Director Mr.Sourabh Agarwal v. Abids Division, Hyderabad & Ors.

(per Hon’ble Sri Justice V.V.S.Rao) The orders of the second respondent in W.P.Nos.14425 and 14455 of 2011 dated 07.05.2011 and 20.04.2011 levying penalty and tax respectively under the Andhra Pradesh Value Added Tax Act, 2005 (the Act, for brevity), are under challenge in these writ petitions. The petitioner also questions the jurisdiction of the assessing authority in assessing the petitioner to tax and penalty on the ground that he is not the jurisdictional assessing officer, and he has not been authorized by the Deputy Commissioner to assess the petitioner to tax and penalty. This Bench in Balaji Flour Mills v. the Commercial Tax Officer-II, Chittoor, Chittoor District[1] has considered the validity of the self same rule, as well as the question whether the authorization for audit given by the Deputy Commissioner under Rule 59(1)(7) of the Andhra Pradesh Value Added Tax Rules, 2005 (the Rules) read with Section 43 of the Act enables the Audit Officer to also undertake assessment for the relevant period.

The question was answered in the negative. The conclusions in the judgment dated 30.12.2010 are as follows. (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 the VAT Audit Manual for appropriate Post Audit Action.