The High Court · 2025

Petitirln under Section 151 cPc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be preased to suspend the operation of the circutar issued by the commissioner of Commercial Taxes, Enforcement Wing, A.p., Hyderabad in CCT,s B3/1 TtAc-*t2007-08, dt 3.1loru ,urdins disposar of rhe writ l[".Jrr.rJo Counset for rthe petitioner: counser for the Respondents: Gp FoR ..MMERCTAL TAX The Court made the following: ORDER SRI S. CHAKRAPANI ----7 F INTHEHIGHCOURTFoRTHESTATEOFTELANGANAAT HYDERABAD * HONOURABLE SRI IUSTICE P.SAM KOSHY AND HON'BLE SRI IUSTICE SUDDALA CHALAPATHI RAO WRIT ONN oF 2008 Date:16.L2.2025 Between: M/ s.Nagarjuna Conshuction Company Limited A compiny incorporated under the Companie-s Act' 1956, having its Regd' Office at4L'Nagariuna Hills' f r.r.,;ug,, *,"Uya".iUud, rep' by i ts Execudve Direc tor' Sri A.G.K.Raiu- ^ And Commissioner of Commercial Tax' Enforcement Wing, Andhra Pradesh, Hyderabad and two others' Petitioner Respondents ORDER: (per Hon'ble Sri lt'tstice Suititala Chalapathi Rao) ThiswritpetitionhasbeenfiledtodeclaretheCircularissued by the Commissioner of commercial Taxes, Enforcement wing' A'P'' Hyderabad,inCCT,sRef.ENFT.No.B3l17/AC-I|,)2007-}8,dated 03.01.2008 as illegal, void and consequently set aside the same'

2. The writ petitioner is a Company registered under the CompaniesAct,lg56andisaregistered'dealerontherollsof Commercial Tax officer, srinagar colony Circle, Hyderabad with TINNo.285go17g366and'engagedinthebusinessofexecutionof civil works, inpluding construction of buildings - residential and 'i I l Itt -l cornmercial, roads, bridges, dams, electrical installation etc., 2 throughorrt the country 3' It is the contention of the learned counsel for petitioner G.S Rao that ar; per the amended provision, the dealer is exigible to pay CST @2% on his turnover provided the sale is effected to registered dealer ageLinst 'C' form and however, if the goods are sold other than the registelred dealer, the sale is exigible to tax at the rate prescribed in the corresponding goods under the local Act and under the scheme of section s(3) of the Central sales Tax Act, lgs6 (for short, 'Act, 1956'), it is only the registered dealer that are equipped and made eligible to make purchase against'C' forms. The writ petitioner further corrtended that they are the works contractors and in pursuit of its activity, they buy raw-material like cement, steel etc., and after introduction of Article 366 (2g-A) of the Constitution of India, the material uried in execution of works contract should also be treated as deemed *tle for the purposes of levy of sales-tax under Entry s4 of List-II of \rII schedule of the Constitution of India and in the course of said trusiness, the Commercial Tax Department has been permitting the dealers to incorporate not only the material required for execution of works contract, but also capital goods used in 3 execution of such works contract in the Certificate of Registration and permit buying of such goods against'C' form. However, it is contended by the writ petitioner that the Commissionbr (CT) in Circular, dated 03.01.2008, has issued clarification that the purchase of capital goods cannot be made on the strength of.'C' forms though such capital goods are being used in the execution of works contract, is illegal and arbirrary. It is contended that the Commissioner (CT) has issued said Circular, which is in violation of principles of law laid down by the Hon'ble Supreme Court in |.K.Cotton Spinning & Weaving Mills Co.Ltd., v. Sales Tax Officer, Kanpur and anotherl, and in view of the said Circular, the Commercial Taxes Authorities are insisting deletion of capital goods from the Certificate of Registration and threatening to impose penalty for issuing of 'C' forms in the context of purchase of capital goods. It is contended that instructions issued by the Commissioner (CT) are impeding the discretionary powers of the assessing authorities, more particularly, the Commercial Taxes Officers/Assessing Authorities to examine the facts of each case on its own merit are simply rejecting the cases of the dealers solely basing upon the Circular issued by the Commissioner (CT) dated 03.01.2008. It is contended that the said ' lrses] 16 src s63 (sc). 4 Circular is in gross violation of due procedure of law and is ousting the discretionary powers of the statutory authorities and thus, is violative of orders of the Hon'ble Supreme Court. Further, it is contende:d that the said circular is ex facie illegal, arbitrary and highhan<Ied and is liable to be quashed.

4. It is also contended that though the Commissioner has power to issue r;uch circulars under Section 77 of the Andhra Pradesh Value Added I'ax Act, 2005, which are not inconsistent with the provisions of the A,:t or the Rules made there under to his subordinate officers for the proper administration of the Act. The said Section also contemplates that such circulars cannot oust the discretionary powers of the appellate authority and, by necessary implicatiory makes it clear that the power under Section 77 of the Act cannot be exerciserl so as to disable or curtail the discretion of the statutory authoritres. The impugned Circular dated 03.01.2008 is nothing but violative of the judicial precedents of the Hon'ble Supreme Court in ].K.Cofton Spinning (supra) and it is also submitted that a batch of writ petLtions came up before this Court in W.P.No.20579 of 2004 and batctu vt'here similar issues were raised when the Commissioner has issued instructions in respect of levying of turnover tax on the &* -\ 5 subsequent sales of telephones and cell phones and this High Court considering the facts of the said cases held that the Commissioner has no power to issue the circular so as to disable the discretion of the statutory authorities and also as various authorities under the APGST Act, 7957, are quasi-judicial authorities, are legally bound to adjudicate the matters on the basis of appreciation of facts and law in each case. Thus, by the issuance of the said circular, the Commissioner has prejudged the issue and directed that the matters coming before the assessing authority to be decided in a particular way.So also in the case of W.P.No.27123 of 201,4, the Division Bench of this Court, by placing reliance on the decision of M/s. Unitech Limited v. Commercial tax Officer, Gaiuwakaz, has categorically held that the assessing authority while examining the said issue for grant of 'C' form afresh without being influenc6d by the Circular instructions of the Commissioner dated 03.01.2008 and 30.08.2012, apply its own mind while deciding the said issue.

