recorcj

9. The main borrc contcntior-r of the lc..rrrrcd \ssistarrt Government Plcacler for tlrL, Rcvt,r-ruc is llrat, tl-rough thc aq.rt.cments were executed in thc Statc of far-nil Nadu, as or1 the date of execution of agreemcnts, the gootls w,cre \/ery much in existence in r\.ndhra Pradesh and as such, the goocls.rrc exigiblc to tax by the State of Andhra Pradesh. Perusal of the record rvould show that admittedly the agreements of tht, lcases rvere cnterL.d at Chennai and right to usc thr: goo,-ls w,.rs transfcrrcd to Chcrrnai ur-rder the registered lease agreements and when such agreements were executed in Chennai, the Governme'nt of Andhra Pradesh has no authority under law to levv tax thereupon, irr vievv of the clccision of the Hon'ble Supreme Court in 20th Century Finance Corporation Limited (supra) ancl aclnrittecllr, c-r,cn accorclirrg to thc learned l==EGtF!!lr!'="', -:..i"rF /I ,/ ----, I 1 r\ppellate Deputy Cornmissioner f indings, wh i, r is extracted as ''llegarciing thc mclits of thc case, it is observecl I ) r r [h,'(,rpr(,\ ot-lcasc' .igr(,crnent produccd bt,fore me Lhat t]re ir.r. ;rllrtrcmerrt rrert crrtclcr'l into at Cherurai, but it is not prove(l r, Llr t,',,iclentt' ,incl th.rt thc rnachincry leased out rvas existed :r he SLrtr. o1 .\.1)., .rt tho Lir).re ol cntering into such .rBreements. '., r hc rlct-rsiort ol thc Ilon'ble Supremc Court in thc said casc ctrrrr Lre epplicrl to thc cas(, rrrt hantl as the existcllce o[ the rnachirr' , .rt []re tinrt' ol r.ntcring into allrce.ment w,is pre-condiLion stiP r a tetl in tht' said juclgl.rcrr t. In vrt,n, of thc above, I sr:o no rL'ason to intr,rl le rtith tl-rr' rli,t isitrn ot tlrt, .rsst,ssirrg autlrolih' in tlris reliarel tl,i . Ihr' ,rppt',rl t.rils on thi-s scorc an.l stancls dismissctl."

10. C)rr a specific observation made by tht: \:,pcllate DepLrty Comurissiorrer tllat there was no proof of t, v .der rce that the machincrv le.rsctl out was existerl in the State o1- .,, r,.1hra [)rar-lesh at the tir-rrc of entoring into such agreements ancl .l;() thc Aprpellate Deputv Commissioner while dismissing thc. a1,::al iilecl bt, the .lssessLlc helcl .ts rr nder "lt is not provecl n,ith evidence that the machint,r i Icast,tl out n'as uristctl in Andhra Pradesh at thc hrne of cr.rtcr r g into suclr agr(.('malrts" I l. i\s such, the ground for rejection by the ,\ :pellate Deiruty Cor-nrnissioner stating that the case of 20th (_ rntury Finance Corporation Linrited (r"pf)_:t rrot applicable rrr Iu llICSent Case/ It appears to be untenable and invalid. hr such a view of the matter, the assertion of t[-re Iearrrcr{ Assistar-rt (]ovcrnment Pleatler for Revenue that as thc goocls oxistt'tl in thc St,rtr'ol ,\.1'., as on tlrr.. cl.rtr, o[ execution of lease agrcements, the State oi r\.1)., orrlv has got ample power to lcvy tax on thc transfcr oi rir,,,ht to usr. gootis on the rentals, are untellablc ancl arc- ht'r't,[rv rt icci..ri. l ltt. I Ion'[rlt- Su 1,11.11-1l., Court in the case of 20th Century Financc Corporation Limited (supra) has categoricalll'helcl that, cvcn ii tlrt. lioods arc situ.rterl in one State, the State irr ',vhich ihc gooc{s ar'(, frlrI to usr' frursualtt to tlle execution of the agreement is competcnt kr ler,.y tax. Insofar as issuance of notice before t[-re final asscssrlcnt is conccrnt:d, the Tribunal has held that the rrotrcc is nrarrclalorv to be issuer] Lrefore final assessment. The said finding of thc fribuual is valid and justified in our considered view arrcl the sa-rirl ground of Revenue is also rejected. Accordingll,, the qucstiotrs o[ l.rn'are ansrverccl against the revision petitioner/ revenue and the Tax Revision Case is rlevoic-l of merits and is liable to be dismisscd .. ', J 9

12. Irr r,iew ill- thc above firrdirrgs, the .l.ax F t l.isiclt.t Cz-rse is t smisser.l, by corll-irtllirrg thc ortlers passed Lry' tht' I 'rrned S-l 'AT irr T.r\.r,..o.1571 ot 20(.13 clated 01.06 2009 13 l hert' shal I bc no order as to costs. Pencl lr '; miscellirtreous apLrlications if .rnv shalI stancl closed / /'[RUE C]PY I I SD/. A.V.S. PRASAD DEPUTY REGISTRAR F \ Sl-('ll( )N Olit'l('I R 'u't. -r,t" sales l'atx '\plrcllnit l'ribunal' r\nclhra' Praclesh' I : 'lcrat"r'l' 2 TI.re Appellate f lt'p "iv'L"*ttitsioner , Lj[t?,a1n,1il h" sp"ttulco't I ll tlr'r.r["r,.1. l( )l'U( l I iji\b aati r -sri S I l'v'irak'' nath' Atlvoca te [ol']UCl' 5. I rvo CI) CoPies 'leatler (CT)' Secundcr r ''rti [)ivisiott' for statc'l'ax' l1i1' C.rrrt Br'ril..lirr;.s' JCK/ PSL w [{ICII ('OURI' I)A'l lll) 27l t1i2025 C)lil)tiR TREVC. r.,,,- o. 264 of 2009 I I I I I I I I I Disntissir-rg thc -1.R.Ir.\'.( r.vithouI costs .l;)F ( Ro o C) * :t8 2026 7 ::s@Sr .^(e,b ro( \9<.aG i'-"