5. Per contra, learned Assistant Government Pleader appearing for the respondents would submit that the Commissioner has power under Section 77 of the APVAT Act, 2005 to issue instructions to his ' (rggr) Vot.12 ASPSTJ 176 -i 4 : l " i i I i t I I I I I I I i I I i i I I I I i I I : I : : l. I i { \-:+: nt\ subordinerte authorities to follow the guidelines and in the instant 6 case, it ir; contended that the Commissioner has issued the said - circular dated 03.01.2008 directing the authorities to follow certain guideline:; to examine all the case of works contractors with reference to the Ce::tificates of Registration issued to them under the CST Act and see tl'rat the ineligible goods are deleted under intimation to the respectivr: works contractors and they were also directed to take steps to examine all the cases of works contractors, resorting to misuse oi'.'C' forms by purchasing the ineligible goods against 'C' forms in violation of Section 8(3) of CST Act, 1956 and appropriate action shirll be initiated in terms of Section 10A of the CST Act. The learned .Assistant Government Pleader would contend that the Circular is not violative of the judicial precedents of the Hon'ble Supreme Court and emphasizes that the Commissioner has the power urrder Section 77 of the APVAT Act, 2005 and contended that the writ petition is devoid of merits and is liable to be dismissed.

6. We have heard Mr. A.V.A.Siva Kartikeya, learned counsel representing Mr. S.Chakrapani and Mr. T.Chaitanya Kirary learned Assistant Government Pleader for respondents and having given \ 7 earnest consideration of the submissions made by both the counsels, perused the material on record.

7. Before going into the riva[ contentions urged by the counsels, perusal of circular dated 03.01.2008 would go to show that the Commissioner has directed the assessing authorities to take steps to examine alt the cases of works contractors with reference to the Certificates of Registration issued to them under the CST Act, 1956 and to see that the ineligible goods are deleted under intimation to the respective works contractors and it is further directed to take steps to examine all the cases of works contractors, resorting to misuse of 'C' forms by purchasing the ineligible goods against 'C' forms in violation of Section 8(3) of CST Act, 7956 and also directed to initiate appropriate action in terms of Section 10A of the CST Act and thus vide.the circular, apparently the Commissioner has directed the assessing authorities/statutory authorities to do their functions in a particular fashiory which has definitely a bearing on the discretion of the assessing authorities/statutory authorities, who are the primary authorities and the quasi-judicial authorities and have to decide each case on its own merits uninfluenced. In a similar matter, the Hon'ble Division Bench of this Court, while dealing with a batch ' tr, of writ F'etitions in w.p-No.2 *srg of 2004 and batch, so arso a Division Bench of this Court in w.p.No.2 zr2g of 2014 has arso considerecr a case of sim,ar nature and arowed the said writ petition by directi.g the 1rt respondent therein to consider the petitioner,s request fo. grant of 'C' form afresh without being infruenced by the circular inr;tructions issued by the Commissioner dated 03.01.200g and the Hon'bre supreme Court arso in the similar case in ].K.Cotton spinning (supra), herd that circurar cannot be issued by the Commissio ner to pass orders in a particular way to the assessing authorities. In the instant case also, the contention of the learned counser for the pefitioner appears to be germane and varid and the contention <lf the Iearned Assistant Government preader that the Commissioner has the power under section 77 ofthe ApVAT Act, 2005 to issue instructions to his subordinates, is not sustainabre as the proviso to trre said secti on 77 0f the Act wourd go to show that though the Commissioner is vested with such power, the same sha[ not curtail th,: discretion of the appeilate authority impliedry, which also appries t, the discretionary powers of the assessing authorities, hence the said contention of the learned Assistant Government Pleader is untenable and is accordingly rejected. --7 o'r 9

8. In the light of the said facts and circumstances of the case, in our considered opiniory the circular dared 03.01.200g is nothing but interdicting the discretion of the assessing authorities/statutory authorities and also violative of principles laid down by the Hon,ble supreme Court in ].K.cotton spinning (supra) and accordingly, the said circular is hereby quashed and set aside and the Writ petition is accordingly allowed. Therg. :hrll be no order as to costs. pending miscellaneous ap4lications if anv shall.stand closed SD/.AHMED ABDULLAH KHAN ASSISTANT REGISTRAR 6 SECTION OFFICER //TRUE COPYII \ To, Pradesh, Hyderabad. 1- The commissioner of commerciar raxes, Enforcement wing, Andhra 2. Commercial Tax Offiqel, Srinagar Colony Circle, Hyderabad. 3. Assistant commercial rax officer, Srinalar colony circle, Hyderabad. 4. One CC to SRl. S. CHAKRApANT; Advotate tOpUCl 5. Two ccs to GP FoR cotvtMERCtAL TAX ,H'igh court for the State of 6. Two CD Copies Telangana. [OUT] Bru BS SP / t( 'r{E stAr€ C)o 0 6 tts 2026 t;tI l'. _:. * .* ,-.ii.. ';L)/ Sl',: I HIGH COURT DATED:1 611212025 ORDER WP.No.i28463 of 2008 ALLOWING THE WRIT PETITION WITHOUT COSTS rN ,\r[